Paraguayan and Venezuelan officials began talks in Asuncion Wednesday that could end or at least ease the deadlock that began when Mercosur front-line members admitted Venezuela into the group soon after Paraguay was suspended from the group in June last year.
Founding members Argentina, Brazil and Uruguay encouraged Venezuela's admission into the trade group after jettisoning Paraguay over a government change in Asuncion last year.
Former Paraguayan President Fernando Lugo was impeached over riot deaths but Mercosur called it a coup and suspended the country's membership. Since that controversial step, Mercosur members have changed positions and want Paraguay reinstated.
Paraguay, however, wants Venezuela's speedy admission in its absence reconsidered before it will return to Mercosur. The impasse means Mercosur cannot function normally and, until it can, the trade group cannot resume free trade talks with European Union negotiators.
Venezuelan Foreign Minister Elias Jaua, invited to Asuncion by senior aides of Paraguayan President Horacio Cartes, hopes to mend fences after a disruptive period in the two countries' relations.
Venezuelan President Nicolas Maduro was foreign minister of his mentor and former President Hugo Chavez when he was implicated in an alleged plot to restore Lugo to the presidency of Paraguay. Diplomatic ties between the two countries plunged when Lugo was replaced by caretaker President Frederico Franco last year, and didn't improve when Cartes took over from Franco this year.
Maduro took over as Venezuela's president from Chavez died of cancer in March.
Paraguay's many gripes against Venezuela concern Maduro's reported interference, the manner in which Venezuela was admitted to Mercosur and its current presidency of the organization, held by Maduro. Paraguay says it, not Venezuela, should be holding the rotating presidency of Mercosur this year.
More important than Mercosur's rotating presidency, however, is the trade group's joint approach to the EU for international trade expansion.
Paraguay's suspension from the group hasn't been welcomed by the EU which wants the situation regularized.
"We are making all efforts possible to re-channel bilateral relations with Venezuela," Paraguayan Foreign Minister Eladio Loizaga said during hearings in a congressional finance commission.
He did not elaborate, but Cartes recently said the rule of law must prevail if the Mercosur crisis is to be resolved. The comment relates to Venezuela's admission, declared irregular by Cartes.
Although Mercosur lifted Paraguay's suspension when Cartes took office Aug. 15, the president says he's in no hurry to rejoin. He has asked the Paraguayan congress to consider its position on Paraguay's and Venezuela's membership of the organization.
Analysts say the diplomatic impasse is costing Mercosur tens of millions of dollars in lost trade with Europe.