Crushing hopes of a unified position on talks with the European Union over a long-awaited free-trade deal and other commercial opportunities, a high-profile Mercosur meeting in Puerto Iguazú this week instead ended up highlighting disputes between member states.
Tensions mainly emerged over the future direction of the trading bloc. Uruguay and its president, Luis Lacalle Pou, is seeking permission to individually negotiate deals without the support of member states – a move that would go against Mercosur’s existing rules.
In a sign of just how tense things got, Lacalle Pou even refused to sign the summit’s final communiqué, refusing to endorse a statement that said member states would make bilateral agreements with the European bloc while talks over a regional deal are ongoing. He also took issue with a call for "greater integration" between the region's economies.
In addition, Lacalle Pou expressed dismay over efforts to re-introduce Venezuela into the fold rejecting the push and highlighting concerns over democracy and human rights in the troubled country.
Aside from the disputes, the EU deal was the main topic of debate during the two-day summit.
During the presidential meeting on Tuesday, the leaders of Argentina and Brazil lashed out at the EU’s "unacceptable" stance in negotiations with the bloc for a free-trade deal long delayed due to stated European environmental concerns.
Mercosur countries Argentina, Brazil, Paraguay and Uruguay reached an agreement in principle with the 27-member European Union in 2019 after two decades of tough negotiations.
The EU has since proposed a "side letter" to the agreement with extra environmental requirements, angering South American leaders who suspect protectionism was at work.
Brussels wants any deal with Mercosur nations to include compliance with commitments made under the 2015 Paris climate accords.
At the two-day summit in Puerto Iguazú, Mercosur leaders hit back. The latest proposal, said Brazil's Luiz Inácio Lula da Silva, "is unacceptable."
"Strategic partners do not negotiate on the basis of distrust and the threat of sanctions," he told the meeting. "We are not interested in agreements that condemn us to forever be exporters of raw materials, mineral products and oil."
Argentina's President Alberto Fernandez echoed this point, saying: "No-one can condemn us to be suppliers of the raw materials that others industrialise and then sell to us at exorbitant prices."
Fernández declared that the EU "presents us with a partial vision of sustainable development, focused excessively on the environmental" aspect.
Tuesday's meeting was also attended by Paraguay’s President Mario Abdo Benítez and his soon-to-be successor in office, Santiago Peña.
Also present was Luis Arce, the leader of Bolivia, which hopes to become a member of the bloc by restarting an application that was put aside in 2019.
The grouping, founded in 1991, represents 62 percent of South America's population and 67 percent of the continent's gross domestic product.
Its trade deal with the EU became held up under the 2019-2022 presidency of Lula's far-right predecessor Jair Bolsonaro, on whose watch Amazon deforestation surged.
While veteran leftist Lula has cast himself as the anti-Bolsonaro on environmental policy, he told European Commission head Ursula von der Leyen in June he had concerns over the additional environmental guarantees.
"No-one in the world has the moral authority to discuss with us the issue of clean energy," Lula said in an interview with Brazilian public television shortly before Tuesday's meeting.
The EU's top diplomat, Josep Borrell, acknowledged recently that the environmental proposals were not well received by the South American countries and said Europe was awaiting a concrete response.
Lula said his government was preparing a counter-proposal to take to Brussels, hosting a summit of the EU and the Community of Latin American and Caribbean States (CELAC) on July 17 and 18.
"It is imperative that Mercosur presents a rapid and forceful response," said Lula, who is taking over Mercosur's rotating presidency until the end of the year.
On Monday, Argentina’s Foreign Minister Santiago Cafiero had called for the 2019 agreement to be “updated” as it is “an unequal effort between asymmetrical blocs."
Cafiero pointed out that under the draft deal, Mercosur will scrap tariffs on 95 percent of agricultural imports from Europe, which reciprocates with only 82 percent.
And he said the agreement as it stands had an excessive focus on environmental issues at the expense of economic and social considerations in largely agricultural and developing Mercosur members.
"The deepening of the link between [the blocs] is a necessary policy in an international context of conflict and growing uncertainty," Cafiero said.
But for "the agreement to have good results for both sides it is necessary to work and update the 2019 texts," he argued.
"As it was closed [the text] reflects an unequal effort between asymmetric blocs and does not respond to the current international scenario," the foreign minister added, citing disruptions caused by the Covid-19 pandemic and the war in Ukraine.
At the close of the summit, Lula assumed the rotating pro-tempore presidency of the group from Argentina with a promise to reduce dissent. He also confirmed his intention for Mercosur to resume talks with Venezuela, which was suspended from the bloc in 2017 for breaching its democratic clauses.
The plan faced an immediate backlash. Citing human rights concerns, Lacalle Pou and Abdo Benítez highlighted the controversial decision to bar opposition leader María Corina Machado from running in upcoming presidential elections, putting Lula on the defensive.
“I follow the events in Venezuela with great concern,” Benítez said. “Erasing the opposition with the disqualification of María Corina Machado collides with human rights.”
Lacalle Pou echoed him: “It is clear that Venezuela will not have a healthy democracy if, when there is an election possibility, a candidate like María Corina Machado, who has enormous potential, is disqualified for political reasons.”
Lula, a longtime ally of Venezuelan leader Nicolás Maduro, said he still didn’t have a full picture of Machado’s situation, but called on his colleagues to remain open to dialogue: “When we have problems, we don’t hide from them, we face them,” he said.
Fernández also adopted a more diplomatic tone, saying he wants “democracy to be full and institutionality to be maintained in Venezuela,” but that he first needs to “see exactly what the size of the problem” is in the country.
Machado’s ban, like those slapped on other leading opposition figures including former governor and twice presidential candidate Henrique Capriles, is an attempt by the Maduro administration to keep her out of next year’s race. In practice, however, she and other candidates are ignoring the bans and continuing their campaigns, betting the government will eventually be forced to reverse its decision.