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  Félix Peña

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  Abril de 2009

South American Integration, Can Unasur and Mercosur complement each other?

English version of an article published in Spanish in "Nueva Sociedad" N° 219, January-February 2009, and in Portuguese in October 2008, also in "Nueva Sociedad" - ISSN: 0251-3552,

English translation: Isabel Romero Carranza


The South American geographical space constitutes a differentiated international subsystem. Nowadays, the region is increasingly inter-connected, presents a marked diversity and is undergoing a process of profound changes. Within this scenario, the issue of governance becomes one of special significance. Mercosur and Unasur constitute the most relevant initiatives aimed at providing an institutional framework for the South American space. In both cases, Brazil plays a key role. This article argues that, even when problems do exist, both processes can complement each other and contribute to the creation of a peaceful and stable political environment in the region.

South America as a differentiated regional space

South America has the characteristics of a differentiated international political subsystem. These characteristics are related to its geography, its vicinity and its history. Nowadays, they are also related with shared resources and the proximity of its markets. An agenda of the prevailing political, economic and social issues results from these similarities and reflects the shared problems and opportunities that often require collective answers.

In fact, the idea that South America forms a different sub-region is deeply rooted in history and is based on geographic reasons. These, in turn, strengthen the connection between the respective national agendas in a way that the effects of the events of one country deeply affect all the others. This, however, does not imply that it is a separate or opposite space to others such as the Latin American or hemispheric ones. Neither does it deny the existing differences within the same South American space: for example, between the Andean and the Atlantic sides, or between the North, that tends to be included with the Caribbean and is economically more linked with the US, and the South, with a greater tradition of association with Europe.

However, South America is a differentiated regional space which also shows blurred outlines, given that, in several aspects, it may not be distinguished from the more encompassing Latin American and Caribbean space. These unclear boundaries account, in many cases, for the leading role of Mexico in matters related to the political development of the region.

Recent events have shown, once again, the relevance of the regional environment -even in its broader Latin American dimension- for South American countries, especially when complex problems need to be addressed. This was clearly evinced during the Rio Group Summit held in Santo Domingo, in March 2008, when the government of Ecuador accused Colombia of attacking a camp site of the Revolutionary Armed Forces of Colombia (FARC) located within its territory. As it involved the Rio Group, this episode had a Latin American dimension which included Mexico as a meaningful protagonist. The summit helped to dismantle the course towards confrontation that, due to the high degree of complexity and confusion of the case, could have eluded at that time the control of those involved: Colombia, Ecuador and Venezuela (and, to a certain degree, Nicaragua). As a consequence of these results, the Rio Group was able to reinstate its original function, which consisted precisely of providing a collective mediation for the dilution and, whenever possible, the solution of conflicts involving a group of countries of the region whose effects could spill over to the rest. As an offspring of the Contadora Group, the prestige of the Rio Group lies on its track record in channeling off first and then finding a solution to the violence that ruled over Central America during the '80s.

The relevance of the South American space was reflected at the Extraordinary Summit of the Union of South American Nations (Unasur) held in Santiago de Chile in September 2008. Its aim was to analyze and contribute to direct the internal conflicts that have threatened democracy in Bolivia and almost endangered the union of the country. Even when it is still too early to judge the effects of the Summit in the development of the Bolivian political process, the fact is that the Moneda Declaration reflected the ability and political willingness of South American countries to make specific contributions towards the resolution of problems that could alter the peace and stability of the region. The message of the Unasur Santiago Summit was very clear in pointing out that the problems in the democracy of one South American country concern all the others. This would lead to the introduction of rational guidelines that could help neutralize the propensity towards violent solutions. Furthermore, South American countries managed to convey to the rest of the world, with the conclusive force of facts, the idea that they are ready and willing to assume their collective responsibility for the region.

The outcomes of the meetings of the Rio Group and of Unasur have been, to a certain degree, the result of diplomatic efforts -sometimes in silence- at the highest level, undertaken before and during the summits, especially by those countries that have the ability to influence the political evolution of the region. In this sense, there are new expectations regarding the possibility that Unasur might become functional to the exercise of a collective leadership in the region.

