The Push for South American Integration

Leaders of the Community of South American Nations will meet later this year in Bolivia to assess the continental integration process and to finalise positions for their joint meeting with African leaders in Nigeria at year-end. The Government of Bolivia is also planning to convene a social summit to coincide with the meeting of the South American presidents. This forum is expected to focus heavily on the fight against poverty and social inequalities in the region.

One of the ways identified by the presidents to combat such inequalities is to hasten the integration process on the continent. This, they feel, will boost employment opportunities and encourage social and cultural contacts among the peoples of the countries.

Even before the Community of South American Nations was officially launched in December 2004, the leaders had established an action process centred on the integration of communication and infrastructure networks. This became known as the Initiative for the Integration of Regional Infrastructure in South America (IIRSA).

And after the Community’s formal establishment, a Strategic Commission for Integration was created in December 2005 to develop, debate, and discuss various ideas and issues over the next year and to produce a report on concrete proposals to be examined at the Bolivia summit.

The Commission, currently in the discussion phase, is working in five themes of integration: energy, physical, social, financial and institutional. This body, comprising representatives from the 12 member-states, has been working without much fanfare and at the end of August it held its third meeting in Caracas. It plans to re-convene in Montevideo at the end of September to prepare its final report to the South American presidents.

Attempts at energy integration have already started with plans for gas pipeline construction jointly agreed upon by Venezuela, Brazil, Argentina and Bolivia. And Guyana and Suriname are also signatories to the PetroCaribe agreement with Venezuela even though they have not finalised purchasing agreements for fuel supplies.

Further, some neighbouring countries are also discussing the possibilities of expanding cross-border electricity purchases in the efforts to cut costs and improve efficiency in supplies. Currently, Paraguay is also exporting most of its electricity from the huge Itaipu dam to Brazil. And in more recent times, the Brazilian state of Roraima began purchasing electricity from the Venezuela hydro-electric stations across the border. A similar idea for Guyana to purchase surplus electricity from Venezuela has also been touted in the Guyanese media and, when considering the benefits accrued by Brazil in the purchase of surplus power, Guyana should seriously examine the viability of this option.

Already, the IIRSA has planned a series of communications projects aimed at infrastructure integration. In some cases feasibility studies have commenced and financing possibilities are being explored. A road link between Cuidad Bolivar in eastern Venezuela and Linden via Bartica, including river bridges, and the completion of the Takutu Bridge and the road link from there to Georgetown are listed as already approved IIRSA projects.

To further enhance this communication linkage in north-eastern South America, IIRSA has also listed a plan for another road from Suriname across the middle of Guyana to link up with the road to Brazil.

Regarding work on the institutional architecture of the South American Community of Nations, the Caracas meeting agreed that would be a long process. The delegates were unanimous in the view that to accelerate the integration process, non-bureaucratic mechanisms to reduce costs would be essential.

But one of the biggest problems is how to obtain financial support for the ambitious infrastructural projects on the drawing board. With this in mind, a working group coordinated by Venezuela is preparing a report aimed at providing more concrete and substantial guidance to the Commission for its meeting in Montevideo this month-end.

While considering that each country must seek financing of infrastructural projects in its own territory, Venezuela has proposed the creation of a Bank of the South to provide much needed assistance. The chairman of the meeting, Venezuelan Integration Minister Gustavo Marquez Marin, explained that this projected bank would reverse the cycle of South American de-capitalisation produced when the savings of the region, such as the national reserves, are placed in the banks of the more developed countries, thus reducing their availability to solve the economic problems of the region’s people.

While this proposal is innovative, the establishment of this bank depends on whether or not it obtains support from all the South American countries as well as those of the developing world.

In the meantime, the Andean Development Corporation (CAF) is already involved in providing financing for feasibility studies for some of the projects including the Venezuela-Guyana road link.

Currently, there are two main sub-regional groups in the Community – Mercosur and the Andean Community. Chile, which stood outside both groupings, recently stated it would rejoin the Andean group. Since the South American Community of Nations has a central focus on trade in its inter-continental relations (with the European Union, the Arab states and Africa), this is a wise decision by Chile to operate within one of the two sub-regional blocs now working under a cooperation agreement.

With regard to Guyana and Suriname, both members of Caricom, it thus becomes important for them to establish either associate or observer status in either group – preferably Mercosur – since Caricom by itself is not a sub-regional group within the continental body. This will likely enable them to engender trade benefits while promoting their further physical, social and economic integration with the rest of South America.

Caracas, 21 September 2006

(The views expressed in this article are solely those of the writer and not necessarily those of the Government of Guyana.)

(Dr. Odeen Ishmael is Guyana’s Ambassador to Venezuela.)