Page last updated at 22:51 GMT, Thursday, 29 October 2009

Trade bloc's unease over Chavez

By Robert Plummer
Business reporter, BBC News

Regional leaders at a Mercosur summit in July 2008
Some do not want Hugo Chavez to take centre stage in Mercosur

Venezuela's combative President Hugo Chavez is used to dividing international opinion. But even by his standards, the wrangle over his role in South America's biggest free-trade alliance is pretty impressive.

Venezuela officially teamed up with Brazil, Argentina, Paraguay and Uruguay as a full member of their Mercosur trading bloc in July 2006.

At the time, Mr Chavez called the move "historic" and said Venezuela's "road to liberation" lay with Mercosur.

Yet more than three years later, its status is still in limbo, as the club's existing members struggle to ratify the newcomer's application.

So far, Venezuela's membership bid has been approved by the leaders of all five states and by the Uruguayan, Argentine and Venezuelan parliaments.

However, it has still to be ratified by the Brazilian and Paraguayan legislatures.

On the first anniversary of the agreement to make Venezuela a Mercosur partner, Mr Chavez warned both countries that he would withdraw his membership request unless they backed it within three months.

But that turned out to be an empty threat, followed by two more years of stalling.

Harvesting votes?

Now, finally, Brazil's Congress appears to be slouching towards a decision.

On Thursday, the 19-member foreign relations committee of the Senate in Brasilia voted to approve Venezuela's membership of Mercosur.

Full members: Brazil, Argentina, Paraguay, Uruguay
Full member pending ratification: Venezuela
Associate members: Chile, Bolivia, Ecuador, Colombia, Peru

However, it will have to be approved by the full Senate before it can take effect.

A rejection would have been severely embarrassing for the Brazilian President, Luiz Inacio Lula da Silva, since he is visiting Venezuela on Thursday and Friday.

He and Mr Chavez are paying a joint visit to the Orinoco region to witness the soya harvest.

The two leaders also plan to sign an agreement on a refinery project that is the product of a joint venture between their countries' state-owned oil firms, PDVSA and Petrobras.

According to the Venezuela-Brazil Chamber of Commerce Federation, bilateral trade is booming. Brazil has its healthiest foreign trade surplus with Venezuela ($5.7bn), while the volume of trade has more than tripled in the past five years.

Democracy fears

So if Brazil is deriving clear economic benefits from closer ties with Venezuela, why has it been so slow to endorse its neighbour's application to join Mercosur?

Well, the answer lies in a clause that requires all member countries to be democracies.

After measures taken by the Venezuelan government to close one TV station (RCTV) and investigate another (Globovision), some in the Brazilian Congress doubt Mr Chavez's democratic credentials.

Hugo Chavez and Lula at a summit on Margarita island, 27 September 2009
Hugo Chavez and Lula are on good terms

Eduardo Azeredo, who heads the Senate committee that is due to vote on Venezuela's membership, acknowledged as much in an interview with a leading Caracas newspaper, El Universal, earlier this year.

Sen Azeredo said there were fears that government control of the press in Venezuela "could weaken democracy".

"We know what is happening with Globovision," he added. "That is why Brazil's position is cautious and fearful."

Sen Azeredo criticised what he called the Venezuelan government's "interference in the economy" and described the country's wave of nationalisations as "a form of going back in time".

He warned that existing members of Mercosur did not want the bloc to be used for "personal or ideological projects" - a view echoed by Brazil's Estado de S Paulo newspaper, which cautioned that Mr Chavez would not "rule out making Mercosur an instrument for his political objectives and a weapon for his conquests".

'Respect the rules'

However, those who back Venezuelan membership of Mercosur say that the best way to strengthen the country's democracy is to bring it into the fold.

Even some of the president's fiercest domestic political opponents are in favour of approving the application.

They include Antonio Ledezma, who beat Mr Chavez's candidate in the race to become mayor of Caracas, only to see his power eroded by the creation of a special capital district with its own unelected head.

Mr Ledezma said Mercosur would be in a position to require Mr Chavez to "respect the protocols related to the golden rules of democracy", adding that it was important that Mr Chavez was not "isolated".

President Fernando Lugo of Paraguay
President Lugo leads a minority administration in Paraguay

But whatever happens in the Brazilian Senate, the final hurdle for Venezuela's Mercosur membership is likely to be the most difficult of all to clear.

Paraguay is perhaps the most sensitive of all Mercosur countries to the issue of democratic legitimacy, since the democracy clause in the trade bloc's constitution was adopted after the failure of a coup attempt in Paraguay in 1996.

The Paraguayan Senate has no current plans to debate Venezuela's application, since President Fernando Lugo's Patriotic Alliance for Change has a minority in both houses of Congress and knows that it is unlikely to win the opposition over.

At this rate, Paraguay might not ratify Venezuela's status until 2013, when the next congressional elections are due. That would push an already protracted process into the realms of outright farce.

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