The institutionalization of the South American geographic space

Without going back too far in history, during the first decades of the 20th Century there were proposals aimed at encouraging the institutionalization of the South American geographic space through initiatives that usually promoted the idea of a "South American Union". In those years, the vision was especially focused on the south of the region. Even the original proposals, which led to the creation of the Latin-American Free Trade Association (LAFTA), referred to the southernmost countries, generally identified as the "Southern Cone", which in the most comprehensive version included Bolivia and Peru. To a certain degree, LAFTA was the result of the political vision of Argentine President Arturo Frondizi, together with other leaders of the region. The interest of Mexico in taking part in the initiative accounts for the fact that, finally, the organization created by the Treaty of Montevideo of 1960 and the process of commercial integration resulting from it had not only a South American but a Latin American scope as well. The same happened to its subsequent development, the Latin American Integration Association (LAIA) created by the Treaty of Montevideo of 1980, with the participation of Mexico in a leading role (the main negotiation meeting was held in Acapulco and was marked by Mexico's leadership). The creation of the Andean Group in 1969 contributed to manifest the South American identity of the idea of regional integration. This initiative, promoted by the presidents of Chile, Eduardo Frei, and of Colombia, Carlos Lleras Restepo, was intended to counterbalance the prevailing roles of Argentina and Brazil in the inception and development of regional integration, particularly through the LAFTA.

However, in spite of the various integration initiatives that were discussed at different times, the truth is that, until very recently, the Latin American space was marked by a fragmentation logic that was fueled by territorial conflicts and discussions related to shared resources that carried over since the days of the Independence. This same logic was reflected in several armed confrontations, especially during the 19th Century. It was only in the '80s that the majority of the territorial conflicts were finally overcome. Coincidentally, the return of democracy contributed to establish the logic of integration in international relations. From that time on, aside from its economic purpose, integration was perceived as a means of reinforcing democratic institutions and values. Since then, the growing understanding in the so called "ABC" -the triad in the South of the Americas formed by Argentina, Brazil and Chile, that at the same time has been historically related with the US and Europe- generated an incipient integration hard core whose economic and political influence spread all over South American space. This hard core was institutionalized in the Mercosur through the signature of the Treaty of Asunción, in April 1991. Chile was invited to form part of it together with the four original partners and, although it declined to become a full member, implicitly its presence has always been significant. This is demonstrated by the degree of economic integration -which translates into trade flows and investments- that has been reached between the Mercosur and Chile during the last years.

The decision of Brazil to assign a growing relevance to the region in its strategy for development and international insertion has contributed to grant an authentic South American dimension to what once were initiatives limited only to the Southern Cone. This path, that became evident during the presidency of Fernando Henrique Cardoso and has continued, and even accentuated, during the presidency of Luiz Inácio Lula da Silva, has translated into a tendency to encourage initiatives and actively participate in the regional scenario. This participation has also become manifest in the trade flows and investments and in the growing presence of Brazilian firms in the economies of other South American countries. This may be the reason why, since its beginning, Brazil perceived Mercosur as an organization of South American outreach. In fact, when negotiating the Treaty of Asuncion it was the Brazilian representative -the current Foreign Affairs Minister Celso Amorim- who suggested the change of the name from "Common Market of the Southern Cone", as it appeared on the original draft, to "Southern Common Market". This vision of the scope of the integration is coherent if we take into account that Brazil's neighboring context -fundamental for the international affairs of any country- comprises almost the whole of South America. This fact should be taken into account when making any projection as to the role that Brazil aspires to play in the future development of the relations between the countries and even in the identity of South America, as a differentiated region unlike the rest of Latin America.

Thereof that the path which led to the creation of Unasur at the Brasilia Summit in May 2008 began with another summit that took place also in the capital city of Brazil in August 2000. It was, from its origins, a road stamped by an intense strategic purport and, at the same time, with a strong emphasis on energy integration and the physical connection of the South American space. From the point of view of Brazil -among others, for obvious geographical reasons-, the physical and energy infrastructure require a South American outlook. The fact that one of the first concrete results of the Brasilia Summit was the Initiative for the Integration of the Regional South American Infrastructure (IIRSA) is a proof of this, as are the multiple current and potential connections for energy development in the region. Both physical and energy infrastructure demand a regional focus in terms of the funding of the projects and for the creation of institutional frameworks that enable the considerable investments that are required.

