The DEP Diplomacy, Strategy & Politics Review is a periodical on South American affairs published in Portuguese, Spanish and English. It comprises the Raúl Prebisch Project and is sponsored by the Brazilian Ministry of Foreign Relations (MRE/Funag – Alexandre de Gusmão Foundation and its International Relations Research Institute – Ipri), Construtora Norberto Odebrecht S. A., Andrade Gutierrez S. A. and Embraer – Empresa Brasileira de Aeronáutica S. A. Editor Carlos Henrique Cardim Correspondence address: Revista DEP P.O. Box 2431 Brasilia, DF – Brasil CEP 70842-970 [email protected] www.funag.gov.br/dep International Cataloguing in Publication Data DEP: Diplomacy, Strategy & Politics / Raúl Prebisch Project no. 10 (October/December 2009). Brasília : Raúl Prebisch Project, 2009. Published in Portuguese, Spanish and English. ISSN 1808-0499 1. South America. 2. Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, Venezuela. I. Raúl Prebisch Project. CDU 327(05) D E P DIPLOMACIA ESTRATÉGIA POLÍTICA Number 10 October / December 2009 Summary South American integration 5 Celso Amorim Argentina: economy and international policy. 26 Historical processes Mario Rapoport The transformation of the Bolivian State 50 Luis Tapia The construction of the Brazilian industrial model 70 Amado Luiz Cervo Economy and society in Chile. A history summary 83 Luciano Tomassini Progress and challenges in Colombia today 111 Alfredo Rangel Ecuador’s socioeconomic development 122 Marco P. Naranjo Chiriboga Guyana’s history and economic development 139 Tota C. Mangar Paraguay: the challenges of a landlocked economy 151 Juan Carlos Herken Krauer New perspectives on Peru’s economic development 168 Manuel Burga An overview of Suriname’s economy in the 19th 190 and 20th century Jerome Egger Uruguay, the region and international integration 205 Gerardo Caetano Venezuela’s challenges in the 21st century 252 Jorge Pérez Mancebo Youth on the plantation 269 Sylvia M. Gooswit South American integration* Celso Amorim** I would like to begin with some thoughts and facts related to South American integration in the broader context of Latin American and Caribbean integration. Of course, I do not pretend – nor would I be the most appropriate person to do it – to present a history of all the integration efforts, from Bolivar’s and other libertadores utopias early in our independent life to the first specific attempts with Alalc in the sixties and with Aladi. I will concentrate on more recent efforts, which have already been written about, of which I had personal experience and about which I can add something you may not find in books – or at least a particular view of someone that had the luck or was led by chance or by a coincidence to participate, at various moments, in this integration process in more recent years. I am referring specifically to the Mercosur process, from its outset to the present. I am not going to spend too much time on each of those moments but would like to make a brief reference to each process in which we have been involved. First of all, Mercosur. How did Mercosur start? You have certainly heard about this from other people. You have met Ambassador * Opening lecture of the Sixth Course for South American Diplomats, organized by the Alexandre de Gusmão Foundation (Funag) and its International Relations Research Institute (Ipri). Rio de Janeiro. April 9, 2009. ** Minister of External Relations of Brazil. [email protected] DIPLOMACY , STRATEGY & POLITICS Nº 10 – OCTOBER /DECEMBER 2009 5 South American integration Samuel Pinheiro Guimarães, who was very active in this process, even before Mercosur’s creation, as far as the approximation between Brazil and Argentina was concerned. This was a crucial step. Argentines and Brazilians are well aware of this, and so are other Mercosur members, but this may not be as clear in other countries. As a matter of fact, the great impetus toward Brazilian-Argentine approximation was of a political nature. Since they came out from under military, authoritarian governments, both countries felt the need to establish a community of interests and that such a community could not be restricted to political contacts. They also felt that it was important that it should also encompass economic interests which, of course, were something fundamental. This is why so much emphasis was placed on trade since the beginning of the Brazilian-Argentine approximation. I am referring to the year 1985, when President Alfonsín, whose recent death we deeply feel since he was a great democrat in our region, and President Sarney, who not by coincidence represented us at the tributes to the deceased President, launched a dialogue that covered various issues. Economic issues were not the only ones; nuclear