[Soulflytribe]

Jesus Christ, what is Brazil becoming? A new URSS?

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Uruguay says it was Brazil that forced the incorporation to Mercosur of Venezuela
http://en.mercopress.com/2012/07/02/uruguay-says-it-was-brazil-that-forced-the-incorporation-to-mercosur-of-venezuela

The Uruguayan government revealed on Monday its disagreement with the way Venezuela’s incorporation to Mercosur was decided last Friday at the summit held in Mendoza, Argentina, and said “it was not the last word” since the process must be reviewed from a juridical point of view.



Minister Almagro, “nothing is definitive; the last word has not been said”


“Nothing is definitive” and “if everybody had been so sure about it, Venezuela would have become a full member last Friday in Mendoza. That is why country members are taking their time until July 31st”, said Luis Almagro Uruguay’s Foreign Affairs minister.
Almagro also revealed that the decision on Venezuela’s incorporation to Mercosur was born following a specific request from Brazilian president Dilma Rousseff and it all ended with a private meeting of the group’s presidents, besides Rousseff, Argentina’s Cristina Fernandez and Uruguay’s Jose Mujica, behind doors, with Foreign ministers outside.

“I believe the (Uruguayan) government gave ample evidence of having defended the other position with all its strength, but it was finally decided at a closed meeting of the presidents. I don’t think it can be said it was an imposition from Argentina and Brazil, what happened last Friday”, said Almagro.
He added “it all started with a request from Brazilian president Rousseff and the agreement comes out from that closed meeting. The initiative was mainly from Brazil; Brazil’s position in this entire incident has been decisive”.

Almagro said that as Foreign minister when the final declaration on Venezuela’s incorporation was read out, he left the meeting. “I have the same objections about the legality of the procedure, I have to pass the declaration on to the legal services of the ministry and assess once again the juridical implication of the decision. For me the last word on the issue has not been said; we must comply with the Treaty of Asuncion and current legislation because we have always supported and defended Mercosur”.

Asked about the final declaration from the Mercosur summit in which it was decided to suspend Paraguay until new elections are held, Almagro said that the prevailing idea was “to restrict the Paraguayan participation in the different Mercosur organizations; the country has no right to participate in negotiations until the full democratic order is re-established with new elections”.

But “it was also decided not to apply economic or trade sanctions because of their social impact. During the discussions Venezuela that was one of the countries that applied economic sanctions cutting the supply of oil, she was convinced to continue with the shipments”.

As to the status of the new Paraguayan government, Almagro said “it is plain clear that there has been a rupture of the democratic order and without wanting to open a controversy, I think the only ones in the world that have stated there has been no rupture of the democratic system have been members from the Uruguayan opposition. All Unasur countries have unanimously agreed, no matter what political colour, that the situation clearly indicates the existence of an institutional interruption”.

Further details of the Friday meeting indicate that Brazil’s Foreign Minister Antonio Patriota was not in favour of the immediate incorporation of Venezuela to Mercosur while Paraguay was suspended. That was when Brazilian president Rousseff asked to be left alone with Cristina Fernandez and Jose Mujica, and the Foreign ministers had to abandon the room.

“Contrary to the position from Patriota, Rousseff proposed the incorporation of Venezuela and Mujica was left alone against the two ladies. Finally he had to yield”, confessed Almagro.

The Uruguayan minister has come under a barrage of criticism in Uruguay for having stated that the Paraguayan situation was a rupture of the democratic system, and for supporting the Venezuelan incorporation.

Before leaving Uruguay for the Mendoza summit, Almagro pledged to members of the opposition and the two congressional foreign affairs committees that there would be no economic or trade sanctions on Paraguay and that Venezuela would not be incorporated to Mercosur taking advantage of the Paraguayan situation. This for the simple reason that the Paraguayan congress had always blocked such a move and the process of admission must be respected.
Almagro also pointed out that what happened in Paraguay was a rupture of the institutional order, not necessarily a “parliamentary coup”, and “we are convinced of what we are saying because we were there when events evolved as witnesses and as part of a fact finding mission together with several colleagues”.

“A parliamentary coup is when Parliament taking advantage of circumstantial majorities forces a situation, abuses a situation. The impeachment is included in the Paraguayan constitution, but what is not included is to run over the guarantees of due process and as any political trial must have the maximum defence guarantees for the head of state”, concluded Almagro.

