In addition to ALBA (see “The rise of ALBA” 3/11/2014), another manifestation of the process of Latin American union and integration is the transformation of the Common Market of the South (MERCOSUR), which occurred in 2005 and 2006. MERCOSUR was founded in 1991, and it was originally a commercial bloc that included Argentina, Brazil, Paraguay, and Uruguay. Established at the height of the neoliberal project, it had made little progress in increasing commerce among its members, being principally a mechanism that facilitated the penetration of transnational capital. However, by 2006 the orientation of the association had changed. Venezuela had entered the association, and Chile and Bolivia had become associated states. There occurred an expansion of focus beyond commercial accords to the addressing of social, political, and military questions. During its meeting of 2006, Mexico and Cuba were present as invited countries, and MERCOSUR signed an Agreement of Economic Complementation with Cuba.
MERCOSUR now has compensatory policies that take into account the particular needs of the members with smaller economies. It seeks to follow the logic of complementary integration, developing mutually beneficial relations based on the petroleum of Venezuela, the natural gas of Bolivia, the industrial capacity and large markets of Brazil and Argentina, and the advanced knowledge of Cuba in education and health. And it seeks to develop relations that address the social needs of the peoples. Thus MERCOSUR, like ALBA, is a project of integration that is fundamentally different from the previous regional associations of integration and from the integration intended by the FTAA proposal of the United States.
A MERCOSUR project of important implications is the formation of the Bank of the South. The project was proposed by Chávez in September 2006 and was formed a little more than a year later. Seven countries participated in the constitution of the financial entity: Venezuela, Argentina, Bolivia, Ecuador, Brazil, Paraguay, and Uruguay. The Bank is able to supply credit to the countries of the regions without the conditions imposed by the International Monetary Fund, the World Bank, and the Inter-American Bank for Development. It seeks the repatriation of reserves of capital that the governments of the region have deposited in the banks and government treasury bonds of the United States and Europe. And it endeavors to promote the autonomous development of the nations of South America. The bank began with initial capital of seven billion dollars.
MERCOSUR also has undertaken the construction of two gas pipelines connecting the countries of the region. The Gas Pipeline of the South began with a connection of Venezuelan natural gas reserves to Río de la Plata, crossing Brazilian territory. Eventually the pipeline will connect Venezuela, Brazil, Bolivia, and Argentina. A second trans-Caribbean gas pipeline will connect Venezuela, Colombia, Panama, and possibly Nicaragua. The objective is to establish an infrastructure to support the energy sovereignty of the region and to facilitate that the region’s natural gas reserves will be utilized to supply the energy needs of the region, preventing the region’s natural resources from being exhausted in order to supply the consumerist demands of the industrialized countries. The gas pipeline project is being financed by the Bank of the South.
Alongside ALBA and MERCOSUR, an integration project that provides energy assistance to Caribbean countries was formed in 2005 through the initiative of Venezuela. PETROCARIBE is an association of 15 countries of the Caribbean:: Antigua and Barbuda, Bahamas, Belize, Cuba, Dominica, Granada, Guyana, Haiti, Jamaica, Nicaragua, the Dominican Republic, Saint Kitts and Neves, Saint Lucia, Saint Vincent and the Grenadines, Surinam, and Venezuela. The countries of PETROCARIBE are small countries that are highly vulnerable to the fluctuations of petroleum prices and to the high costs of petroleum. As a result of the supplying of fuel without intermediaries, it is estimated the countries of PETROCARIBE saved 455 million dollars in the first two years of the association.
PETROCARIBE is an agreement of energy cooperation that seeks to reduce the inequalities in access to energy resources by means of an alternative structure of exchange that is more favorable and equitable for the countries of the Caribbean. PETROCARIBE coordinates the energy policies of its members, including policies related to petroleum and its derivatives, natural gas, and electricity. It also is developing an infrastructure tied to the refining and storage of fuel that permits the countries to better manage their energy resources. PETROCARIBE seeks the efficient use of energy and the development of an energy infrastructure as well as the development of alternative sources of energy, such as wind energy, solar energy, and others.
PETROCARIBE includes mechanisms for the financing of petroleum purchases from Venezuela. The member states can buy Venezuelan petroleum with a payment of 60% of the price, with the remaining 40% financed at a rate of interest of 1% and a period of payment of 17 to 25 years. And there is the possibility of making payments in the form of goods and services.
PETROCARIBE not only seeks energy integration, but also social integration, and accordingly it is developing projects in education, health, and transportation.
At the First South American Energy Summit, held on April 16-17, 2007 in Isla Margarita, Venezuela, 11 South American heads of state agreed to form the South American Union of Nations (UNASUR). This agreement was formalized by the Constituent Treaty of UNASUR, signed by 12 Latin American heads of state on May 23, 2008 in Brasilia. The member states are Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Surinam, Uruguay and Venezuela. The Constituent Treaty permits the admission of other states of Latin America and the Caribbean as Associated States of UNASUR, and it established the possibility that Associate States can be admitted as new members after five years.
The Constituent Treaty of UNASUR proclaims that “South American integration and union are necessary in order to advance sustainable development and the welfare of our peoples as well as to contribute to the resolution of the problems that still affect the region, such as persistent poverty, exclusion, and social inequality.”
The Constituent Treaty affirms that the principal objective of UNASUR is a comprehensive integration: “The Union of South American Nations has as an objective the construction, in a participatory and consensual manner, of space for the cultural, social, economic, and political integration and union among its peoples, granting priority to political dialogue, social policies, education, energy, infrastructure, financing, and the environment, among others, with a view to eliminating socioeconomic inequality, attaining social inclusion and citizen participation, strengthening democracy, and reducing asymmetries in the framework of the strengthening of the sovereignty and the independence of the States.”
The Constituent Treaty established the following objectives: Social and human development with equity and inclusion in order to eradicate poverty and to overcome inequalities in the region; the eradication of illiteracy; universal access to quality education; energy integration in order to utilize in solidarity the resources of the region; the development of an infrastructure for the interconnection of the region; the protection of biodiversity, water resources, and ecosystems; cooperation in the prevention of catastrophes and in the struggle against the causes and the effects of climate change; the development of concrete mechanisms for the overcoming of asymmetries, thereby attaining an equitable integration; universal access to social security and to services of health; and citizen participation through mechanisms of dialogue between UNASUR and diverse social actors.
In addition to the formation of the above-mentioned associations, the process of Latin American integration has moved forwarded through the signing of many bilateral agreements by nations in the region.
The formation of various associations dedicated to mutually beneficial commercial and social exchanges provided the background for the establishment of the Community of Latin American and Caribbean States, which we will discuss in the next post.
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