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Mercosur Blues

July 31, 2014 Andrés Velasco

Andrés Velasco, a former presidential candidate and finance minister of Chile, is Dean of the School of Public Policy at the London School of Economics and Political Science. He is the author of numerous books and papers on international economics and development, and has served on the faculty at Harvard, Columbia, and New York Universities.

SANTIAGO – When the leaders of Mercosur met in Caracas this week, the usual bluster about standing up to imperialism filled the air. But so did the unmistakable scent of decay.

Mercosur is usually described as a trade grouping; in fact, it has been a political creation from the start. Brazil, the regional powerhouse, always viewed it as a counterweight to the United States in hemispheric affairs. Peronist governments in Argentina used it to hype integration while doing little or nothing to remove actual barriers to trade. With the entrance of Hugo Chávez’s Venezuela in 2006, the lurch toward populism became unmistakable. As a Chilean government minister late last decade, I remember the frustration of attending Mercosur gatherings (Chile is an associate member). They were long on posturing and endless speeches, but short on substantive agreements about anything. At the 2006 summit in Córdoba, when Chávez and Fidel Castro dueled over who could deliver the longest and most rambling address, spirits were running high. Bolivia, also governed by a charismatic populist, was keen to develop closer ties. Ecuador soon followed suit. And a smattering of smaller countries in Central America and the Caribbean fell into political line in exchange for generous infusions of Venezuelan cash and oil. Back then, Mercosur leaders could claim to offer an “alternative development model” for the region. No more.This week in Caracas, the mood was funereal. The host, Chávez’s successor Nicolás Maduro, confronts a collapsing economy and tensions within his own party. Despite relatively high oil prices, Venezuela has a large fiscal deficit and falling foreign-exchange reserves. The inflation rate is the region’s highest, and the economy is stagnating. In the face of popular frustration with worsening living conditions, Maduro’s government has relied on violent repression to put an end to street protests. Opposition leader Leopoldo López spent months in a military prison before recently being put on trial. Institutions like Human Rights Watch have repeatedly denounced the government’s rights violations and restrictions on civil liberties.

Argentina’s president, Cristina Fernández de Kirchner, arrived in Caracas hoping to rouse support in her fight against the so-called vulture funds that bought her country’s sovereign bonds on the cheap and have successfully sued for payment in full. But Fernández found that her colleagues’ polite words of encouragement mattered little. The US Supreme Court’s decision last month to uphold a lower court’s ruling against Argentina put her in an impossible situation. Paying the recalcitrant bondholders would mean losing face and possibly triggering a salvo of copycat lawsuits; not paying would mean technical default and all of its attendant costs. She chose the latter option. Access to foreign capital matters for Fernández, because, like Maduro, she faces a stalled economy and a growing dollar shortage. Domestic stabilization measures earlier this year bought her some time, yet fear of a recession remains. In an effort to regain access to capital markets, her economic team patched up things with the Paris Club of sovereign creditors and Spain’s Repsol (the former owner of nationalized oil giant YPF); but the fight with the vultures has set the country back. With a presidential election looming in October 2015, most potential candidates (even those from her own party) are quickly distancing themselves from her authoritarian style and troubled economic legacy. In Bolivia, President Evo Morales has resorted to legal and constitutional shenanigans to guarantee himself yet another term in office. After two terms, Morales would in theory be prohibited from running again. But Bolivia’s constitutional court has ruled that he can, because the adoption of a new constitution redefined the country as the Plurinational State of Bolivia; Morales, therefore, served his first term as the head of a different state. When asked why he will run again, he replied – in a peculiar confession for a nationalist leader – that former Queen Sofía of Spain had encouraged him to “finish the job.” In Ecuador, too, democratic institutions are under siege. An independent report has chronicled 12 separate episodes of government meddling with court rulings. A controversial gag law on the press that was enacted last year has already ended a major newspaper’s print edition. According to Catalina Botero, the outgoing rapporteur for Freedom of Expression of the Inter-American Human Rights Commission, “Ecuador is, along with Cuba, the country that most restricts freedom of expression.”Brazilian President Dilma Rousseff faces a situation that is both similar to and different from that of her Mercosur colleagues. Brazil is not the kind of country where a president can manipulate the constitution or close newspapers at will. But malaise is in the air in Brasilia (leaving aside the World Cup thrashing delivered by Germany). Brazil’s swift recovery from the 2008 financial crisis endeared it to international financial markets; but weak growth since then has left yesterday’s promise unfulfilled. Despite low unemployment, economic anxiety is on the rise – and is beginning to filter to the political realm. With Rousseff dropping in the polls and her opponents slowly gaining, the October presidential election – once thought to be a done deal – may be up for grabs. Absent from the Caracas summit was Chile’s president, Michelle Bachelet, who blamed a cold and a busy domestic agenda for her inability to travel. Political complications linked to a possible meeting with the Venezuelan opposition, which Bachelet had chosen not to attend (preferring to send her foreign minister), likely also played a part. Rousseff and Bachelet were natural candidates to lead the development of a moderate counterweight to the populism of Maduro, Fernández, Morales, and Correa. But Rousseff, like her predecessor, the popular Luiz Inácio Lula da Silva, has chosen not to fill that role, instead cozying up to Venezuela. Chile is too small to go it alone, and Bachelet has her hands full with increasingly controversial tax, education, and constitutional reforms. Uruguay’s president, José Mujica, offered the best summary of what happened in Caracas: “We issued a statement.” In other words, Mercosur remains an irrelevant talking shop – and the emergence of a modern center-left regional leadership in Latin America will have to wait.


