VZCZCXYZ0012
RR RUEHWEB

DE RUEHMN #0726/01 3451914
ZNR UUUUU ZZH
R 111913Z DEC 09
FM AMEMBASSY MONTEVIDEO
TO RUEHC/SECSTATE WASHDC 0081
INFO MERCOSUR COLLECTIVE

UNCLAS MONTEVIDEO 000726 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECIN ECON ETRD UY
SUBJECT: MERCOSUR SUMMIT PREDICTABLY SHORT ON ECONOMIC PROGRESS, BUT 
OFFERS POLITICAL SOAPBOX 
 
REF: MONTEVIDEO 700; MONTEVIDEO 718 
 
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SUMMARY 
 
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¶1. (SBU) SUMMARY:  On December 8, heads of state of Mercosur's four 
full members and aspiring member Venezuela gathered in Montevideo 
for the bloc's 38th Presidential Summit.  As expected, (ref A) 
dialogue at the summit focused more on regional politics and less 
on tangible progress of the economic bloc, which was scarce. 
Summit leaders signed a strident declaration refusing to accept the 
results of the November presidential elections in Honduras.  On 
Colombia, Venezuela's President Chavez said there would "never be 
war with a brother nation," but railed against U.S. use of 
Colombian bases and lambasted Colombian President Uribe for giving 
asylum to individuals alleged to have attempted to assassinate him. 
Leaders at the summit failed to advance long-standing issues such 
as elimination of the double imposition of the common external 
tariff and agreement on a customs code, but reaffirmed the bloc's 
intent to further free trade discussions with the EU and extended 
the temporary admission system, which allows some imported 
materials to enter free of tariffs, until 2016.  END SUMMARY 
 
 
 
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MERCOSUR'S 38TH SUMMIT 
 
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¶2. (U) On December 8, Montevideo hosted the 38th Presidential 
Summit of Mercosur; the Southern Cone Common Market composed of 
Argentina, Brazil, Paraguay and Uruguay that has Chile and Bolivia 
as associate members, and to which Venezuela is in process of 
adhering.  The presidents of Argentina, Brazil and Paraguay and 
aspiring member Venezuela were in attendance.  Colombian Vice 
President Francisco Santos participated as an observer while Chile 
and Mexico each sent their Foreign Ministers.  Peru was represented 
by a mid-level official and Bolivia chose to not attend. 
 
 
 
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REGIONAL POLITICS TAKES CENTER STAGE 
 
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¶3.  (U) The Presidents of the four full members of Mercosur and 
Venezuela signed a declaration condemning the "coup" in Honduras 
and refused to recognize the result of the November 29 Presidential 
elections in that country.  In the declaration, the presidents 
stated that they "reiterate their most energetic condemnation of 
the coup d'etat in the Republic of Honduras and consider 
unacceptable the serious violations of human rights and fundamental 
liberties of the Honduran people."  The declaration called the 
elections unconstitutional, illegitimate, illegal and a blow to the 
democratic values of Latin America and the Caribbean.  In her 
summit speech, Argentine President Fernandez de Kirchner hinted 
that Mercosur should apply economic sanctions against Honduras and 
emphasized her belief that the matter should be resolved in the 
OAS. 
 
 
 
¶4.  (SBU) Venezuelan President Chavez used his 10-minute time 
allocation, and several subsequent interjections, to rail against 
the U.S. presence in Colombia, Colombia in general, and "Mexico's 
intervention in Honduras," for nearly an hour.  Chavez also 
criticized Colombia for giving asylum to those accused of trying to 
oust him in 2002.  Vice President Santos countered that his country 
has not shown aggression towards its neighbor and that asylum, like 
it or not, was a well-established institution in Latin America.  He 
pointed out a couple of Colombian fugitives currently enjoying 
asylum in Brazil and Uruguay.  There was a single positive exchange 
between the two, when Chavez said that Venezuela would never go to 
 
 
war against a brother nation.  Santos welcomed that comment. 
 
 
 
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MERCOSUR DEVELOPMENTS 
 
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¶5. (SBU) Leaders at the summit did not advance long-standing issues 
such as elimination of the double imposition of the bloc's common 
external tariff and agreement on a customs code.  Paraguay's 
President Lugo took the mantle usually carried by Uruguay, and 
criticized the function of Mercosur and the bloc's failure to 
address economic asymmetries.  As the host, President Vazquez did 
not dwell on the lack of progress on its key goals:  harmonizing 
competitiveness-distorting public policies, eliminating current 
non-tariff barriers (NTBs), and adopting mechanisms to deal with 
new NTBs. 
 
 
 
¶6.  (SBU) Mercosur extended its temporary admission system until 
¶2016.  That system offsets some of the effects of double 
application of tariffs.  The temporary admission regime allows 
imported materials, which are later re-exported, to be free from 
tariffs and is an important, legal loop-hole that benefits 
Uruguayan industry. 
 
 
 
¶7.  (U) Mercosur also reaffirmed the bloc's longstanding stated 
intent to further free trade discussions with the European Union, 
announcing a meeting in the first half of 2010 when Spain and 
Argentina will hold the EU's and Mercosur's presidencies, 
respectively. 
 
 
 
¶8. (U) Brazilian President da Silva argued in favor of Venezuela's 
adhesion to Mercosur, saying it would add scale and balance to the 
bloc.  During his discourse, he predicted his country's senate 
would affirm Venezuela the next day.  NOTE: On December 9, the 
Brazilian senate postponed its decision on the matter.  The 
Paraguayan parliament has yet to take up the matter.  END NOTE. 
 
 
 
¶9. (SBU) After the summit, emboffs met three of the four Mercosur 
Secretariat technical consultants to discuss its outcomes.  While 
the group admitted politics took its usual place at the center of 
Mercosur discussions and several key issues seem to be on ice, they 
noted that the bloc continued to strengthen and refine its 
institutions, and cited progress in certain areas that remained in 
the background.  For example, an earlier decision to allow open 
residency within Mercosur was implemented during Uruguay's 
presidency.  In addition, they noted progress to increase 
coordination of judicial processes, and reciprocal recognition of 
certain academic degree programs, especially in the medical fields. 
Mercosur may not stand up to the economic integration achieved in 
the EU, the officials said, but it is doing reasonably well when 
compared to other economic blocs. 
 
 
 
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COMMENT: POLITICS AS USUAL 
 
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¶10. (SBU) COMMENT:  The GOU seemed happy to get through its turn at 
the helm, which came at an awkward time of transition as President 
Vazquez prepares to transfer the Presidential sash to Jose "Pepe" 
Mujica.  Mujica took full advantage of having the Mercosur summit 
in his backyard, meeting individually with each of his soon-to-be 
counterparts (Ref B). 
MATTHEWMAN