What If The Andean Community Developed Stronger Integration?

The Actual History

The Andean Community (Comunidad Andina or CAN) emerged from the 1969 Cartagena Agreement, initially known as the Andean Pact. The founding members—Bolivia, Chile, Colombia, Ecuador, and Peru—envisioned creating a customs union that would eventually evolve into a common market modeled partly after the European Economic Community. Venezuela joined in 1973, expanding the bloc's economic potential.

The organization's initial goals were ambitious: to harmonize economic policies, coordinate industrial development through sectoral programs, implement a common external tariff, and strengthen the region's negotiating position internationally. The Andean Pact also established several institutions, including the Andean Development Corporation (CAF) and the Andean Reserve Fund (later transformed into the Latin American Reserve Fund).

However, the path to integration proved significantly more challenging than anticipated. The first major setback came in 1976 when Chile, under Augusto Pinochet's military dictatorship, withdrew from the agreement due to incompatibilities between its emerging neoliberal economic model and the Andean Pact's protectionist approach. This marked the beginning of a pattern of political divergence that would hamper deeper integration.

The 1980s—known as Latin America's "lost decade"—further complicated integration efforts as member countries struggled with severe debt crises, hyperinflation, and political instability. Economic hardship led countries to prioritize national economic survival over regional commitments. By the late 1980s, intra-regional trade represented less than 5% of the members' total trade, reflecting the limited progress in economic integration.

The early 1990s brought renewed hope with market liberalization across the region. In 1993, the members established a free trade zone, eliminating tariffs on most products traded within the bloc. In 1996, the Trujillo Protocol reformed the organization, rebranding it as the Andean Community and creating the Andean Integration System, which included institutions such as the Andean Presidential Council, the Andean Council of Foreign Ministers, and the Andean Parliament.

Despite these institutional developments, political and ideological differences continued to undermine integration. In 2006, Venezuela announced its withdrawal from the Andean Community, citing objections to Colombia and Peru's free trade agreements with the United States. Venezuela's departure removed the bloc's largest economy and oil producer, significantly reducing its economic weight and potential.

The 21st century has seen the Andean Community struggle to maintain relevance amid the emergence of alternative regional integration initiatives such as UNASUR (Union of South American Nations), ALBA (Bolivarian Alliance for the Peoples of Our America), and the Pacific Alliance. While the Andean Community has achieved some notable successes—including the implementation of an Andean passport, recognition of university degrees across member states, and coordination on some migration policies—it has failed to develop into the powerful economic and political bloc originally envisioned.

As of 2025, the Andean Community remains active but with limited influence. Its current members—Bolivia, Colombia, Ecuador, and Peru—continue to maintain the free trade area and some institutional structures, but deeper integration in fiscal, monetary, or political spheres remains elusive. Intra-regional trade, while higher than in the 1980s, still represents a modest portion of the members' total trade volume, and economic coordination rarely extends beyond basic tariff policies.

The Point of Divergence

What if the Andean Community had developed stronger integration? In this alternate timeline, we explore a scenario where the Andean Pact not only survived its early challenges but evolved into a deeply integrated economic and political union comparable to the European Union, fundamentally altering South America's economic landscape and global influence.

The point of divergence occurs in the mid-1980s, during the depths of Latin America's debt crisis. Rather than allowing economic hardship to weaken integration efforts, the Andean nations might have recognized that collective action and deeper economic coordination offered a pathway out of their common predicament. This realization could have manifested in several plausible ways:

One possibility is that the 1987 Quito Protocol, which in our timeline made modest adjustments to the Cartagena Agreement, could have been far more ambitious—establishing clear timelines for monetary coordination, joint debt renegotiation mechanisms, and industrial development programs designed to make the region more economically resilient.

Alternatively, visionary leadership could have emerged at a critical moment. Perhaps a coalition of forward-thinking presidents—similar to how Jacques Delors revitalized European integration in the 1980s—might have championed deeper integration as essential for weathering the debt crisis and positioning the region for future prosperity.

A third possibility involves external catalysts. The United States' Baker Plan (1985) and Brady Plan (1989) for debt relief might have included incentives for regional coordination, encouraging the Andean countries to develop stronger collective economic governance as a condition for debt restructuring.

