South America Leaders Head to Rio Summit

Thursday January 18, 2007

By MICHAEL ASTOR

Associated Press Writer

RIO DE JANEIRO, Brazil (AP) — South America’s lunge toward the left is overshadowing the goal of free trade as the continent’s most prominent leaders arrived in Rio for a two-day summit of the fractured Mercosur economic bloc.

While the Mercosur leaders from five nations plan to consider membership requests from Bolivia and Ecuador and discuss a development fund for the bloc’s poorer countries during the summit beginning Thursday, Venezuelan President Hugo Chavez is lobbying for a socialism for the 21st century'' that seeks to unite the region's economies but has little to do with free trade. The trade bloc was born 16 years ago when Brazil, Argentina, Uruguay and Paraguay pledged to seek economic integration and free trade - goals that have been largely frustrated by cross-border squabbling among its biggest member nations, Brazil and Argentina. Venezuela entered Mercosur last year, but the bloc was put on a potentially explosive path just last week when Chavez began his new six-year term with a plan to nationalize key industries. Analysts are now questioning whether Mercosur's future role will be as a political stage for criticism of Western-style free trade, or as a forceful negotiating bloc that can cut trade deals beneficial to the continent with economic giants such as China and the European Union. Brazilian Foreign Minster Celso Amorim insisted on the eve of the summit that Mercosur is an important player on the world stage, and that its power is growing.Mercosur is becoming stronger every day, and more important to the world,’’ he told the Agencia Estado news agency Wednesday night. Brazil could negotiate on its own with China, but together with Mercosur, it has more leverage.'' Amorim declined to say whether he agreed with Chavez's nationalization drive, saying Venezuelans alone must decide what is best for their country. Some 600 federal troops were deployed to protect the summit at the famed Copacabana Palace Hotel in Rio, where a wave of violence launched by drug gangs killed 19 people last month. During the summit, Bolivia and Ecuador - both led by leftists critical of U.S. economic and political influence - are expected to ask for full membership in Mercosur, leaving some experts wondering about the organization's purpose.Mercosur is no longer about trade, really,’’ said Riordan Roett, director of Western Hemisphere Studies at Johns Hopkins University. The new joiners don't have much to trade, they are opposed to free trade it seems. The organization is more and more political and to some degree anti-American.'' Chavez frequently calls President Bushthe devil.’’ Presidents Evo Morales of Bolivia and Rafael Correa of Ecuador oppose U.S.-backed trade liberalization.

The Mercosur cast is balanced by Brazilian President Luiz Inacio Lula da Silva, who was elected as a leftist but governs as a centrist. He has cordial relations with both Bush and Chavez.

But Silva has led opposition to U.S.-backed efforts for a Free Trade Area of the Americas that would stretch from Canada to Chile. Brazil also has emerged as a key player among poorer nations that have demanded rich countries slash farm subsidies in World Trade Organization talks launched five years ago in Doha, the capital of Qatar.

On paper, Mercosur is a force to be reckoned with, uniting some 250 million people living in an area covering 4.9 million square miles with a gross domestic product of $1 trillion, or about 76 percent of the total for South America.

But member nations have struggled for years to resolve their own trade disputes, and the bloc has become more a symbol of regional unity than a free-trade zone.

Still, the biggest issue for the bloc could be whether it can contain Chavez, or whether Chavez will dilute Mercosur,'' said Agustin Cornejo, a researcher at the Washington-based Institute for International Economics.Mercosur has always upheld democratic principles, but Chavez’s definition of democracy is very crude, even by Latin American standards,’’ he said. ``Will Mercosur leaders look the other way?’’