Mercosur confronts global crises

July 13, 2008

In stark contrast to the thumb-twiddling of the G8 overlords, who meet on July 7-9 to decide on taking as little action as possible on climate change and the developing global food and fuel crises, the June 30-July 1 summit of the Common Market of South America (Mercosur) was one more demonstration of the role being played by Venezuela — together with other South American countries — in charting a way out of these crises.

Held in the northern Argentinian city of San Miguel de Tucuman, the 35th summit of the presidents of Mercosur nations brought together the leaders from Argentina, Brazil, Paraguay and Uruguay — who are full members of the trade bloc — along with leaders of its associate members Chile, Bolivia, Ecuador, Colombia and Peru.

Venezuela, currently an associate member, is awaiting the approval of the Brazilian and Paraguayan parliaments in order to become a full member, while Uruguay raised the fact that Mexico, currently an observer, was interested in becoming an associate member of the bloc.

Mercosur represents the fifth largest economic bloc in the world. Together with the Community of Andean Nations (Peru, Bolivia, Ecuador, Colombia), these two blocs formally launched the Union of South American Nations (Unasur) in May.


The question of the growing food crisis was high on the agenda of the summit, with Argentinian President Cristina Fernandez warning that "not long ago, nobody could imagine the food problem would mushroom so swiftly, with situations that take you back to the Middle Ages and people dying over a grain of food, or a crust of bread".

According to the United Nations, the number of starving people in the world could rise from 800 million to 860 million, with some 200 million affected by poverty in Latin America alone — almost 40% of the region's population.

"Mercosur is a regional group that is powerful in the production and export of food and energy", Argentinian foreign minister Jorge Taiana said. South America is the largest food producer in the world, and is responsible for 15% of world oil production. "It's a good moment to reinforce our will to work to see how we can position Mercosur more clearly."

Fernandez added that "the situation of food and energy prices presents the region with an enormous opportunity if we can take advantage of it with solidarity and regional integration".

Leading the charge, Venezuelan President Hugo Chavez proposed that Mercosur implement a "petro-food" strategy.

Outlining one of his proposals, Chavez stated: "As long as the price [of oil] is above 100 dollars, we propose setting up a fund. For each barrel of oil that Venezuela exports, we propose donating US$1 to a fund. That is $920 million a year."

He called this "a modest figure for the magnitude of the task that lies before us, but we are willing to do this right now as long as there is a group of countries that will unite in a plan to produce foods in emergency".


Chavez stated "we're not trying to convert food into fuel but the reverse: petroleum into food" — a direct attack on what he called US President George Bush's "crazy plan to use foodstuffs to produce biofuels". Recently leaked documents from the World Bank suggest that this move to turn food into fuel is responsible for 75% of the price increases in key agricultural products.

In order to facilitate this proposal, Chavez called on the other government to move forward with the project of Petrosur, which seeks to unite regional oil companies and which he likened to a South American OPEC.

Chavez also vowed to push forward with an "axis of growth" that would link up Brazilian industry, Argentinian agriculture and Venezuelan energy. The presidents of these three countries held a trilateral meeting where they discussed this proposal.

Chavez also expressed interest in Argentina and Brazil's plan to move away from trading in US dollars and towards using national currencies, decreasing their economies dependency on the US dollar.

Looking at the broader economic picture, Fernandez laid the blame for rise food prices at the feet of financial speculators, drawing a connection between these price rises and growing world financial crisis. "When banks start to flounder, when no bank is reliable, speculative movements start in the food sector. The 'casino' economy, speculation, which was circumscribed to the financial realm, are now starting to move on to the world of foodstuffs."

In recent times, the governments of Venezuela, Bolivia and Argentina have faced stiff resistance from large agricultural producers, as each has attempted, to varying extents, to attack the interests of these important economic sectors.


Also in the summit's firing line was the European Union (EU) decision in June to allow the detention of irregular immigrants for up to 18 months before deportation. Many South Americans have migrated to Europe in search of a livelihood and in order to send money back to help their families survive as a result of the onslaught of neoliberal policies in the region.

The EU want to build a "wall in the Atlantic", Chavez said. "Civilized Europe — I say that ironically — has legalised barbarism", he added, calling for a strong united campaign "in defense of the dignity of our people".

Referring to the recent US decision to reactivate its Fourth Fleet in Latin American waters, Chavez asked the question "what reason could the [US] have for sending a naval fleet so powerful to a region in peace?

"I have no doubt that what we are dealing with is a threat. They want control over the Orinoco [where huge Venezuelan oilfields are located], over the Amazon and over the Parana. We need to be prepared to see what it is they want to do here."

In his intervention, Bolivian President Evo Morales raised his support for the creation of a Security Council of Latin America.

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