In the Journals

March 22, 2012

Mercosur, 20 Years Later


“¿Qué nos enseñan los 20 años del Mercosur?” by Mercedes Isabel Botto, from Nueva Sociedad (Buenos Aires), March–April 2011, pp. 17–25.


On March 26, 1991, the leaders of Argentina, Brazil, Paraguay, and Uruguay met in Asunción, Paraguay, to form the Common Market of the South regional trade bloc (Mercosur). Today, three Mercosur members rank among the world’s top 35 economies in terms of purchasing power, industrial production, and real GDP growth. Annual growth in Paraguay and Uruguay has been among the highest in Latin America, with Uruguay averaging over 8% between 2004 and 2010. Escaping the 2008 global economic crisis relatively unscathed, Brazil joined the ranks of China, India, and Russia as one of the world’s most significant emerging economies.

On the 20th anniversary of its 1991 founding, however, Mercosur was hampered by ongoing disagreement and a lack of leadership on economic policy. According to Mercedes Isabel Botto, author of “What Have the 20 Years of Mercosur Taught Us?” this is partially due to “the absence of a clear hegemonic leader” in the region, leading to a “situation of apparent regional inertia” in which irregularities between national markets hamper growth. Botto gives several reasons for this inertia. The region’s economic heavyweight, Brazil, prefers acting unilaterally on the world stage, rather than bilaterally with Argentina, its leading economic competitor in the Southern Cone. Mercosur’s leadership of the regional economy also faces challenges from the Union of South American Nations (Unasur), which, writes Botto, “has managed to combine the wishes and the priorities of a greater number of countries in the region,” costing Mercosur its “prominence on the international stage.” In 2009, Unasur absorbed Mercosur and the Andean Community of Nations, uniting over a dozen South American nations to create a broader economic and political union.

Despite these challenges, Mercosur has achieved some important victories in integrating the regional economies. Over Mercosur’s two-decade-long history, the integration process has taken two distinct phases. From 1991 to 2000, Mercosur let markets determine the direction of growth, which was concentrated around big corporate industries, including mostly Brazilian and Argentine petroleum and automobile producers. But change was brewing. The decade of neoliberal economic policies failed to “reduce the economic asymmetries between the countries” that excluded small businesses from competing in the marketplace. The smaller Mercosur states, Uruguay and Paraguay, began to “pressure” the trade bloc for equitable changes to the neoliberal economic model.

This paradigm shift toward inclusive economic policies for development centered on directly investing in small- and medium-size businesses to help them link with exporters and compete in foreign markets. In 2006, Mercosur established the Structural Convergence Fund, with the stated goals of promoting social cohesion, developing the economies of less developed countries, and strengthening economic integration. The fund, financed by member states, currently has $100 million and is expected to reach $1 billion by 2020.

Mercosur’s record of cooperation on education and environmental policy is less impressive. In 2002, efforts to establish mandatory national standards to environmentally regulate private and public industry were quashed amid the business community’s concerns that elevating national standards would lead to unwanted tariffs and trade barriers. Mercosur now sponsors a number of weaker, nonbinding obligations covering emissions and pollution. The Competitive Program for the Environment, one of these nonbinding initiatives, was formed in 2002 in conjunction with Germany to help small- and medium-size businesses follow environmentally sustainable practices and to create a system to publicly disclose the emissions of large-scale industries.

On higher education, Mercosur established a common system of accreditation for university degrees. It also works to promote international cooperation between universities, raising the region’s national education standards and facilitating the movement of students and professors between states. Nevertheless, Mercosur’s education policy remains hampered by the failure of member countries to contribute to Mercosur’s education fund. Brazil and other nations continue to resist the Mercosur education policy because, Botto writes, there is an “absence of consensus over the type of initiatives to finance.” Botto is optimistic but skeptical that Mercosur will overcome these challenges.

“We find ourselves before a process of integration in which there are powerful national asymmetries and the absence of clear hegemonic leadership,” she writes. “But in reality, the process of integration continues to advance toward the harmonization of policies.”



Economic Slump Raises Female Poverty


“El impacto de la crisis económica sobre el tiempo, el trabajo y la pobreza de las mujeres,” by Sonia Montaño Virreira and Vivian Milosavljevic, Pensamiento Iberoamericano (Madrid), September 2011, pp. 147–68.


Women face unique challenges in an economic slump. They are more likely to have part-time jobs that are vulnerable to cuts when recessions strike. Due to gender discrimination and unfair societal norms, women tend to share an unequal share of responsibility for child care and household chores, creating additional barriers to finding work. If they do search for work, they have to compete with greater numbers of unemployed men, who are unencumbered by pregnancies and sometimes children.

According to Sonia Montaño Virreira and Vivian Milosavljevic, analysts with the Economic Commission for Latin America and the Caribbean (CEPAL), part-time employment in Latin America’s service industries continues to be “the most important source of work for women.” This includes teaching, nursing, hairdressing, and secretarial positions. Nearly 30% of women work part time in Latin America, compared with only 16% of men. Women’s predominance in part-time work makes them more susceptible to poverty, especially if they are single parents or dependent on remittances from relatives working abroad.