In this context, Unasur stands as an attempt to create an institutional space that encompasses the whole region. It was born with the Treaty of Brasilia, signed on May 23, 2008, and in order to be in force it still needs to be ratified by at least nine of the twelve signing countries: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela. At the subsequent South American Summits of Cusco 2004, Brasilia 2005 and Cochabamba 2006, the initiative was called "South American Community". Later on, at the Energy Summit held on Margarita Island in 2007, the name was changed to the current one. In any case, its objectives have remained the same and are quite comprehensive. According to the Preamble of the Brasilia Treaty, the goal of Unasur is to contribute to the consolidation of regional integration through an innovative approach that allows to go a step beyond the simple confluence of the existing sub-regional frameworks: Mercosur and the Andean Community, that have reached a general agreement of economic cooperation, within the scope of LAIA (that contemplates a network of bilateral agreements that may eventually converge in one single free trade space).

Unasur was born then as an initiative with a strong political imprint, which includes an international projection (as reflected by the quite ample statement of article 15 of the Treaty) and which does not exclude the expansion to the rest of Latin America (as affirmed by articles 19 and 20). Additionally, it is an initiative with a strong Brazilian accent, which shows the willingness of this country to promote the institutionalization of a geographical space formed by nations which, on its majority, are its neighbors. It constitutes thus a result of Brazil's leadership impulse that has achieved consensus among the rest of the countries, some of which, such as Chile, have shown a special interest. Chilean President Michelle Bachelet assumed the presidency pro tempore for the second semester of 2008. The signing countries were expected to ratify the agreement during this time, although most of them have not done so yet.

Finally, the idea of the institutionalization of the South American space runs parallel to the trends that can be observed in other regions of the world. Some relevant examples of this are the geographical areas conformed by North America and the Caribbean; by Europe and the Mediterranean and, in particular, by the region of Southeast Asia. The idea of "multi-polarity regionalism" has consolidated in the latter region as a result of a series of government agreements (among which the Association of Southeast Asian Nations is the most relevant) and of a dense network of business connections. This multi-speed and variable geometry regionalism provides examples that are estimated will increasingly influence the integration process of South America.

Future challenges in the institutionalization of South American region

Many are the challenges that need to be faced in order to develop the institutionalization of the South American region. Among them, two stand out: on the one hand is the challenge to reconcile the multiple spaces of regional and global insertion of each country and, on the other hand, is the need to furnish the institutional spaces with a sufficient dose of credibility. Both challenges will be accentuated by the fact that the deep transformations that are taking place in the distribution of power and the global economic competition are generating multiple options for the external positioning of each country. In view of such perspective, no country will accept to be circumscribed to its regional environment only but, on the contrary, will attempt to take the maximum advantage of the opportunities that are opening up in the world. Moreover, the transformations may be explained by the perception that, in general, the existing processes of regional integration are ineffective. This view is a consequence of the cumulative experience of the last five decades, which has not always produced the promised results.

Facing such challenges will require at least three conditions. Fist, is that each South American country develops a national strategy to capitalize on the multiple spaces of international insertion that include the region. Second, is that the initiatives of regional scope are reflected by rules and institutions that have the necessary qualities to permeate reality. Third, is that the commitments that are assumed through the different regional institutions -and particularly those of trade preferential scope- serve to strengthen the development of an efficient multilateral system at a global scale, especially in regards to the trade of goods and services within the rules of the World Trade Organization (WTO).