decayослабление, упадок, распад
powerhouseцентр власти, влияния
counterweight противовес
frustration разочарование, расстройство, срыв, крушение
substantiveзначительный, существенный
tensionsнапряженные отношения; трения; конфликт
stalled застойный, тупиковый
loomingнадвигаться, принимать угрожающие размеры
meddling вмешательство 
controversial спорный, дискуссионный


  1. counterweight to 
  2. barriers to 
  3. in exchange for
  4. put on trial
  5. access to
  6. resort to
  7. meddling with/ in
  8. similar to
  9. different from 
  10. on the rise



decayспорный, дискуссионный
counterweight значительный, существенный
frustration напряженные отношения; трения; конфликт
substantiveнадвигаться, принимать угрожающие размеры
tensionsразочарование, расстройство, срыв, крушение
stalled центр власти, влияния
meddling ослабление, упадок, распад
controversial застойный, тупиковый


decaya strained relationship between individuals, groups, nations
powerhousea counterbalancing weight, influence, or force
counterweight subject to controversy; debatable
frustration of a great or considerable amount or quantity; having practical importance, value, use, or effect
substantivea gradual and continuing decline
tensionsto assume form as an event about to happen
stalled stop being effective, working
loominga person, group, team, or the like, having great energy, strength, or potential for success
meddling the act of interfering with or altering something secretly or improperly
controversial a feeling of dissatisfaction, discontent


decaycounterbalance, counterpoise, equaliser
powerhousequestionable, contentious, arguable, dubious, provocative 
counterweight decline, deterioration, collapse, downfall
frustration strain, pressure, hostility, friction, antagonism
substantiveimminent, in sight, impending, on the horizon
tensionsdisappointment, inconvenience
stalled tampering, intrusion, interruption, trespass, interference
loomingman of action, a cooperative unit 
meddling hampered, inhibited 
controversial essential, meaningful, considerable, significant


decaya powerful/ regional/ to Western power/ to skepticism 
powerhouseinfrastructure, economy
counterweight record/ due process/ judgement and recommendation
frustration threat of, crisis in, war, deadline, confrontation
substantivefall into /  in a state of/ mental/ moral/ physical
tensionsdecision, ruling, law, politician, issue, question, matter
stalled technology/ media/ production/ economic
loomingin personal life/ affairs
meddling hope and/ through struggles and/ a mix of anger and
controversial to ease/ escalate/ increase  


  1. counterweight ___ 
  2. barriers ___ 
  3. ___ exchange ___ 
  4. put ___ trial
  5. access ___ 
  6. resort ___ 
  7. meddling ___ / ___ 
  8. similar ___ 
  9. different ___ 
  10. ___ the rise

a gradual and continuing decline

decline, deterioration, collapse, downfall

[mental, moral, physical, urban, radioactive] decay
the [country, nation, economy] is in decay
the [house, building] is in a state of decay
fall into decay
центр власти,
a person, group, team, or the like, having great energy, strength, or potential for success

man of action, a cooperative unit

powerhouse legal firm
technology/ media/ production  powerhouse
economic powerhouse
a counterbalancing weight, influence, or force

counterbalance, counterpoise, equaliser

a powerful regional counterweight to
a powerful regional counterweight to
system of weights and counterweights
a vital counterweight to Western power
a counterweight to skepticism
разочарование, расстройство,
срыв, крушение
a feeling of dissatisfaction, discontent

disappointment, inconvenience

hope and frustration
through struggles and frustration 
a mix of frustration and anger 
значительный, существенный
of a great or considerable amount or quantity; having practical importance, value, use, or effect

essential, meaningful, considerable, significant

substantive record, substantive due process
to make a substantive judgement and recommendation
напряженные отношения; трения; конфликт
a strained relationship between individuals, groups, nations

strain, pressure, hostility, friction, antagonism

diplomatic efforts to ease tensions
escalate tensions 
increase tensions 
stop being effective, working

hampered, inhibited 

stalled infrastructure, economy
надвигаться, принимать угрожающие размеры
to assume form as an event about to happen

imminent, in sight, impending, on the horizon

a looming [threat of, crisis in, war, deadline, confrontation] 
the act of interfering with or altering something secretly or improperly

tampering, intrusion, interruption, trespass, interference

meddling in personal life/ affairs
спорный, дискуссионный 
subject to controversy; debatable

questionable, contentious, arguable, dubious, provocative 

a controversial [book, article, politician]make a controversial [decision, ruling, law]the controversial [issue, question, matter] ofcontroversial [plans, programs, changes] (to)