Cold Winds in MERCOSUR — Why Chile Must Pay Attention

By Christian Scheinpflug

Recently, a row between the key members of MERCOSUR emerged. The trading bloc includes five full members – Brazil, Argentina, Paraguay, Uruguay, Venezuela — and (almost) five associate members: Chile, Peru, Colombia, Ecuador, and Bolivia on a steady path to membership. Mexico, Japan, and New Zealand hold only observer status.

Essentially, the troubles stem from Uruguay’s attempt to transfer the rotating presidency to Venezuela without consulting the other full members, as the statutes supposedly demand. Thus, Uruguay’s foreign minister Rodolfo Nin Novoa apparently received a visit from his Brazilian counterpart, who promised support in trade negotiations, granted Uruguay reconsiders transfer of power. As reported by MercoPress, Mr. Nin Novoa interpreted these actions as “bullying” and attempts of “buying Uruguay’s vote” to prevent Venezuela from taking the helm. These utterances caused enough dread in Brasilia to summon Uruguay’s ambassador to the foreign ministry, Itamaraty, and load him up with complaints.

Brazil and Argentina as currently the most potent right-wing governments in the Southern Cone, naturally object to a self-proclaimed socialist country taking on an important role, even if it’s just the rather insignificant MERCOSUR presidency, since President Maduro equally doesn’t conceal his loath for them. Such tensions amplify because right-wing governments feel emboldened by the so-called Pink Tide’s disappearance in a swamp of corruption scandals and collapsed raw material prices. On the surface, however, it’s about democracy, as Brazil’s foreign minister José Serra declares: “…a country that holds political prisoners can’t be described as a democratic country.”

But if democracy were the issue, Argentina should explain why it removed pictures of Chile’s former President Salvador Allende and Venezuela’s Hugo Chávez from the Pink House. After all, these were democratically elected, even repeatedly, no matter whether you agree with their politics. So, this one’s about ideological power play.

Venezuela represents a soft target in any case. Mr. Maduro’s Twitter account vividly shows how their propaganda aims to distort the situation. It’s so far removed not only from what even left media report, but also from what Venezuelans coming to Chile because of the desperation in their country tell me.

Confronting the row, Mr. Maduro doesn’t deploy diplomatic subtleties. He abrasively, almost comically, called Brazil, Argentina, and Paraguay the “triple alliance of South America’s torturers.” Topping it of, Mr. Maduro termed Paraguay’s government a “corrupt and narcotics oligarchy,” even though these attributes rather apply to his network.

Maybe Mr. Maduro’s lashing out has triggered Uruguay to tone down and talk now of a “misunderstanding;” still, the key members insist that Venezuela doesn’t comply with MERCOSUR’s human rights commitments, making it unfit to lead.

As I write this, Chilean representatives seem not to have shown interest in getting involved. That’s sensible at this stage. As an associate member Chile can’t steer the process anyway. Furthermore, MERCOSUR constitutes just one of many trade agreements for Santiago, and certainly not the most significant. Still, Chile must pay attention, for independently of whether Venezuela leads MERCOSUR or not, the dispute holds potential for Chile to acquire a more solid position to traverse regional relations.

In case Caracas ascends to the presidency, Chile may feel some heat initially, because the post gives Venezuela a platform to which its ally Bolivia would hook on. Thus, La Paz may fire yet more aggressive rhetoric towards Santiago and worsen relations. This outcome would spark economic troubles as well, largely due to Mr. Maduro’s general ineptitude, but also the involvement of his military backers. Had they felt he doesn’t fit their purpose, they would have disposed of him long ago. I believe he knows that a MERCOSUR presidency carries perks to keep them happy.

In such a scenario, Chile couldn’t hope for trade bonanzas. Yet as key members would begin to turn their backs, Chile could offer to mediate between them and Venezuela. That probably wouldn’t make them all buddies, but it would soften the attacks on the Maduro presidency and so heighten Chile’s influence in Caracas — and diminish that of Bolivia. A short-term gain then, would be less abrasive rhetoric from Bolivia, but more importantly, Chile would in the long run improve its stand vis-a-vis two axes that are key to its regional relations. (These axes run from Lima via La Paz to Buenos Aires, and from La Paz via Caracas to Havanna.)

If, more likely, Venezuela skips the presidency, timing becomes paramount. In this case, Brazil would take the helm, triggering a rightward swing of the bloc that, too, would isolate Venezuela. Chile should watch to what degree that happens. At the right moment, it may offer Caracas to halt isolation by, for example, extracting some cheap yet favourable declarations from the others, or perhaps food trades. In return, Caracas would have to discipline La Paz. If Mr. Maduro’s government objects, Chile could still join Venezuela’s adversaries and push for more isolation, but always offering a way out via mediation. In addition to increased influence in the Southern Cone, this approach would also show Bolivia some limits, which Chile hasn’t achieved for a long time. Working the fundamental mechanics of politics — reward compliance, punish defiance — could do wonders.

Chile had offered such mediation before. I laud these initiatives. If balanced right, a socialist government presiding over a capitalist economy carries some potential in ideologically divided Latin America. Thus, although such a constellation may harm integrity domestically (but nothing the system couldn’t survive), more complex manoeuvring in the international/regional sphere becomes possible.

Unfortunately, Chile doesn’t seem to have fully exploited past attempts, partially due to its liberal, politically correct let’s-all-be-brothers outlook, ignoring the power dynamics in its vicinity. Uruguay, for example, seems to better understand such dynamics, as ex-President Mujica’s support for Argentina’s interests in the Falklands as well as for Bolivia’s in the Atacama enabled Uruguay to gain more leverage than either its military or economy would warrant.

The greatest mistake Chile could make is to remain passive. Timing and determination must prevail to make the MERCOSUR issue work and enhance its ability to manage the urgent conflict with Bolivia, as well as the coming ones over Antarctica and the South Atlantic. The winds in the inter-American system don’t naturally blow fortune towards Santiago.

Christian wrote his thesis on the Anglo-Chilean alliance during the Falklands War. He works as analyst and editor, and lives in Santiago de Chile. Follow him on Twitter @ChrScheinpflug