[Social_Critic]

Brazil's position is fairly intelligent. Brazilian industry can out-compete Venezuelan industry, it'll be able to export goods and services to Venezuela, and this in turn destroys Venezuela's private industrial capacity. Which is fine with the Brazilians because their long term objective is to make Venezuela a quasi colony providing raw commodities, mostly heavy crude, in exchange for importing Brazilian goods.

Brazil realizes Argentina is no longer interested in Mercosur, the organization is dying, and they might as well take advantage to wheel to towards Venezuela. The key risk for the Brazilians will be getting paid. I think we'll see some loans extended to the Venezuelans from Brazilian banks, but they will be short term or tied to draconian rules, similar to the ones used by the Chinese.

Venezuela is in economic chaos at this time, with Chavez trying to implement his vision of socialism/communism, something closer to 21st Century Fascism, but Chavez is going to die, so this is going to be really interesting. The rumour now is that Chavez has a double, and the double goes out in public as Chavez lies in bed in pain, as the cancer has eaten into his leg bone and he has to use diapers. But they may be able to parlay the fake Chavez for a while, and continue their misrule and corruption for a while. What's going to kill the regime is the flight of the middle class and the educated Venezuelans, which I expect will be a flood by the end of the year. At that time, expect the borders to be closed, creating some sort of bamboo curtain, followed by economic sanctions against Venezuela for human rights violations, etc. This means the Brazilian game is long term, they're playing this to wait for the Chavez regime to collapse.

[Marauder]

Venezuela has been trying to get in mercosur for about 5 years I think, I'm not sure why, as social_critic said there are not many things produced in the country that can compete out there. On top of it, the private industry was never consulted on this decision.

[Social_Critic]

Geez Marauder, Chavez sees Mercosur as a political agency, not as a free trade arrangement. Then you got to factor in the fact that Chavez doesn't want private Venezuelan industry to thrive - he's pointing them towards a form of national socialism blended with militarism and cult of personality - it's a tropical version of nazi Germany but they chase down the middle class instead of Jews.

Anyway, now that they have made a Chavez double, the fascists in the Chavista camp can keep the real Chavez rotting away with cancer until he dies, then he'll "win the elections" in October, and they'll put in Maduro or some other idiot in charge - after they announce Herr Fuehrer has alas died of patriotism.
This of course will lead to protests, some violence, harsh counter meassures, and a huge flight of Venezuelans out of the country. Which means Miami real estate should be doing quite well by mid 2013. I already got me a property in Ft Lauderdale to see if I can move it to a Venezuelan when the time is right.

[Marauder]

Chavez double?! That one is pretty hard to pull out, specially in speeches, he is a very unique man.

[Smertios]

Geez Marauder, Chavez sees Mercosur as a political agency, not as a free trade arrangement.

Exactly. And the problem is precisely that. If Paraguay and Uruguay are out, there is no doubt Argentina will always agree with Venezuela on any matter. Brazil's opinion will not matter much anymore. And soon, Mercosul becomes a completely political entity, with only Brazil as a moderate member.

There is no question that Venezuela's entry in the bloc is good for Brazil, from the economic point of view. But that is only the case if Paraguay and Uruguay are still there. And hopefully, Chile and all CAN members will continue as associate members.

I think this was a game played wrongly, though. Dilma wanted Venezuela in, she never thought Paraguay and Uruguay might leave afterwards. If they do, I think the only solution will be to completely disband the bloc and start focusing solely on Unasul, instead...

[Social_Critic]

Don't underestimate Brazil's opnion. Dilma is just looking out for Brazilian commercial interests. She knows Chavez is a mental weakling and is sick with cancer, and is playing this for the longer term. These politicians don't mind making pacts with the devil if it brings cash flow to the elites, which in turn support whoever is in power if they bring in the dough. So what Lula did, and Dilma is doing, is look out for Odebrectch and the other Brazilian giants.

I think their miscalculation lies in Venezuela's inability to pay. I don't know who is advising them, but Venezuela is going deeper and deeper in debt, and the economic model Chavez is peddling is a fascist communist model - they are going to either nationalize or hyper regulate everything, meaning that any private industry, agriculture and services which survive will do so under tight government controls and an inept bureaucracy. This of course will shrink the economy and there won't be much cash to pay for these imaginary infrastructure projects the Brazilians think they'll build.

