Venezuelan President Nicolás Maduro next to his wife and national assembly deputy, Cilia Flores, while marching among ordinary Venezuelans in a January 23 demonstration. Photo: Presidential Press.
Venezuelan President Nicolás Maduro, from a large demonstration at the Miraflores Palace in Caracas, greeted the countries that will meet as of Tuesday, January 24, at the 7th Heads of State and Government Summit of the Community of Latin American and Caribbean States (CELAC). During his greeting, Maduro reported that “Venezuela supports and is prepared” for the initiative to create “a Latin American and Caribbean currency,” announced on Monday, January 23, by Luiz Inácio Lula da Silva and Alberto Fernández, presidents of Brazil and Argentina, respectively.
“I send a greeting of liberation to the peoples who will meet at the CELAC summit in Argentina,” said President Maduro while receiving a large demonstration at the Miraflores Palace for the commemoration of January 23, 1958, the date on which the last Venezuelan dictator, Marcos Pérez Jiménez, was overthrown.
On Sunday, January 22, Argentinian President Alberto Fernández and his Brazilian counterpart, Luiz Inácio Lula da Silva, confirmed that they are moving forward in creating a “common South American currency” within the framework of the bilateral alliance between the two countries. They demanded “peace and democracy” and condemned all forms of “anti-democratic extremism” and “political violence” in the region.
In a message that the two leaders wrote together, they indicated that they decided to “advance discussions on a common South American currency that can be used for both financial and commercial flows, reducing operating costs and our external vulnerability.” Along these lines, they urged to “simplify and modernize the rules, and encourage the use of local currencies” in order to “overcome barriers” in foreign exchange.
During his visit to the Casa Rosada in Buenos Aires on Monday, January 23, Lula stressed that “we want to work with the economic teams on a proposal for foreign trade and transactions between the two countries, to be done in a common currency.” Lula clarified that “a lot of debate and meetings” between the two countries’ economic teams are necessary for this, according to Ámbito website.
“If it were up to me, I would have foreign trade with the same currency to not depend on the dollar,” Lula da Silva asserted. He recalled that in the BRICS group of countries (comprised of Brazil, Russia, India, China and South Africa), the use of a common currency was strongly discussed, although no agreement was reached. In this sense, Lula made it clear that “in the middle of the 21st century, we cannot continue to do the same as during the entire 20th century.”
SUR: A Look at Lula’s Project to Create a Common Currency for Latin America
In the end, Alberto Fernández was more cautious. “We don’t know how a common currency would work with Brazil and with the region,” he said. Fernández clarified that “national economies must function with strategies,” but he did not rule out the common mechanism.
Previous attempts
In December 2007 and January 2008, during Lula’s first presidency, the necessary documents to establish the Banco del Sur (Bank of the South) and the ALBA Bank were signed. Both were heavily pushed by former Venezuelan president Hugo Chávez. These institutions, especially the Banco del Sur, would serve as financing vehicles for development in the spirit of integration among the signatory countries. However, these plans were never carried out, and all that remained was the formation of customs treaties.
Despite being the largest economy in the region, Brazil did not contribute the necessary capital to the Banco del Sur. The project was to start with $7 billion, setting itself up as an alternative to the International Monetary Fund (IMF), the World Bank (WB), the Inter-American Development Bank (IDB), the Andean Development Corporation (CAF) and the Fund for the Cuenca del Plata (Fonplata).
For the Banco del Sur, each country was to contribute according to its financial capacity and relative development. All partners of the regional financial entity would have equal voting and veto power. It was a policy of consensus between Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela that did not materialize.
(Alba Ciudad) with Orinoco Tribune content
Translation: Orinoco Tribune
OT/JRE/SF