The most pivotal element of this divergence would be Chile's decision to remain within the Andean Pact despite Pinochet's neoliberal reforms. In this alternate timeline, perhaps pragmatism prevailed over ideological purity, with Chile seeing value in maintaining access to regional markets while pursuing its domestic economic agenda. Chile's continued membership would have provided crucial economic heft and stability to the integration project, potentially preventing Venezuela's later withdrawal by balancing the bloc's ideological composition.

What emerges from this critical juncture is a different trajectory—one where the Andean Community builds on early institutional foundations to gradually deepen integration through the 1990s and into the 21st century, rather than stalling at the level of an imperfect free trade area.

Immediate Aftermath

Economic Stabilization Through Coordination (1985-1990)

The immediate consequence of deeper Andean integration would have been a more coordinated approach to the debt crisis. Rather than each country negotiating separately with international creditors and the IMF, the newly empowered Andean Junta (the forerunner to a Commission) would have developed a collective negotiating strategy, leveraging the bloc's combined economic weight.

This approach would likely have yielded several tangible benefits:

Enhanced Bargaining Power: Collective negotiations with creditors would have resulted in more favorable terms for debt restructuring, similar to how the European Community negotiated as a bloc in international trade forums.
Intra-regional Financial Support: The Andean Reserve Fund would have been significantly expanded and transformed into a regional stability mechanism, providing emergency liquidity to member states experiencing balance-of-payments difficulties—potentially preventing the worst impacts of the debt crisis in countries like Peru and Bolivia.
Policy Coordination Framework: The establishment of regular economic ministerial meetings would have facilitated information sharing and policy learning, helping countries avoid the most damaging aspects of structural adjustment while maintaining creditor confidence.

Former Colombian President Virgilio Barco, who in our timeline supported moderate integration, would have played a pivotal role in this alternate scenario. His administration might have championed the creation of an Andean Monetary Cooperation Fund in 1988, establishing exchange rate bands to reduce currency volatility among member states—a precursor to deeper monetary coordination.

Institutional Development and Market Integration (1990-1995)

The early 1990s, characterized by the Washington Consensus and market liberalization, would have unfolded quite differently in this alternate timeline. Rather than each country pursuing liberalization individually (which in our timeline led to uncoordinated and sometimes contradictory policies), the Andean Community would have established a genuine common market by 1992.

Key developments during this period would have included:

Institutional Transformation: The 1991 Caracas Protocol (which doesn't exist in our timeline) would have transformed the Andean Junta into the Andean Commission, with commissioners nominated by member states but working independently for the community's collective interest.
Common External Tariff: Unlike our timeline, where the common external tariff remained partially implemented, the alternate Andean Community would have fully implemented a unified tariff structure by 1993, significantly increasing the bloc's leverage in international trade negotiations.
Judicial Enforcement: The Andean Court of Justice, which exists in our timeline but with limited authority, would have gained enhanced powers to enforce community decisions and ensure consistent application of Andean law throughout the region.
Freedom of Movement: By 1994, the community would have implemented protocols allowing Andean citizens to work in any member state with minimal paperwork, addressing labor market imbalances and creating a more integrated regional economy.

Chilean Economic Leadership and Venezuelan Accommodation (1990-1995)

In this alternate timeline, Chile's continued membership would have profoundly shaped the Andean Community's economic orientation. After Pinochet's departure in 1990, Chile's democratic governments would have played a moderating role, balancing Venezuela's state-centered economic vision with its own experience in market liberalization.

This dynamic would have produced a distinctive "Andean model" of development that combined elements of both approaches:

Coordinated Privatization: Rather than the sometimes haphazard privatizations seen in our timeline, the Andean Community would have developed guidelines ensuring that strategic industries maintained regional ownership while improving efficiency.
Social Dimension: Influenced by Chile's relatively successful poverty reduction programs, the community would have established an Andean Social Fund in 1993 to address the negative social consequences of economic restructuring.
Commodity Export Strategy: Recognizing their shared dependence on commodity exports, member states would have created an Andean Resource Management Framework, coordinating investment in extractive industries and establishing sovereign wealth mechanisms to better manage resource revenue volatility.

