MercoPress. South Atlantic News Agency

Mercosur plans a “South American Community”.

A more flexible Mercosur with a several speed integration process, structural support fund for the weakest economies plus an “energy compensation belt” helping to match demand and supply culminating in a “South American Community” or “United States of South America”, is the ambitious agenda for the next six months set out this week in Brazil.

During a meeting in Rio do Janeiro the president of Mercosur Standing Committee of Representatives Eduardo Duhalde and Brazilian president Luiz Inacio Lula da Silva agreed on the basics for the agenda that will be implemented during the next six months when Brazil holds the chair of the South American block.

"We want something on the line of the European Economic Community model, a South American union eventually larger that the EC, but which we are determined to launch during the pro tempore chair of President Lula", said former Argentine president Mr. Duhalde.

According to Mr. Duhalde this project will enclose besides the four permanent members Argentina, Brazil, Paraguay and Uruguay, associate member Chile and the Andean Community countries, Bolivia, Peru, Ecuador, Colombia and Venezuela.

To achieve this goal Mercosur will be implementing by the end of the year a "golden clause", which will facilitate a faster integration for those countries willing to advance, without hindering the rest. Simultaneously a Structural Fund with 100 million US dollars will grant support to the weakest Mercosur economies helping them to face asymmetrical trade and commercial conflict situations.

A 0,1% levy on all Mercosur internal and external transactions would help finance the Fund.

"It's similar to what Germany and France did to support weaker members such as Spain, Greece and Portugal. In this case Uruguay and Paraguay would be the immediate beneficiaries", said Mr. Duhalde.

Finally, an "energy compensation belt" would help balance production and consumption in an area basically rich in energy resources.

The Physical Integration Protocol, leading to the South American Community, with access to 70 billion US dollars in multilateral structural development funds, would be signed next December during the bi annual Mercosur summit which is scheduled to take place in Ouro Preto, Brazil.

"We'll call it Ouro Preto 2, recalling that a decade ago the current structure of Mercosur was agreed. The target is to commit the rest of the continent's countries in the South American Community project", underlined Mr. Duhalde.

And what about the US sponsored Free Trade of the Americas Association?

"It can happen or not, but it's only an enlarge free trade market including the US. We're talking about a Community, with political goals. We're talking about joint financial institutions, a central bank for the region and a unified energy situation in the mega-block, and to achieve this we need a more flexible Mercosur enclosed in a South American Community process". Mr. Duhalde also admitted that the Colombian drug industry and security situation with the guerrilla war threatening to extend to Panama, Venezuela and Brazil was also considered. "We're thinking of a joint coordinated shield which would impede the drug trade to move freely among these countries".

Regarding the delicate political situation in Venezuela with the coming August 15 recall referendum the idea is that "it's better to let President Hugo Chávez complete his mandate in 2006 than have a leaderless opposition".