Accused of human rights violation, opposition to democracy and rejection of free trades laws, the four founder members of the Mercosur agreement, Argentina, Brazil, Paraguay and Uruguay, request the expulsion of the Bolivarian Republic of Venezuela from the block.
This isolation from its former allies is a harsh experience for the socialist country experiencing the most destructive humanitarian and economic crisis in its history.
The anger and frustration of the Venezuelan population has lead, since October 2016, to widespread of demonstrations claiming the president’s ouster. In the distressed of severe hunger, serious medicine shortages, and the undermining of its protection toward a highly established violence, the population wants a referendum to recall Maduro and apply the rules of democracy. But the government keep postponing the organization of the referendum while intimidating, persecuting and eliminating its critics during demonstrations.
Facing solid and determined opposition, the Venezuela is now losing the support of Mercosur, an establishment that could have benefit the country on its economic crisis as well as on its social one.
An economic isolation
In 2012, the Venezuela integrated the Mercosur, or Common Market of the South, based on a free trade economy with a free circulation of goods and persons. In a country where the price of bread keep increasing and the trade balance remains negative, the free market of Mercosur agreement could have offered a chance to Venezuela to reverse its trade balance and relaunch its ruined economy.
Back under Hugo Chavez Presidency. The Chavism years are marked by the great domination of Venezuela in the oil market production but also by the collapse of its other industries production, iron, steel, ores, aluminium and agriculture. Therefore, between his fascination for socialism and his war against capitalism, Chavez neglected the importance of diversification, and underestimated the danger of a reliant economy.
The oil production became a pillar of Venezuela economy representing 97,68% of the country exports. And in 2013, when the barrel’s price breakdown, the Venezuela economy dropped dramatically and plunged the country in one of the gravest economic crisis ever seen.
In 2016, the IMF recognized the Venezuela as the poorest country of South America with 70% of the population under the poverty line and the collapse of the middle class. It also confirms the highest inflation rate never recorded of 800% and a decline of the GDP by 18,6%. If these numbers are temporary, reminds the Central Bank, they are still a proper representation of the economic situation.
The income from the oil production allowed the country to import every natural resource and live-sustaining good it needed. An effective strategy until the cost-efficiency of the precious resource collapsed. And, deprived of any productive industry to compensate, the trade balance began to reverse divesting the population of food, drugs and electricity.
But what does the Mercosur could have done?
The Venezuela opportunities with the South America market were high and especially with the Mercosur market.
Accept a free trade market means the removal or the reduction of any trade tariff barrier in order to facilitate the circulation and integration of goods and services in the economy. For Venezuela, it would have been a chance to benefit of the importation of cheaper goods but mainly it could have helped in the restructuration of its dying industry, creating employment and increasing its exports.
On December 2016, the four members of Mercosur has addressed a post to Venezuela notifying the revocation of its rights within the block. Nicola Maduro, the successor of Chavez, denounces the Mercosur accusations and these waves of discontent within its population, as the result of United-Stated instructions, its politic enemies, willing to provoke chaos and organise a coup against socialism in Venezuela.
The fierce opposition of Maduro against capitalist ideology and his deny toward the real situation has not only plunge the population in one of the worse humanitarian and economic situation around the world, it has also isolated the Venezuela from its last allies, making its situation well more uncertain for the future.
For further information:
On Venezuela and Mercosur: venez-in-mercosur-implicationes