"Today we have a new country with 361 million inhabitants," Peruvian President Alejandro Toledo said on Wednesday in welcoming seven presidents to the historic summit in the ancient Inca sun temple of Coricancho.

The presidents of four of South America's 12 nations -- Argentina, Uruguay, Paraguay and Ecuador -- did not attend and instead sent representatives.

Their absence raised doubts among critics of the new organization, who questioned the firmness of the commitment to form a powerful regional bloc.

But Toledo was optimistic about what the bloc means to the development of South America.

"The South American Community of Nations (SACN) which is born today should help us to confront the challenges of globalization so that it is fairer, more equitable," Toledo said.

"It will allow us to act jointly and united on the international stage to increase our negotiating capacity and take the leap to conquer markets in the United States, Europe and Asia."

After an all-day meeting, the 12 countries signed a declaration of principles, creating the South American Community of Nations.

The declaration said the hope is that the new regional bloc "will achieve a greater weight and presence in international forums" for South America.

The organization's first meeting will be held in Brazil next year.

One of the biggest blocs

The summit in Cuzco, a city high in the Andes, was the third time South America's presidents have convened since Brazil invited them to meet in 2000 to discuss projects to link the countries through a network of highways, railways and rivers to boost trade in the region.

On Wednesday, Peru and Brazil took a step in that direction when Toledo and Brazilian President Luiz Ignacio Lula da Silva announced an agreement on the financing of a highway that will connect the southwest of Brazil to Peru's Pacific ports of Matarani, Ilo and Marcona. The road will cut through virgin rain forest in Peru, and international environmental groups have expressed concern about its impact.

On paper, the South American Community of Nations is impressive.

It covers 17 million square kilometers with 361 million inhabitants, making it, in Toledo's words, "one of the biggest on the planet," with a gross domestic product of more than US$973 billion and with exports above US$180 billion.

Peruvian Foreign Minister Manuel Rodriguez noted before the meeting began that South America's combined gross domestic product exceeds Canada's and "is much greater, by more than US$200 billion, than that of the famous Asian tigers."

Blocks ahead

But there are roadblocks ahead.

"The formation of a new United States of the Americas will be tortuous," said Isaac Bigio, an international analyst based in London.

Writing in the Lima daily Correo, Bigio noted that not all the region's presidents were equally committed to the new bloc.

He said left-leaning governments in Argentina, Brazil and Venezuela see it as a counter-force to US influence in the region but that countries with pro-US governments, such as Colombia and Chile, are more cautious, fearing it might damage bilateral relations with Washington.

Paraguayan President Nicanor Duarte said he was not going to attend the summit because of urgent matters at home and sent his foreign minister, Leila Rachid, in his place.

Earlier, Rachid had said Paraguay did not plan to sign the document creating the new bloc, "because we do not need more bureaucracy. We have enough with Mercosur."

Mercosur is a trade bloc composed of Argentina, Brazil, Paraguay and Uruguay, covering the eastern half of the continent.

In a preliminary step in October to the creation of the new organization, it signed pacts with South America's other regional trade block, the Andean Community, to gradually create a free trade zone across the continent.

The Andean Community is composed of Venezuela, Colombia, Ecuador, Peru and Bolivia.

Talks lasted months and there were reports of disputes, especially involving trade of agricultural products, getting in the way of agreements.

Paraguay has complained about high tariffs imposed on its exports by Mercosur's dominant members, Brazil and Argentina.

Critics point to the Andean Community's lack of results as justifying skepticism about the success of a new regional organization.

In the 35 years since it was formed, the Andean Community group has yet to agree on common tariffs for its members.

The South American Community of Nations is seeking a political role before its members have agreed on tariffs and economic policies.

"We have chosen the opposite path," Eduardo Duhalde, head of Mercosur, acknowledged in an interview published in the Lima daily El Comercio, "because it has been very difficult to resolve the matter of lowering tariffs and becoming a single region" for free trade.

(China Daily December 10, 2004)