South America takes first step to a union of nations

The Peruvian highland town of Ayacucho, where fine-fleeced vicuñas roam wild along the snowline, is already a focus of South American history.

Here, in December 1824, forces loyal to Simon Bolivar, the independence hero, drove the Spanish conquistadors from the lands they had dominated for three centuries. Next Thursday, on the 180th anniversary of the battle, the presidents of all South American nations will sign a declaration that could prove historic in its own right.

Taking a first concrete step towards Bolivar's own dream, they will sign a "fundamental charter" to give birth to the South American Community of Nations. It is time, they say, for their own European Union-style economic and political grouping.

Well, that's the idea. The 9 December signing is little more than the symbolic launch of an ideal, to create a greater sense of unity among South America's 360 million inhabitants. In the short term, the signatories hope the prospect of unity will give them greater clout in negotiations with the United States, the EU, Asia andfinance institutions.

There are some who say the union is light years away. But a lot of people said that when the European Steel and Coal Community came to being a few years after the Second World War, with France, West Germany, Italy and the Benelux countries signing up. That was the mother of the European Common Market, which begat the European Community, now 25 nations strong.

However the initiative develops, you can be sure US administrations, current and future, will be watching closely. President George Bush has been seeking a Free Trade of the Americas - north and south. An economically integrated South America could significantly alter the balance in the western hemisphere. To US administrations over recent generations, the region has mattered only where oil was concerned - notably in Venezuela - or where elected governments did not coincide with the US model. (Sound familiar?)

Take Chile, where the CIA, coupled with US economic pressure, played a key role in the build-up to the coup which killed President Salvador Allende in 1973, a Marxist. That decision helped give us General Augusto Pinochet, for the best part of two decades, and his legacy, tens of thousands tortured and killed.

An ostensible shift to the left in much of South America as the curtain came up on the 21st century had already caught the attention of Washington.

The idea first spoken of by Simon Bolivar, the Venezuela-born leader of the independence struggle, resurfaced late last century, with Brazil the leading proponent. Then, in the first year of the new millennium, Fernando Henrique Cardoso, the former Brazilian president, hosted the first summit of South American presidents in Brasilia, the capital. Recently, Mr Cardoso's successor, President Luis Inacio "Lula" da Silva, has been the driving force with Hugo Chavez, Venezuela's President, in the front passenger seat.

The breakthrough came in October, when themain trading blocs, Mercosur (Argentina, Brazil, Paraguay and Uruguay) and the Andean community (Bolivia, Colombia, Ecuador, Peru and Venezuela), signed a free trade pact. Chile, whose economy is the region's biggest success story, is not a full member of either bloc but its President, Ricardo Lagos, sign the declaration.

Thursday's declaration will be only that, a two-page declaration of intent entitled Preamble to the Foundation Act of the South American Union, calling for a regional parliament, a common market and even a common currency. Ministers will meet in spring to work on the mechanics of setting up its bureaucracy. A constitution will be drafted next year, probably with the EU as the model.