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MERCOSUR: the first casualty of Argentina's Kirchner

By Tony Pagliaro

20.04.06 | The Southern cone integration effort, known as MERCOSUR, is certainly little more than a mere protectionist scheme agreed upon to defend Brazilian and Argentine inefficient industrial sectors from foreign competition. Its Main Members are: Argentina, Brasil, Paraguay and Uruguay. Two big countries and two very small ones, therefore.

All along the recent months both small members, i.e. Paraguay and Uruguay, have expressed their deep disappointment on the uneven functioning and results of MERCOSUR that damage their economies and does not allow them to trade with countries offering better opportunities.

This is probably the reason why both small countries are now, on the side, flirting with the idea of negotiating and executing free trade agreements with the United States, structured on a fair basis.

MERCOSUR has suddenly become a major casualty in the conflict between Mr. Kirchner and Uruguay on the pulp and paper mills under construction on the east side of the Uruguay river.

Uruguay, as a consequence of Mr. Kirchner’s bullying attitudes, will not attend the forthcoming MERCOSUR meeting, to be held in Buenos Aires. First time ever. And a major signal to the other members of such integration effort.

This is an early signal that suggests that all Argentines may end up paying a very high economic and political cost as a consequence of Mr. Kirchner’s exceptional defense of his close political ally, Governor Busti of Entre Ríos, whose future is at stake and who does not want the industrial plants to become a reality on the other side of the international river, since they will become a permanent reminder of his obvious failure to attract foreign investment.

Nobody likes bullies. Both Kirchner and Busti cannot avoid acting as such and unfortunately, as we do say above, Argentines may pay dearly for such an unusual and uncivil political “style”.

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