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Mercosur Expresses Discontent with International Financial System - 2002-07-06

Leaders of the four-nation South American trade bloc, Mercosur, wrapped their one-day summit Friday expressing solidarity with recession-plagued Argentina. They were also critical of the international financial system and its inability to deal with economic crises. The expressions of concern came in a joint communiqué signed by heads of the four Mercosur countries, Argentina, Brazil, Paraguay and Uruguay, and the leaders of the two associate members, Bolivia and Chile.

The six presidents, plus Mexican President Vicente Fox who was invited as a special guest, met in Buenos Aires Friday for the 22nd annual Mercosur summit.

In a 17-point declaration, the leaders expressed concern over what the document called the "current behavior" of the international financial and economic systems. They vowed to do everything possible to overcome the economic problems plaguing the region.

Brazil's currency is taking a beating and its risk rating is up sharply because of the markets' concern over the upcoming presidential election and the high level of the country's debt. Argentina is virtually bankrupt, and its economic woes are beginning to affect its neighbors, especially Uruguay.

At a news conference, Brazilian President Fernando Henrique Cardoso complained about the negative effect of fluctuating financial markets, and said the international financial institutions are not able to cope with the market turbulence.

He said "globalization has unleashed a series of new phenomena and there are no institutional forces capable of dealing with damaging turbulence in financial markets."

The summit, while expressing solidarity with Argentina, stopped short of endorsing a joint appeal for funds from the international financial institutions. Argentina is appealing to the International Monetary Fund for billions of dollars in aid to bail the country out of its economic crisis.