MercoPress. South Atlantic News Agency

Argentine industrial union wants to block Venezuela from Mercosur

Mendiguren, UIA chairman; Chavez latest nationalization spree has infuriated Argentine investors

The powerful Argentine Industrial Union, UIA, has called on its Mercosur peers to impede Venezuela’s incorporation to Mercosur in reprisal for the nationalization spree launched by President Hugo Chavez.

“We are calling the Mercosur Industrial Council for an urgent meeting this week to address and consider if the current policies of the Venezuelan model are in the framework of the Mercosur protocol signed by Venezuela three years ago”, said Jose Ignacio de Mendiguren, UIA chairman.

UIA is on an aggressive campaign to block the incorporation of Venezuela to the Mercosur block (Argentina, Brazil, Paraguay, Uruguay) following President Chavez nationalization of several companies from the steel industry belonging to the Argentine-Italian holding Techint, the country’s largest.

According to reliable sources from UIA the Industrial Council is expected to meet sometime this week most probably in Montevideo.

Venezuela is currently in the process of becoming a full member of Mercosur and counts so far with the approval of the Argentine and Uruguayan lawmakers but is pending a similar resolution from the Brazilian and Paraguayan congresses.

Mendiguren said that Chavez model of taking over by the government what are considered strategic industries, such as steel, “are incompatible with the integration model of a common market that harmonizes macroeconomic policies”.

Anyhow the chairman of UIA which represents thousands of Argentine manufacturers said that Venezuela is a sovereign country and can decide on “nationalizations”.

However “if Venezuela is in a process of taking over industrial sectors, banks, services, this is a new factor which was not contemplated when the incorporation of Venezuela as a full member of Mercosur was considered”.

The recent taking over of the steel companies Tavsa, Matesi and Comsigua belonging to Techint by the Venezuelan government triggered harsh criticism and condemnation from most of the main Argentine trade and business chambers.

President Cristina Fernandez de Kirchner who has close political and economic relations with Chavez said that it respects Venezuela’s sovereign decisions but will intercede in favour of proper compensations for the Technit group.

Former president Nestor Kirchner was personally involved in the 2007 negotiation when Chavez nationalized the Ternium-Sidor steel works, Venezuela’s largest with an annual production of 4.5 million tons of steel and also belonging to the Techint group.

Apparently the Argentine government will be bringing up the issue during the current OAS general assembly in Honduras which convenes Foreign Affairs ministers from the 34 member countries.