The impossibility of a LATAMExit (and why that is a bad thing)

Patricio Navia

Buenos Aires Herald, June 28, 2016


And why that is a bad thing for the region...

The only thing worse than risking the possibility that a member chooses to leave a regional integration initiative with more successes than failures, is that there is no such union. Discontented citizens will only vote to abandon a regional union that actually means something to them. Despite the numerous intra-regional integration initiatives in existence, Latin American countries have lagged behind Europe in assimilating their economies, labour markets, currencies and regulatory policies.


As a result, Latin America is safe from the type of shocks triggered by the United Kingdom’s decision to leave the European Union. But not having an integration initiative that is meaningful enough for people to even consider leaving it is a very bad thing for Latin America.


Latin America might have the dubious world record of having more integration initiatives than countries in the region. Ranging from political organizations to trade unions — and covering areas as diverse as human rights, telecommunications, education, health or energy — Latin American integration initiatives have shown an enormous resilience in surviving even when their influence is very limited and their powers and attributes have diminished over time.


Unlike the European Union — where the bureaucracy has grown and has expanded its powers — Latin American integration initiatives have seen a growth in the first area but with little of the latter, they have increasingly been fragmented as new initiatives are created.


The web of integration initiatives has grown without much coherence. Since 1990, just in South America, the creation of the Mercosur, Unasur, the Boliviarian Alliance (ALBA) and the Pacific Alliance have illustrated an enormous creativity in terms of superimposing different kinds of integration initiatives, depending on the ideology of the government in power and the different geopolitical priorities.


Some initiatives have also been short-lived. Though it has not been formally disbanded, ALBA has not shown signs of activity since the death of Venezuelan president Hugo Chávez in 2013. As UNASUR was championed by Brazil — as an alternative to regional integration initiatives that included either the US or Mexico — the political crisis in the largest country in South America has set that body back. The only integration initiative that presently seems to be moving forward is the Pacific Alliance, which brings together market-friendly Mexico, Colombia, Peru and Chile.


Yet, since that initiative seeks to promote free trade, its success will depend on having governments in its member countries with compatible ideologies.


Weaker blocs

Since the Maastricht Treaty formally established the European Union in 1993, Latin American countries have launched several similar initiatives. But those children have consistently failed to develop into adulthood or even adolescence. The Mercosur bloc is now weaker than it was in the late 1990s. In 1993, the Group of Rio looked to be the initiative most likely to succeed in Latin America. But the Group of Rio was replaced by CELAC (Community of Latin American and Caribbean States) in 2010 and its influence has diminished over time. The most recent CELAC annual meeting in Ecuador in January of 2016 generated little enthusiasm as its agenda reflected the member countries’ unwillingness to move forward with concrete integration steps.


The United Kingdom’s popular vote to begin negotiations to leave the European Union has sent shockwaves around the world. There is much uncertainty as to how the process will move forward and whether an orderly exit can be achieved within the two-year time period that existing treaties mandate. Since this would be the first real exit by a member country, there is no roadmap in place in the EU to help respond to questions as to what will happen and when. Understandably, Europe — and the rest of the world — is suffering from the anxiety of not knowing how the process will end and what the cost will be for all those involved.


Latin America has been attentive to the recent developments. After all, since the regional economies are so dependent on exporting commodities, a Brexit-triggered world recession will have significant negative consequences for almost all countries in the region.


The Brexit vote has also led many in Latin America to also wonder about the pros and cons of regional integration. As the EU braces for tough times ahead, some people in Latin America are breathing a sigh of relief thinking that countries who have not embraced similar integration initiatives will never have to suffer from a Brexit-like trauma. Yet, those people fail to understand that, even with Brexit, the European Union has produced many more positive than negative results for the countries involved. Europe is better off with a union and countries are better off being a part of the EU than staying out.


Thus, while some people are relieved that a Brexit will never happen in the region, the very fact that there is currently no such bodies strong enough to make it worth any country considering leaving is a testament to the failure of Latin American integration initiatives. When comparing European and Latin American integration initiatives, it is better to weep over a loss than to have never had anything to lament.