The Mercosur trade bloc has suspended Paraguay but will not slap economic sanctions against the South American country after the controversial ousting of its president a week ago.

Fernando Lugo was impeached by the Paraguayan Congress in a fast trial triggered by a land eviction that killed 17 people in clashes between police and landless peasants. Argentine President Cristina Fernández told other heads of state that the "democratic order was broken" in Paraguay because it carried out a two-hour trial where Lugo was not allowed a proper defense. But Fernández said the grouping does not believe "in economic sanctions because they never hurt governments. They always hurt the people."

Paraguay is among South America's poorest nations and any economic sanction by the grouping would have been disastrous since half its trade is with fellow Mercosur founding members - Argentina, Brazil and Uruguay.

Mercosur barred Lugo's replacement, former Vice President Federico Franco, from attending the meetings. Franco says the transition of power in Paraguay was carried out according to the law and that the current ban on his government attending the summit is punishment enough.

Lugo said at first he would attend the meet in order to plead his case with regional leaders but later changed his mind. He then spoke out against retaliatory economic sanctions, which he said would only hurt ordinary Paraguayans.

The landlocked country is highly dependent on beef and soybean exports and is already suffering from a recent drought that parched soy fields and an outbreak of foot-and-mouth disease last year that forced the slaughter of hundreds of cattle heads to prevent the spread of the contagious disease.

Paraguay, a country of red-clay earth and formidable soccer players, still remains a mystery to most outsiders. It is one of the world's top producers of marijuana and has bared a long history of dictatorships and fragile democracies.

But the removal of Lugo, a former bishop whose presidency was eclipsed by a cancer diagnosis and several paternity scandals, plunged the country into a deep political crisis and became a top priority for regional leaders. Several governments called back their ambassadors and some called his ouster a coup.

"We're sorry about the absence of Paraguay due to not having a legitimate government!" Venezuelan President Hugo Chávez said on his Twitter account.

At the summit, Fernández also announced that Venezuela will become a full member of the trade bloc starting July 31. Venezuela, an associate member, had been trying to get full status for years, but the move had been blocked by Paraguayan lawmakers. The Union of South American Nations (UNASUR) will hold an emergency meeting Friday and could also suspend Paraguay from its organization, arguing that Lugo was not granted the defense that he deserved.

Former President Lugo on Wednesday urged international organizations to recognize that his ouster constituted a democratic breakdown and said he expected events in Paraguay to echo what happened in Honduras following that country's 2009 coup.

Lugo told The Associated Press in an interview that there should be some form of punishment against the new government, but said he didn't want to see economic sanctions that would hurt ordinary Paraguayans.

"The democratic process in this country is broken," said the 61-year-old former Catholic clergyman once dubbed "the bishop of the poor." He added that he hoped "international organizations will have the maturity and the courage to say that there has been a break in the democratic process and that it merits a sanction."

Follow us on twitter.com/foxnewslatino
Like us at facebook.com/foxnewslatino