Mercosur Suspends Paraguay; Venezuela Becomes Member

June 29, 2012

After meetings this week in the wake of Fernando Lugo’s impeachment and removal from office just one week ago today, Mercosur/Mercosul has decided to suspend Paraguay from the organization. This decision was made with the understanding that Mercosur would not issue sanctions on Paraguay, a move that, as I said yesterday, would have more directly impacted member countries’ own economies, particularly Brazil. Of course, the suspension did not go far enough for some members. Associate member Ecuador says the bloc also has the right to close off all borders with Paraguay if it finds wrong-doing on the part of Congress. This move would be remarkably damaging, though, as it would effectively quarantine one of Latin America’s only two landlocked countries from trade with any of its neighbors. This move would be extremely punitive not only on Paraguayan industry, but on the daily lives of millions of Paraguayans who depend on imported goods for basic living and who had nothing to do with the impeachment itself. Fortunately, other countries have not talked up their intentions to do this to Paraguay, but should it get to that point, it will be absolutely devastating.

That said, by relying on suspension but not sanctions, it seems that the members of Mercosur have found a way to take a stand against political maneuvers that undermine democratic stability, even while working to protect their own national economic interests. And while one can question the overall power and/or effectiveness of Mercosur, the suspension is not toothless. Paraguay depended in no small part on trade within Mercosur, and the trading bloc is a place for countries to attempt to settle regional trade disputes and negotiations, an arena that Paraguay is now excluded from. Thus, this suspension from the organization will likely have very real immediate and possibly long-term impact on Paraguay, depending on how long the suspension lasts.

With Paraguay’s suspension, Venezuela was also finally able to become the fifth full member of Mercosur (though it is technically the fourth full member now, as Paraguay is out). Uruguay, Argentina, and Brazil had all ratified Venezuelan membership in their own congresses, and it was only Paraguay’s congress that was holding up the process; with Paraguay out of the picture, Venezuela joined as a full member, suggesting that South America will continue to work towards broader economic ties and interests, a process that, at least for the time being, Paraguay finds itself shut out of, due largely to the actions of its Congress.

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