Paraguay suspended from Mercosur, no sanctions

June 30, 2012

MENDOZA, Argentina (AP) — The Mercosur trade bloc suspended Paraguay's membership on Friday for having impeached and ousted its president but will not slap economic sanctions on the poor, landlocked country.

The South American group also announced that Venezuela will become a full member starting July 31, a move that will link the region's most powerful agricultural and energy markets. Paraguayan President Fernando Lugo was impeached by the country's Congress a week ago in a fast-track trial triggered by a land eviction that killed 17 people in clashes between police and landless peasants.

Argentine President Cristina Fernandez told other heads of state at a Mercosur summit Friday that the "democratic order was broken" in Paraguay because it carried out a two-hour trial where Lugo was not allowed a proper defense. It will be suspended from Mercosur until it holds presidential elections next year.

But Fernandez said Paraguay would not be slapped with economic sanctions because "they never hurt governments. They always hurt the people." Paraguay is among South America's poorest nations and any economic sanction by the bloc would have been disastrous since half its trade is with fellow Mercosur founding members, Argentina, Brazil and Uruguay.

Mercosur barred Lugo's replacement, former Vice President Federico Franco, from attending the summit. Franco says the transition of power in Paraguay was carried out according to the law. Lugo said at first that he would attend the meeting in order to plead his case with regional leaders but later changed his mind. He then spoke out against retaliatory economic sanctions, which he said would only hurt ordinary Paraguayans.

The landlocked country is highly dependent on beef and soybean exports and is already suffering from a recent drought that parched soy fields and an outbreak of foot-and-mouth disease last year that forced the slaughter of hundreds of cattle heads to prevent the spread of the contagious disease.

Paraguay has a long history of dictatorships and fragile democracies. The removal of Lugo, a former Roman Catholic bishop whose presidency was eclipsed by a cancer diagnosis and several paternity scandals, plunged the country into a political crisis and became a top priority for regional leaders. Several governments called back their ambassadors and some called his ouster a coup.

The Union of South American Nations, or UNASUR, also suspended Paraguay during an emergency meeting Friday and handed the pro-tempore presidency to Peru for 12 months. The regional grouping said Fernando Lugo was not allowed a proper defense.

Retaliation for Lugo's ouster came from Venezuela's state-run oil company Petroleos de Venezuela (PDVSA), which earlier canceled a bilateral deal to supply Paraguay with diesel oil. Sergio Escobar, who heads Paraguay's national oil company, announced Friday that Petroleos de Venezuela had instructed an intermediary firm not to deliver 150,000 cubic meters, expected over the coming months.

At the Mercosur summit, Argentina's Fernandez also announced that Venezuela will become a full member of the trade bloc during a ceremony in Rio de Janeiro on July 31. The union links the region's top agricultural and energy suppliers.

Venezuela, an associate member, had been trying to get full status for years. Lugo supported the full-membership because he said its oil could help smaller members of the grouping, but the move had been blocked by Paraguayan lawmakers.

Venezuelan President Hugo Chavez hailed the decision, calling it "a day for the history of integration." Chavez reiterated his belief that Lugo's ouster was essentially a coup. He spoke by telephone on the Caracas-based television channel Telesur.

"I have no doubt that behind that group of senators and deputees, that behind them is the hand of the empire," Chavez said, using his term for the U.S. government. He didn't offer any evidence to support that claim.

Chavez dismissed accusations against his government that have emerged since Lugo's ouster, including claims by Paraguay's new government that Venezuelan Foreign Minister Nicolas Maduro had tried to convince military leaders to support Lugo.

"I'm not going to answer them. An eagle doesn't hunt a fly," Chavez said. Some observers pointed out that if a diplomat from another country had come to Venezuela and tried to meet with military officers, it would have provoked a scandal, especially given Chavez's personal history of surviving a failed coup in 2002.

"The president never would tolerate it," said Margarita Lopez Maya, a history researcher at Venezuela's Central University who has studied Chavez's presidency. "There the foreign minister goes to a country and talks with military officers. It's completely hypocritical."

Maduro on Thursday night similarly dismissed the claim by Paraguay's defense minister, though he didn't deny meeting with military officials. "These things being said by this person from an illegitimate government that's emerged from a coup d'etat, they simply tell you the political and moral appearance of people who have just carried out a coup d'etat and they try to accuse others of trying to make coups against coups. It has no basis in reality," Maduro told Venezuelan state television.

"We did our work to seek to talk and dialogue with all sectors of Paraguayan society."

Associated Press writers Luis Andres Henao reported from Mendoza, Argentina. Almudena Calatrava and Debora Rey in Buenos Aires, Argentina, Jenny Birchfield in Rio de Janeiro and Ian James in Caracas, Venezuela contributed to this report.