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Venezuela and South American integration

By OWAIN JOHNSON, UPI Business Correspondent

CARACAS, Venezuela, July 29 (UPI) -- Integration was the watchword of last week's South American regional summit in Guayaquil, Ecuador, and, as at previous summits, the most radical advocates of greater economic and political unity were the members of the Venezuelan delegation and, in particular, President Hugo Chavez.

Chavez counts himself as a disciple of Simon Bolivar, the Venezuelan-born leader who liberated South America from Spanish colonial rule in the 19th century. Bolivar opted to replace the Spanish empire with a federal superstate in the region, although the individual republics soon opted for full independence. Despite the historical failure of his hero's dream, Chavez and his "Bolivarian" government in Venezuela remain heavily committed to the cause of regional integration, which they believe will create a powerful trading bloc able to negotiate on a more equal footing with the United States and the European Union.

There are two regional trading blocs in South America: the Southern Common Market (Mercosur), which groups Argentina, Brazil, Paraguay and Uruguay, with Bolivia and Chile as associate members, and the Andean Community of Nations (CAN), which links Bolivia, Colombia, Ecuador, Peru and Venezuela.

The ongoing negotiations between Mercosur and the CAN were a hot topic at the Guayaquil summit and in their final communique, the 12 heads of state expressed their hope that negotiations on the integration of the two groups would be complete by the end of 2002.

Chavez called for greater urgency in the talks and immediately set the prospect of their successful completion in the context of Bolivar's dream of greater independence for Latin American from the United States and Western Europe.

"He (Bolivar) said the nations of the south should form a single political body. Uniting will give the region greater political, economic and military strength and allow us to negotiate as equals in times of war and peace," Chavez said upon his arrival at the summit.

"His (Bolivar's) vision was that the world should be multipolar and this is beginning to happen. Bolivar is returning once again," Chavez added.

Despite the almost mystical tones in which the Venezuelan president discusses "the Bolivarian dream," the Chavez government has made several concrete proposals as to how increased regional unity might be achieved. Perhaps the most ambitious proposal to date was Chavez's suggestion during the Guayaquil summit that the South American nations should create a single multinational company to exploit all the region's petroleum and gas reserves.

"Venezuela has petroleum and gas; so do Ecuador, Brazil, Colombia, Bolivia, and so why shouldn't we form something like a PetroAmerica company?" Chavez asked. "It would be a multinational oil, gas and energy producer. This is a fascinating idea. There is strength in union, and energy is one of the most important factors in the world's future development." Chavez's proposal raised eyebrows not only in Guayaquil but also among analysts around the world. A company made up among others of Venezuela's PDVSA, Brazil's Petrobras and Colombia's Ecopetrol would indeed be a giant player in the world hydrocarbon market, but the practical difficulties surrounding the creation of such a company seem insuperable in the extreme. The Latin American press has responded with skepticism to the idea, asking who would administer the new company and who would scrutinize the administrators. Other issues include how company profits would be divided. For example, would all the South American countries benefit from the regionwide company, irrespective of whether they possess hydrocarbon reserves?

The political difficulties surrounding the proposal also seem insurmountable. Venezuela, for instance, has the largest proven oil reserves in the Western Hemisphere, and most Venezuelans would naturally be reluctant to share the benefits of this privileged position with their regional neighbors when one-fourth of Venezuelans are still living on less than $1 per day.

It seems highly likely that Chavez's PetroAmerica will never even get to the drawing board, but the Venezuelan government is unlikely to be discouraged, and has made the quest for regional integration one of its key foreign policy and economic objectives.

Venezuela's Minister of Planning and Development Felipe Perez said Sunday that he believed the emphasis on integration at the Guayaquil summit had shown that Chavez "is no longer a voice in the wilderness" and that integrationism now "enjoys crucial support at presidential level." Perez said Venezuela would keep lobbying its regional partners to invest in creating regional transport, power and communications connections, which he said would boost South America's economy and encourage further political integration.

"We are already talking about the definite possibility, as a forthcoming project, of monetary integration," the minister revealed.

Perez said progress was also likely in the near future on the creation of a Regional Financial Stability Fund, which would act as an alternative within South America to the International Monetary Fund, which has been fiercely criticized in the region for its handling of the Argentine crisis.

The minister said Brazil and Argentina should lend their weight to the existing lending fund administered by the Andean Community in order to strengthen the fund and make it able to intervene and shore up failing regional economies.

"Those people who keep proposing neo-liberal systems are already rather devalued, and in their place a new integrationist spirit is growing," Perez said. "We know that we can achieve this aim ourselves via regional cooperation but still respecting the rest of the world."


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