This balanced approach would have been particularly important in accommodating Venezuela's political evolution. In this alternate timeline, Venezuela's oil wealth would have been partially channeled through Andean Community investment mechanisms, creating economic interdependencies that would have made later withdrawal politically and economically unthinkable.

Long-term Impact

From Common Market to Economic Union (1995-2005)

The successful implementation of the common market would have set the stage for a deeper economic union in the late 1990s and early 2000s. Unlike MERCOSUR or other Latin American integration initiatives that stalled at partial implementation, the Andean Community would have steadily progressed toward coordination of macroeconomic policies.

Monetary Integration

The Asian Financial Crisis of 1997-1998 and its spillover effects would have accelerated monetary cooperation among Andean nations:

Andean Monetary Institute: Established in 1998, this institution would have coordinated monetary policies and prepared for eventual currency unification.
The Andean Unit of Account (AUA): Initially introduced in 2001 as a virtual currency for intra-governmental settlements, the AUA would become increasingly used in private commercial transactions, particularly in border regions.
Exchange Rate Mechanism: By 2003, all member currencies would be pegged to the AUA within defined fluctuation bands, significantly reducing exchange rate risk for cross-border business.

While full currency union would remain a future aspiration even in this alternate timeline, these steps would have created a zone of monetary stability that contrasted sharply with historical patterns of currency volatility in South America.

Fiscal Coordination

The Andean economic union would have developed mechanisms for fiscal coordination that, while respecting national sovereignty, established parameters for sustainable public finance:

Convergence Criteria: Similar to the Maastricht criteria in Europe, the 2000 Lima Protocol would have established benchmarks for inflation, government debt, and budget deficits.
Investment Coordination: The enhanced Andean Development Corporation would become one of Latin America's largest multilateral lenders, coordinating infrastructure investment to benefit the entire region rather than individual countries.
Tax Harmonization: To prevent harmful tax competition and fiscal erosion, member states would gradually harmonize aspects of their tax systems, particularly regarding corporate taxation and value-added taxes.

Global Projection and External Relations (2005-2015)

By the mid-2000s, a more integrated Andean Community would have emerged as a significant player in international economic affairs, fundamentally altering South America's position in the global economy.

Global Trade Position

The Andean Community's unified market of approximately 120 million consumers (including Venezuela and Chile) would have commanded substantial attention in international trade negotiations:

Collective Trade Agreements: Rather than pursuing bilateral agreements with major economies, the Andean Community would negotiate as a bloc with the United States, European Union, and emerging Asian economies.
Commodity Leverage: Coordinated policies regarding the region's vast natural resources—including oil, copper, lithium, and agricultural products—would have enhanced the bloc's bargaining power with major importers like China.
Supply Chain Integration: The region would have developed integrated production networks, particularly in sectors like automotive manufacturing, textiles, and agro-processing, increasing value addition within the region.

Relations with Brazil and MERCOSUR

A strong Andean Community would have fundamentally altered the geopolitical balance within South America:

Balanced Regionalism: Rather than Brazil's dominance through UNASUR (as seen in our timeline), South American integration would have proceeded along a bi-polar model, with the Andean Community and MERCOSUR as two centers of gravity.
Eventual Convergence: By 2010, formal negotiations for an Andean-MERCOSUR economic space would be underway, creating the potential for a truly continent-wide economic integration—something that remained elusive in our timeline.
Infrastructure Integration: The Initiative for the Integration of Regional Infrastructure in South America (IIRSA) would have progressed more rapidly, with the Andean Community functioning as an effective coordination mechanism for cross-border projects.

Democratic Consolidation and Political Integration (2005-2025)

Perhaps the most profound divergence from our timeline would be seen in the region's political evolution. A stronger Andean Community would have created institutional anchors for democratic governance and tempered some of the more extreme political oscillations seen in the region.

