Venezuela intent on freezing out Paraguay

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CARACAS, Venezuela, Jan. 2 (UPI) -- Latin America's Mercosur trade bloc is facing renewed internal squabbles as plans for consolidation and expansion are clouded by the aftermath of last year's fractious admission of Venezuela as full member and suspension of founding member Paraguay.

In the latest twist to continued in-fighting Venezuela embraced more Mercosur instruments of multilateral collaboration but openly excluded Paraguay from the latest set of regional accords incorporating Caracas and founding members Argentina, Brazil and Uruguay.

Divisions within the organization have turned Mercosur into a shadow of its former self, with its long-awaited agreements with the European Union nowhere near final negotiation and quarrels over Paraguay's exclusion taking up most of the pact's conference time.

Paraguay was suspended from Mercosur when the country's senate impeached former president Fernando Lugo and installed his Vice President Federico Franco as the new president.

Mercosur called the change a constitutional coup and embarked on a campaign to deny Franco Latin American diplomatic recognition. Attempts to have Paraguay thrown out of the Organization of American States failed, however, and Paraguay also won EU support for its plans to hold democratic elections.

Mercosur's moves to discredit Franco have had little effect outside Mercosur but within the trade pact they have stripped Paraguay of most privileges as a founding member.

The diplomatic isolation has had the effect of closing most avenues of collaboration between Paraguay and its Mercosur members but hasn't prevented Paraguay from seeking trade partners elsewhere.

Despite evidence that the campaign against Paraguay is counterproductive, Mercosur plods on regardless, refusing to mend fences with Franco's administration.

In the latest exchanges, Venezuela announced its association accords will regularize the oil-rich country's trade with Argentina, Brazil and Uruguay. Venezuela's pronouncements made no mention of Paraguay.

"This is an event of great significance since these instruments contain the trade liberation programs and their evolution with partners Brazil, Argentina and Uruguay," the Venezuelan statement said.

In fact the accords will deepen divisions within Mercosur even though Mercosur's trade liberalization will benefit other trade partners Argentina, Brazil and Uruguay.

The Paraguayan row runs counter to the spirit of Mercosur's regional trade programs and also belies Mercosur's charter provision that all decisions must be unanimous. So far Mercosur has swept aside the objections, saying political expediencies take precedence over constitutional provisions.

Analysts say that by bending rules to accommodate Venezuela, Argentina, Brazil and Uruguay have set in store deeper problems within the organization in the coming months.