There is a strong link between part-time work and poverty. In Latin America, nearly 33% of part-time urban workers live below the poverty line, with a more severe 44% in rural areas. In 2008, when average household income dropped by 13%, the number of Latin American women in poverty increased. According to CEPAL, the Latin American female poverty index, which measures the ratio between the number of men and women living in poverty, rose from 108 in 2002 to surpass 115 in 2008. Poor women were also hit by a downturn in remittances, which have plummeted 25% since 2007, decreasing household incomes and increasing poverty. Women who face declining personal income and remuneration are additionally affected by their decreasing ability to afford basic necessities, including electricity, water, cooking gas, and sanitary services. “The cost of the crisis will then be double for women” as they “redouble their unpaid labor, increasing their use of time to supply those goods and services that they formerly would buy in the market.”

This has a direct impact on women, and especially on households headed by women. The average income of women-led households tends to be less than that of single-parent households headed by men. Single-parent homes are also more susceptible to poverty than households with two parents. In Latin America, single-parent households are twice as likely to be poor than those with two parents.

Women seek part-time work out of a need for flexible schedules, giving them time to fulfill socially created responsibilities, including child care, caring for elderly relatives, and household chores. Latin American women tend to spend more time on these tasks than men, even if they are employed full time. In Mexico and Ecuador, for example, women with full-time jobs spent an average of about 48 and 30 hours per week on household chores, compared with 12 and 12 hours for men in each country, respectively.

As income declines and the need to work intensifies, women are still expected to fulfill their traditional responsibilities. “The result is an overloading of women’s total workload,” write Montaño and Milosavljevic, “whatever their official workday may be.”



Latin America’s Nuclear Future


“Energía nuclear en América Latina: el día después,” by Gerardo Honty, Nueva Sociedad (Buenos Aires), July–August 2011, pp. 32–44.


On March 11, 2011, a record-setting earthquake hit the Pacific near Japan, triggering a tsunami that struck the country’s northeastern coast, leveling towns, and causing massive destruction to the Fukushima nuclear power plant. In the following weeks, as the Fukushima employees battled to keep the reactor cool after a full power shutdown, over 100,000 tons of radioactive material was leaked into the surrounding area. Thousands of Japanese were affected. Outrage and concern spread across the globe. In the wake of the disaster, many countries moved to reexamine their nuclear programs. Germany, Spain, and Switzerland announced plans to close all their nuclear plants. Bolivia, Peru, and Venezuela also canceled or banned nuclear-energy projects.

A number of Latin American countries, however, have pledged to press on with their nuclear programs. Argentina, Brazil, and Mexico—the only countries in Latin America with active nuclear plants—are planning to expand their nuclear infrastructure, while Chile, Ecuador, and Uruguay are exploring the nuclear option, ignoring some of the troubling lessons of the Japanese disaster.

Gerardo Honty, a sociologist and researcher at the Latin American Center of Social Ecology in Uruguay, argues that Latin American leaders need to consider the many risks and costs associated with nuclear energy over safer renewable energy options:

First, especially in earthquake-prone regions, dangerous leaks and other disasters could easily befall a nuclear plant. Second, the price of constructing nuclear plants is often underestimated. For example, Finland’s Olkiluoto plant faced numerous delays that doubled construction costs from 2005 to 2009. Romania’s Cernavod 2 took 24 years to build, eliminating any would-be financial savings from nuclear energy.

“Nuclear energy presents risks not only because of eventual accidents but also a long list of various kinds of problems that make its use inconvenient,” Honty writes. “It becomes incomprehensible that one would advocate this very controversial and unfavorable solution when there exist alternatives with far fewer impacts and risks.”

According to Honty, Latin America can meet its energy needs without resorting to nuclear energy by encouraging its emerging renewable-energy sector, including the development of solar, geothermal, and wind power. Renewable sources, he points out, currently generate 4% of Latin American energy, almost twice the 2.4% generated by nuclear power. The International Energy Agency predicts that by 2035, one-third of the world’s energy will come from renewable energies, with production in Latin America doubling over the next two decades. Currently, 55% and 32% of all energy in Latin America is produced by hydroelectric and natural-gas plants, respectively.

The “decentralized” nature of renewable energy, says Honty, makes solar, wind, and geothermal power more adaptable than nuclear energy to the current energy infrastructure in many countries in Latin America. For example, most existing power grids could not handle the massive energy load of a nuclear power plant, requiring massive upgrades and investments in energy infrastructure. Unfortunately, says Honty, the adaptability of renewable energy and its very promising prospects are often lost on hard-core advocates of nuclear energy, who insist that nuclear energy is necessary to ensure future economic growth and development.

Many Latin American citizens were gravely concerned by the disaster of Fukushima and have called on their governments to halt nuclear plants. Nuclear-free Latin American countries are proving that development without nuclear power is possible with far fewer risks. Nuclear power is often called “clean energy,” but Honty demonstrates that the ever present danger of a costly disaster vastly outweighs its benefits.




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