However, in order to understand these conditions it is necessary to remember that South America has become a geographical space of increased density, with marked differences and a great dynamism. It has acquired, in this sense, a mosaic-like quality and all indicates that it will continue to be this way in the future. To fully grasp the deep forces that have been unleashed in the region constitutes a complex challenge for its actors, both at the political and, above all, at the business level. The region has become more interconnected than ever. The interdependence between the different countries has grown considerably during the last decades, bringing national political and economic systems closer to each other and making them more susceptible to what happens in the neighborhood, which has, increasingly, a South American scale. This dense interconnectedness can be verified in at least three planes. First is that of production and trade: the networks established by transnational firms and increasingly by multi-Latin ones - as well as by a significant number of small and medium enterprises of regional origin- have gradually consolidated, with a particular intensity during the last years. This is reflected in the commercial exchange and the investments, focused mainly in the south of America, and the resulting impact on logistics and transportation. The second plane where the growing density of South American relations can be verified is that of energy in its multiple modalities. On this respect, unlike the previous one, the relations are not concentrated in the south but extend across most of South America. The third plane is that of drug-dealing and the diverse manifestations of violence and organized crime. Its interconnectedness has also accentuated and has become a palpable threat in several countries of the region.

South America is not only a more densely interconnected region but also a more differentiated one, something that foreign studies and analysis have failed to realize. Aside from the differences in country size and level of development, other differences that are a consequence of growing conceptual disagreements have recently emerged. Among these are the concepts of democracy and integration which allow for dissimilar interpretations. Other clearly visible difference is the result of the expectations placed by some of the protagonists on the global challenges faced by the different countries. While some of the nations look into the future and perceive globalization as an opportunity to be seized, others have yet to overcome their histories, with issues deeply rooted in their pasts. In such cases, there is a tendency to see the world around them more as a threat than as an opportunity

Ultimately, South America is a region with a strong change dynamic. Even when the transformations reflect the dynamism of a turbulent world in continuous metamorphosis, some of the changes are of its own crop. Those who do not follow closely the news originating in each of the countries of the region or who insist in analyzing them under the paradigms of the past, run the risk of not understanding what is happening. Facts loaded with future consequences are constantly emerging and it is essential to detect them in time in order to anticipate the changes. One of them is, for example, the discovery of what promises to be a huge oil reserve off the Atlantic coast of Brazil.

All these factors -the growing density, the greater differentiation and the dynamic of change- are important for the approach of the core issue of governance of the South American space, that is, to guarantee the prevalence of peace and political stability in the region. The efforts to allow for the logic of cooperation and integration to temper the natural conflicts and, above all, to neutralize the tendencies towards fragmentation need to be aligned with this perspective. These efforts will require an up to date assessment of the deeply rooted forces that are at work in the South American reality, rich in nuances. Wisdom and political caution will be required as well, above all because it is becoming a multi-polar regional space where, as noted before, each of the countries has several options in terms of its insertion in the world. Diversity generates responses of variable geometry, flexible and at multiple speeds, such as those that have developed in the Asian geographic space (and also, more recently, in the European Union). If the South American reality has a mosaic-like quality as a result of the diversity of situations that coexist in it, it is most likely that this will be reflected in the institutional level for a long time. It is possible that, at least for a while, the regional geographic space is unable to conform something similar to what the European Union currently represents for the European space. This is the reason why only time can bring a clearer notion of what will be the contribution of Unasur to South American governance. If it succeeds in effectively becoming an instance for the reinforcement of democracy, peace and political stability, sustained by nations with a high level of social cohesiveness, its contributions will be worthy. On this respect, the abovementioned Moneda Declaration constitutes an important step towards the affirmation of the future role of Unasur.

However, Unasur also poses several questions. One of them refers to its ability to permeate reality. The yet unfinished experience of the addition of Venezuela as a full member of Mercosur justifies the doubts. Even when the Treaty of Brasilia is formally in force, it will have to demonstrate that it can attain its ambitious goals. It is quite common to find a significant distance between formal constructs and concrete facts in a region where it would seem easier to create institutions than to fully profit from them. This is the reason why the question rises as to whether it might have been more convenient to define Unasur as a system of periodic summits, without aspiring to invest it with legal standing through a formal organization with a set of ambitious objectives.

