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Tired of Being Neglected by Brazil and Argentina, Uruguay and Paraguay Woo the US

Uruguay says it is tired of being treated as Argentina’s "little sister" and has begun to rebel against its bigger brother neighbours and assert itself as an economic power in its own right.

In the last few weeks, Uruguayan officials have said they want a free trade agreement with the United States and the country has embarked on the largest industrial project in its history despite opposition from Buenos Aires.

The cattle-raising nation of 3.2 million people feels it got the short end of the stick in the Mercosur trading bloc, which was created in 1991 with South America’s two economic powerhouses Argentina and Brazil, as well as Paraguay.

With a thriving export-based economy held back by trade barriers in the region, Uruguay wanted to negotiate a free trade deal with the US, its top export market, "as soon as possible", Economy Minister Danilo Astori said in an interview published in early January.

The controversial statement, later denied by Foreign Minister Reinaldo Gargano, alarmed Brazil and Argentina because such a deal would mean Uruguay’s withdrawal from an already fragile Mercosur. The talk of a Montevideo-Washington alliance came just days after Uruguay passed a bilateral investment treaty with the US.

"The particular problem of Mercosur is the lack of attention the two biggest partners, Brazil and Argentina, have historically given to Uruguay and Paraguay," said political analyst Rosendo Fraga in Buenos Aires.

"And the two minor partners are reacting by moving closer to the US." Paraguay, the other small and disgruntled partner, is also flirting with Washington.

Last year, it welcomed 400 US troops on its soil, a move that did not please presidents Néstor Kirchner in Argentina and Luiz Inácio Lula da Silva in Brazil, who maintain cordial but firm relations with US President George W. Bush.

"Mercosur is weak … so each country is looking to maximize their limited autonomy vis-à-vis Brazil and Argentina" said Riordan Roett, director of the Western Hemisphere Programme at John Hopkins University in Washington in reply to a question by email.

Uruguay has been unusually defiant in a months-long diplomatic spat with Argentina over a historic 1.8-billion-dollar investment in two European-built pulp mills.

President Tabaré Vázquez has rejected Argentina’s requests to halt construction of the mills to assess the environmental damage they will inflict on the fish and birds of the Uruguay River, shared by the two countries.

Massive protests and road blockades by Argentines living near the future plants have only made the president dig in his heels, emboldened by strong popularity at home.

With regard to the pulp mills dispute, Sergio Abreu, a senator for Uruguay’s National (White) Party and a former foreign minister said that "what Uruguay may do does not affect Argentina or Brazil but what those countries can do, in two or three areas can destabilize Uruguay" and warned President Vázquez against "Argentina’s tendency to confrontation".

"Tabaré Vazquez is at a historic critical juncture in the country’s history and feels enabled to go his own way" said Roett.

But experts doubt the growing dissent will split Mercosur. The bloc has managed to live with internal disputes since its start and is now in expansion mode, recently welcoming Venezuela into its fold and planning to grow further.

Uruguay is likely to want to be part of the action in spite of the mounting trade disputes and name calling, the "grumpy" Mercosur member as referred to in the Brazilian press.

"I see a very productive moment for the region and all these debates in the countries have to end up enriching the proposals for regional integration," Mercosur chief Carlos ‘Chacho’ Alvarez said during a recent visit to Chile.

Mercopress – www.mercopress.com

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