I. The Mercosur level:

Is Mercosur becoming increasingly irrelevant for its original member countries, at the economic but also at the political level?

In some way Mercosur seems to be loosing its original appeal.

As a playing field, it is perceived as to small - and to weak as a platform to improve the capacity to negotiate and to compete at the global arena - not only for Brazil but even for the smaller members.

1. Factors that could explain this perception:

• The original "road map" has not been fully implemented even in its less ambitious goals: Mercosur is far to be a real common market and the original triangle of trade negotiations (Mercosur-US-EU) has failed at least until now;
  
  
• After Mercosur was launched the global scenario has suffer deep changes both at the economic (i.e. WTO/DD Round; China, India and other new protagonists; trade and investment as internal transactions within transnational productive and services networks) and political level, (i.e. September 11 and March 11; Irak War; transnational criminal networks) and, at the same time, South America - not only Mercosur - is not in the radar screen that follow the main issues of the political agenda of the big powers (i.e."2007 US-EU Summit Political Report" - April 30, 2007). But the new global landscape offer a lot of opportunities that are available and accessible for countries rich in natural resources as are almost all those of South America, and
  
  
• Member countries do not perceive clear "win-win" results, as a consequence of a significant gap between the original strategic idea and road map, and its actual achievements.

2. However, Mercosur continues to have relevance at least at three levels:

• As a source of rules that are applied to intra-Mercosur (plus Chile) trade - in some way also investments - and to its extra-Mercosur trade (the common external tariff);
  
  
• As a core group (Mercosur plus Chile) for political stability, open society and democracy within the South American geographic regional space, and
  
  
• As a symbolic reference of the idea of integration among its member countries (nobody would like to afford the political costs of failure).

3. Even if it is less relevant than years before, it is difficult to realize which could be a realistic and reasonable Plan B to Mercosur for each of its original member countries, as soon as we consider simultaneously political, economic and even legal factors. Its transformation in a kind of FTA presents strong political, economic and even legal difficulties. The gradual metamorphosis of Mercosur as a formal process of integration (that in some way is already taking place) appears to be the most reasonable approach to assure its future.

II. The South American level:

Is the South America geographic regional space becoming increasingly differentiated as an international power subsystem (especially with respect to the Latin American and Hemispheric spaces)?

Could it eventually replace Mercosur as the main regional playing field for its original member countries?

In some way South America, as an international power subsystem and as the main focal point for integration efforts, is becoming the new vedette, particularly at the media level. But it seems that it do not have yet a very well defined profile and sufficient attractiveness for the public opinion of all the countries of the region.

1. Some factors that could explain its emergent relevance:

• The historical roots (Robert Burr) that even today have an influence in some of the bilateral tensions or even conflicts (i.e. "papeleras", Itaipu, among others);
  
  
• The new role of energy in the regional power game (plus the Chavez factor), and
  
  
• The challenges of developments leading to an eventual pax mafiosi (Juan Tokatlian).
  
  (They represent problems that cannot be solved only at the national or at the Mercosur or Andean Community level, even if they could have a strong impact in their strategies and images).

2. As a geographic regional space and as a differentiated international power subsystem, South America presents some main traits:

• Multipolarity in terms of real power distribution among its countries and of their capacity to be relevant protagonists (no space for hegemonic or unilateral leadership even from abroad, i.e. US, EU, China);
  
  
• Differentiation of multiple layers of economic connectivity with variable geometry (markets connections; energy potential complementarities and networks; logistic and physical distribution of good; networks of services), and
  
  
• A trend toward some dissonances (even ideological), particularly on the concepts of open societies and democracy, on the perceptions of external challenges and of the international power and economic competition.

III. Some challenges ahead

1. At the Mercosur front:

• Identity (political project? economic project? a South American dimension?);
  
  
• Efficacy (how to overcome the gap between political will and effective rules and concrete results?), and
  
  
• Credibility and social legitimacy (how to convince firms to invest for the larger market and how to build strong citizens support?)
  
  If a Plan B doesn't exist, how to improve institutional quality and how to conciliate methods of variable geometry and multiple speed, with a reasonable degree of predictability on the rules of the game?

2. At the South American front:

• A certain degree of multilateral institutionalization (is the new born South American Union the right framework?) (are other approaches possible, i.e. a kind of Energy Charter Treaty, and best practices for trade and investments within the LAIA framework?);
  
  
• A convergent approach for different national interests, realities and visions (a kind of Deng Shiao-Ping philosophy: "What matters the color of the cat as long as it catches mice"), and
  
  
• The recognition that even the South American space is small in terms of the new opportunities and challenges represented by the global economic competition and security agenda.

3. At each national front:

• Multilayer and dynamic external strategies;
• Social cohesion and harmony, and
• Home grown domestic productive transformation strategy.

Main conclusions:

At the Mercosur level:

• The working together through a common market idea, will require an clever mix of instrumental flexibility and enforced collective disciplines - quiet a challenge for the technical level of governments, business sector and academia -;
  
  
• Mercosur could continue to be an strategic project within a larger South American framework, but its (WTO consistent) heterodoxy will increase, and its relevance for its member countries will strongly depend on the quality of their own national strategies, both at the domestic and international level.

At the South American level:

• A pattern of reasonable regional governance, will require a strong effort to build areas of convergence among different national situations, visions and interests - quiet a challenge for the political leadership -, and

At each national level:

• A feasible multipolar and dynamic external strategy will require a clear definition of domestic priorities and needs, and a good diagnostic of which is the real margin of international action for each country, according to its perceived value for other countries at the global and regional level - quiet a challenge for all the political and social protagonists and, perhaps, the main lesson to draw after almost fifty years of dreaming with the idea of Latin America integration -.