energy, for instance, was another major issue. Up to that time, it was said that Brazil and Argentina were competing, since both wanted to have the atomic bomb, and that an atomic bomb could be launched at Buenos Aires and that Argentina could launch an atomic bomb on Rio de Janeiro, São Paulo or Brasilia. Be as it may, there was this idea of a great rivalry, of fierce competition. This effort also had ramifications in other areas, such as science, technology, and culture. There were many important initiatives. Shortly before the inauguration of the Tancredo Neves Bridge by Presidents Alfonsín and Sarney, an Encounter on Biotechnology was held in Foz do Iguaçu, Brazil, and in Iguazú, Argentina. At that time I was working in the area of science and technology and had some participation in that process as well. The point is that there was a great effort toward economic approximation, which was very important, particularly as far as the political dynamics it generated was concerned. A look at 1985-1990 figures shows that both countries were engaged in a great effort, although trade results were modest. I must add that toward the end of this process in 1988 and 1989, Uruguay began to have some participation in it, when President Sanguinetti was invited to some encounters between Brazil and Argentina. 6 DIPLOMACY , STRATEGY & POLITICS Nº 10 – OCTOBER /DECEMBER 2009 Celso Amorim Since 1990, curiously and even paradoxically, when both Brazil and Argentina have had governments more inclined toward neoliberal policies, and both markets opened widely to the world, something very interesting happened on the level of regional integration. I think that this must be noted to help you grasp the role of State bureaucracies. We often think that events unfold only on one sphere – either on the bureaucratic or the political one. It goes without saying that a political thrust is essential; without political impetus nothing is accomplished, but State bureaucracies often play a role also. As far as the Brazilian-Argentine integration is concerned, and later that of Mercosur as a whole, now with Uruguay and Paraguay as members – at a critical moment when all four countries were opening themselves to the world, it was the bureaucracies that perceived that despite the risks involved, such opening brought a great opportunity for integration, provided we knew how to take advantage of the moment, marked as it already was by this opening toward third countries, for speedier opening to each other. In the early 1990’s, this process was reflected in Economic Complementation Agreement No. 14, a Brazilian-Argentine trade agreement, which more clearly called, subject to schedules and timetables, for the elimination of tariffs between both countries within an ambitious five-year timeframe. We have seen that many things did not take place according to plan. But this voluntarism, which was perhaps characteristic of the politicians of the time, together with the vision of the State bureaucracies, indicated that the hour had come to further the objective of greater approximation between Brazil and Argentina. The combination of these factors enabled a dynamic, irreversible process, which was eventually joined by Uruguay and soon after by Paraguay. Let me tell you a little about how this happened. Some political coordination with Uruguay already existed. Paraguay was experiencing a transition toward a democratic government, and it joined us after this democratic government’s consolidation. An interesting factor ensured that this negotiation, initially between Brazil and Argentina, then extended to Paraguay and Uruguay, resulted, at least in terms of discussions, in something more ambitious than a free trade agreement. Economic Complementation Agreement No. 14 is essentially a free trade agreement. When Paraguay and Uruguay joined in – and this coincided with the launching of the Initiative for the Americas by President Bush, Senior, there was a perception that a common stance should be taken not only by Brazil and Argentina, but also with Paraguay and Uruguay, which were already DIPLOMACY , STRATEGY & POLITICS Nº 10 – OCTOBER /DECEMBER 2009 7 South American integration involved in the negotiations aimed at free trade among ourselves. Why was this fact important? Because it was the need for jointly negotiating with the United States that impelled us to move from the idea of mere trade liberalization to the idea of a common trade policy. This led further to the idea of a common external tariff, another Mercosur characteristic. Despite its imperfections, the common external tariff implies a customs union, a level of integration that goes far beyond simply a free trade area. This factor is very important. I could mention several