The other question relates to the coexistence with actual integration processes and, in particular, to the eventual overlapping with an expanded Mercosur. According to the Treaty of Brasilia, the aim of Unasur is to strengthen regional integration through a process that goes beyond the simple convergence of existing schemes. However, at the same time Mercosur, in its expanded version with the addition of Venezuela as a full member and of other countries of the region as associate members, has aspired to fulfill a role of South American scope. Proof of this has been the participation of the leaders of several Latin American countries in its presidential meetings, such as the Cordoba Summit which was even attended by Fidel Castro.

The expansion of Mercosur has had at least two different dimensions. The first one is related to the space of commercial preferences. Through partial agreements (an instrument contemplated by the Montevideo Treaty of 1980) a network of preferences has developed involving other LAIA member countries and, in particular, those which acquired the status of associate members, such as Chile and Bolivia. The other dimension refers to the broadening of the political objectives of Mercosur. The defense of democracy and human rights, together with other social goals, were gradually added to the agenda which the associated countries adhered. Unasur and the expanded Mercosur would have then similar goals, especially in regards to political issues. But, in turn, Unasur should allow for the discussion of matters such as physical infrastructure and energy complementation, which exceed what could be achieved under the current geographical coverage of the restricted Mercour. This is of special importance for Brazil who shares borders with most of the South American countries.

However, beyond the outreach and goals there are two major differences between Mercosur and Unasur. On the one hand, Mercosur is a concrete reality based on legal commitments undertaken by its member countries. As imperfect and incomplete as these may be, it would be difficult to set them aside, considering the trade and investment flows that have developed between the partners in the years since the signing of the Treaty of Asuncion. Additionally, Mercosur has an incipient identity, as is demonstrated by the addition of its acronym to the identification documents of the citizens of its four partners. For its part, Unasur has yet to move past the process of ratification of its constituent treaty. Even when it is possible that this happens very soon, there are no guarantees, especially considering the political differences between some of its members, which surfaced on the course that led to the recent Brasilia Summit. The other main difference between both organizations is that Mercosur -aside from the ongoing political will of the member countries which has weathered numerous difficulties- is based, above all, on agreed trade preferences which are a fundamental pillar for productive integration. Unasur lacks anything of a similar nature. In any case, economic preferences between its member countries will result from the convergence of the network of existing partial agreements or those which are signed within the scope of LAIA.

Two Future Scenarios

The question arises about the impact that Unasur will have on Mercosur. At least two alternative scenarios can be set forth. The first scenario would involve the dissolution not only of Mercosur's most ambitious aspiration of having a South American political outreach, but also the more concrete goal of achieving an integration process that is perceived as an efficient tool for productive transformation. The most negative variation of this scenario would be if Unasur fails to move forward and Mercosur is unable to strengthen its role of encouraging decisions for productive investments in the shared economic space.

In the second scenario, both organizations would complement and empower each other. This would imply a Mercosur endowed with flexible -albeit predictable- instruments that reflect variable geometry and "multi-speed" methods in a manner that it can become the hard core of a larger structure of South American extent. Technically, such thing is feasible. If achieved, Mercosur -without leaving behind the goals of its members- would forward the political objectives of South American scope to Unasur.

When considering this last scenario of complementation, we should take into account that both initiatives, Mercosur and Unasur, have in common the fact that both aim for the governance of the South American region. Brazil, the country with the most relative weight in the area, is an active participant in both of them. Both have an economic purpose but unquestionable political goals as well, since they are concerned with the power relations between the nations that share this geographic space. Both organizations involve the strategies for international insertion of each country and aspire to generate regional public assets to help neutralize eventual tendencies towards fragmentation. In this context, the complementation between Unasur and Mercosur could contribute to the predominance of the logic of integration in the South American space. Such complementation is indeed possible. However, it will require a collective leadership in which all the countries of the region participate and, especially, those who value a regional environment of peace and political stability.

Félix Peña Director of the Institute of International Trade at the ICBC Foundation. Director of the Masters Degree in International Trade Relations at Tres de Febrero National University (UNTREF). Member of the Executive Committee of the Argentine Council for International Relations (CARI). Member of the Evian Group Brains Trust. More information. |

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