I do agree that Mercosur is toast given Argentina's policies. I suspect that eventually Brazil will shift away from Mercosur unless the Kirchneristas fall from power. But Argentina has always been a sick child, they always elect the wrong politician, so I assume they'll keep on destroying themselves.

[Dark Funeral]

The relationship between Brazil and Venezuela in Mercosul will be strategic and industrial. Strategic in terms of building the necessary infra-structure along the amazon-Orinoco basin, and industrial in terms of coordinating both countries oil industry, which already counts with bi-national projects, such as the refinery Abreu Lima in Pernambuco.

[Social_Critic]

Dark Funeral, your posts sounds like a retread from the Correo del Orinoco. First, there's no need for the two countries to coordinate their oil industries, nor will they do it because Petrobras is a fairly professional firm and pretty well run, and Venezuela's PDVSA is a basket case, poorly run, technically incompetent, and mostly devoted to backing Chavez' political ambitions.

The Pernambuco refinery is being built by Petrobras without PDVSA participation because PDVSA lacks the funds to pay for its share. The deal was originally cut to give PDVSA a share in the refinery and give Petrobras a share in Carabobo (in the Orinoco Oil Belt). But Petrobras balked at PDVSA's terms to work in Carabobo, and the property was eventually put out for bids (I believe either Repsol or Chevron got the license, but it's not producing).

What Brazil is doing is fairly simple, they see Mercosur as a has been, Argentina gutted it. So they are just letting it die, but in the process will try to use it to get deals for Brazilian companies and products in Venezuela. And this doesn't necessarily involve the Orinoco Oil Belt. The plan will fail because Venezuela is going to be a very chaotic place after Chavez dies, the communists won't want to let go, and there's going to be a lot of violence. Meanwhile PDVSA continues to lose efficiency, and the brain drain will accelerate - a large portion of PDVSA's professional staff wants out and are trying to emigrate right now, this will just re-inforce the death spiral, and with the heavy debt load they are taking, the end result will be a bond default and a financial crash. The Brazilians won't get paid, and Dilma's move will be a disaster.

[Magnetonium]

Interesting discussion, guys, I like and am intrigued with several ideas posted. I don't think Chavez has a body double. And I do think that Brazil's interests here go beyond taking advantage of Venezuelan energy reserves. Brazil has strong geopolitical aspirations in the region, as they fight for a multi-polar world in balancing American global domination. Hence, BRIC. But Brazil wants to build something more effective on its own continent, and they have a bright future. Sooner or later Venezuela's Chavez regime will end, but Brazil will only become a stronger rival to America's interests. Brazil may become a protectorate of Venezuela from American interests, for its own benefit of course.

[Social_Critic]

Magnetonium, some points:

1. I agree about the point regarding Chavez' body double. That's purely speculative, but we do know he has terminal cancer, and he's been quite active. I do notice his campaign work is done from a "float", a truck coverted into a portable podium, and his public appearances are very stage managed. Maybe they do have a "spot" double. Time will tell.

2. Brazil doesn't need Venezuela's oil, it has huge offshore reserves and a sizable biofuels industry. For Brazil, as a nation, it makes more sense to focus on its own oil. Venezuela offers terrible terms for oil development, and most of the oil it has left undeveloped is in the Orinoco Oil Belt, which holds a huge volume in place of very low quality oil. This oil is similar to the oil being mined in the Alberta Tar Sands, requires special treatment and conversion into a syncrude before it can be marketed - or it can be blended with lighter crudes to allow it to be pumped and carried by tanker.

3. Brazil can become a stronger rival to US interests, but I'm not sure Brazil and the US have any meaningful differences. Given Mercosur's failure to coalesce into a real union, Brazil is now left with the pieces and Venezuela isn't going to be fit for much for a while because if Chavez wins it's going communist and will become a land of raging red clad troglodytes. If Chavez somehow looses the communists will try to make life impossible for the anti-communist opposition, the country will be extremely violent, and in any case Venezuela only has a population of about 30 million, so bottom line it's not really that important.