Venezuela strengthens Mercosur bloc

After years lobbying for membership, Venezuela was formally welcomed on Tuesday to the Mercosur regional trading bloc, after Paraguay was suspended for replacing its president Fernando Lugo during a controversial trial earlier last month.

Making his first trip overseas after announcing that he had been cured of cancer, President Hugo Chávez arrived in Brasilia for the special summit with the leaders of Argentina, Uruguay and Brazil.

For six years, Venezuela’s membership into Mercosur had been blocked by the Paraguayan Congress, which charged that Chávez’s government was anti-democratic. Paraguay had been one of the regional bloc’s founding members.

Before the summit, Chávez met with Brazilian President Dilma Rousseff and signed agreements for the purchase of six E190 jet airliners from the Brazilian firm Embraer for $270 million. Brazil gave Venezuela the option to purchase 14 more jets for the country’s national airline Conviasa in the near future.

Venezuela’s entry into Mercosur is expected to make the regional trading bloc a powerful economic force. The country has 296 billion barrels in proven oil reserves, one of the largest in the world. Brazil’s own supplies are estimated at 14.2 billion barrels, combined with a recent find off the country’s Atlantic coast, where experts believe there could be an as much as 100 billion barrels.

Venezuela is South America’s fourth-largest country with estimated GDP of $315.8 billion. With 270 million people, it also ranks fourth in terms of population in the continent. Bilateral trade between Venezuela and Mercosur nations has already reached $5.8 billion.

“Venezuela will increase the bloc’s potential, giving it greater geopolitical and global economic dimensions,” said Brazil’s Rousseff during the summit.

Venezuela will have four years to implement the special trade tariffs under the Mercosur pact.

Since its founding in 1991, Mercosur has made some advances in dismantling trade barriers in the Southern Cone. However, its attempt to seek similar trade deals with the European Union (EU) has been less successful.

Paraguay President Federico Franco, who replaced Lugo, said that he would file a protest against Venezuela’s membership. “The problem of Mercosur is not Paraguay, the problem is Venezuela,” Franco said in an interview with the Buenos Aires daily La Nación. “We have seven percent of Venezuela’s GDP, so they see us as ‘little kids.’ But little kids who are proud of our sovereignty.”