During their biannual summit meeting on 29 June, the leaders of Brazil, Argentina and Uruguay decided to suspend Paraguay till elections are held in April 2013 to elect a new president in Paraguay. This is a punishment to the Paraguayan Congress which removedPresident Lugo from power on 22 June through a constituitional coup.
The three leaders also decided to admit Venezuela as a new member of Mercosur from 31 July. The proposal for Venezuelan membership had been pending for ratification by the Paraguayan senate for the last six years. While the other three countries had ratified Venezuelan admission, it was the Paraguayan right-wing dominated senate which refused to ratify. Now they have been taught a lesson.
Parguay has also been suspended from the 12-member South American Union called as UNASUR
The ideal solution would have been to restore Lugo to the Presidency. But since this is difficult, given the current circumstances, Mercosur has taken recourse to the second best option. I wholeheartedly support and applaud this.
However, Mercosur has rightly decided not impose economic sanctions against Paraguay.This means that trade will continue. Paraguay has no other option but to accept and suffer this isolation.
The entry of venezuela, the Saudi Arabia of Latin America, adds weight to Mercosur and increases its importance. However, the leftist radical Chavez might give more political headache to Mercosur than the rightist Paraguayan Congress.
Mercosur agreed to allow individual members to raise tariffs on imports from outside the bloc to up to 35 percent on 200 products to protect local industry. Brazil and Argentina are likely to make use of this agreement.