Venezuela joins Mercosur trading bloc

(L-R) Hugo Chavez, Dilma Rousseff, Jose Mujica and Cristina Fernandez de Kirchner, 31 July in Brasilia (L-R) Hugo Chavez with the leaders of the other full Mercosur members; Brazil, Uruguay and Argentina, in Brasilia

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Venezuela has joined Mercosur, six years after first applying to join the South American trading bloc.

President Hugo Chavez went to Brazil for the ceremony, in his first official trip abroad since being diagnosed with cancer more than a year ago.

"We have waited for this day for many years. This is our path, it is our project, a South American union," said Mr Chavez.

The Venezuelan president is running for re-election on 7 October.

He says he is now fully recovered from his cancer, which took him to Cuba several times for medical treatment.

Mr Chavez was welcomed in Brasilia by President Dilma Rousseff and the leaders of the other full members of Mercosur - Argentina's Cristina Fernandez de Kirchner and Uruguay's Jose Mujica.

Venezuela's inclusion was made possible with the temporary suspension of Paraguay in June over the impeachment of president Fernando Lugo.

Analysis

With a presidential election just two months away, Venezuela's admission to Mercosur is good news for Hugo Chavez.

It ends a long drawn out process that began in 2006 and is a chance for the Venezuelan leader to argue that his country is not economically isolated.

In the same year Venezuela left the Andean Community of Nations, the region's second largest trade bloc, which includes key allies of the United States.

Now Mr Chavez can strengthen links with governments that - with the exception of Paraguay - are sympathetic to him.

He argues that Mercosur will give Venezuelan businesses access to a vast market, helping to reduce his country's dependence on oil.

However, uncertainties remain. Paraguay, which is temporarily suspended from Mercosur, continues to argue that Venezuela's admission to the trade bloc breaks the organisation's own rules, which require the decision to be unanimous.

While at home, some Venezuelan businessmen fear joining Mercosur will lead to a flood of cheaper imports causing economic pain instead of gain.

The fast-track trial by the Paraguayan Congress was seen undemocratic and unfair by other Mercosur members.

Venezuela's admission to Mercosur was blocked for years by Paraguayan congressmen because of concerns about Chavez's democratic credentials

'Oil interest'

A statement by the Brazilian foreign ministry said "the incorporation of Venezuela alters the strategic positioning of the bloc, which will now extend from the Caribbean to the extreme south of the continent".

Brazil said Mercosur was "also positioning itself as a global energy power in renewable and non-renewable resources".

Before the summit in Brasilia, Mr Chavez signed a separate agreement with President Rousseff to buy six E-190 airplanes by the end of the year.

The planes, made by Brazil's Embraer, are to be used by Venezuelan airline Conviasa.

Mr Chavez said Venezuela, which is one of the world's largest oil producers, may in turn export crude oil to its southern neighbour.

"We proposed it and President Rousseff was very, very interested. Brazil is still importing oil and we are increasing production."

But Venezuela's admission to the trading bloc remains controversial also in Venezuela, where local farmers fear an influx of cheap agricultural products from Brazil and Argentina.

Other associate Mercosur members include Bolivia, Chile, Colombia and Peru, but they have little influence in the main decisions and no veto power.

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