Democratic Stabilization

Constitutional Convergence: Member states' constitutions would gradually incorporate similar principles regarding separation of powers, judicial independence, and protection of fundamental rights.
Electoral Monitoring: The Andean Electoral Council would observe all national elections, providing legitimacy and reducing the potential for electoral manipulation.
Crisis Prevention Mechanisms: Unlike in our timeline, where Venezuela's democratic backsliding occurred without effective regional response, the Andean Community would have developed protocols allowing for early intervention in cases of democratic deterioration.

The Venezuelan Question

The most dramatic counterfactual concerns Venezuela's trajectory. In this alternate timeline, Venezuela's integration into Andean economic structures would have created constraints on Hugo Chávez's bolivarian project after his 1998 election:

Institutional Constraints: Andean Community membership would have required adherence to common economic principles, limiting the more extreme aspects of state control over the economy.
Oil Policy Coordination: Venezuela's oil policies would have been partially subject to community consultation, particularly regarding pricing and investment.
Democratic Safeguards: The community's democratic charter would have provided mechanisms for addressing democratic backsliding before it reached critical levels.

While Venezuela might still have pursued a more state-centered economic model in this timeline, the extreme isolation and economic collapse seen in our timeline would have been highly unlikely within an integrated Andean framework.

The Andean Community in 2025

By our present year of 2025 in this alternate timeline, the Andean Community would stand as a globally recognized economic bloc with the following characteristics:

Economic Weight: With a combined GDP approaching $2 trillion, the integrated community would constitute the world's 8th largest economy.
Advanced Integration: While stopping short of a federal structure, the community would feature most elements of deep economic integration—a fully functioning common market, coordinated monetary policies, harmonized regulations, and significant mobility of people and capital.
Geopolitical Role: The Andean Community would function as a coherent voting bloc in international organizations like the United Nations, significantly increasing South America's global influence.
Technological Development: Regional innovation programs would have created technology hubs specializing in areas like renewable energy, digital services, and biotechnology—breaking the region's traditional dependence on raw material exports.
Climate Leadership: Building on the region's exceptional biodiversity and renewable energy potential, the Andean Community would have emerged as a global leader in climate change mitigation and adaptation strategies.

This alternate Andean Community would not be without challenges and tensions. Disparities between wealthier members like Chile and poorer members like Bolivia would persist. Sovereignty concerns would periodically surface, particularly regarding natural resource governance. However, the region's economic resilience, democratic stability, and global influence would be dramatically enhanced compared to our timeline.

Expert Opinions

Dr. Alejandro Gaviria, Professor of Regional Economics at Universidad de los Andes, offers this perspective: "The tragedy of the Andean Community in our actual history was its failure to move beyond paper integration to substantive economic coordination when it mattered most. Had the Andean nations truly committed to collective action during the debt crisis of the 1980s, the region might have developed the institutional capacity and political will to navigate subsequent challenges collectively rather than individually. The alternate scenario of a deeply integrated Andean Community would have provided economic stability mechanisms that could have prevented Venezuela's economic implosion and significantly reduced the cyclical economic volatility that has plagued Andean nations."

Dr. Maria Elena Rodriguez, Senior Fellow at the Institute for International Relations in Santiago, provides a contrasting view: "While an integrated Andean Community offers an appealing counterfactual, we shouldn't underestimate the fundamental obstacles that would have persisted even with stronger initial commitment. The structural heterogeneity of Andean economies—from oil-dependent Venezuela to service-oriented Chile—would have created persistent tensions in any attempt at monetary or fiscal coordination. The more likely outcome of stronger initial integration would have been a multi-speed community with differentiated levels of integration, similar to the European Union's experience, rather than the uniformly deep integration depicted in the most optimistic scenarios."

Professor Carlos Malamud, historian at Universidad Complutense de Madrid and expert on Latin American regionalism, suggests: "The most fascinating aspect of the Andean Community counterfactual is how it might have altered South America's broader regional architecture. A successful Andean Community would have provided a counterweight to Brazilian influence, potentially leading to a more balanced continental integration process. Instead of the Brazilian-led UNASUR project of our timeline, which ultimately failed, we might have seen a pragmatic convergence between two successful sub-regional blocs—MERCOSUR and the Andean Community—each with their own institutional strength and clear mandates. This 'integration of integrations' approach might have proven more durable than the overambitious continental projects that have repeatedly faltered."