Compensating the asymmetries between nations, as well as creating strategic alliances and agreements between Latin American countries, are the most important objectives of the synergy between the Bolivarian Alliance of the Americas (ALBA) and the Unitary System of Regional Compensation (sucre), explained Eudomar Tovar, president of the sucre. “The sucre will be a vital tool for our people, because it will help us to strengthen sovereign production in order to maintain an economic structure consistent with the reality of each country”, he stated.
In its initial phase, the sucre will work as a unit of value and not a currency that depends on an organism emitting paper bills and coins. It has the purpose of serving as a financial instrument that can increase commerce between member nations of ALBA, as well as any other countries that choose to become a part of the project. The sucre seeks to replace the US dollar –in the medium and long term– as the principal interregional currency used between members of the Alliance.
Tovar emphasized that the sucre is of virtual character and is utilized in dfferent commercial transactions through the ALBA Bank. Participating nations place sums of capital in the bank, and a Compensation Fund and other regulatory entities “shave” any financial inequalities. The union of the ALBA-sucre is similar to the Euro in the European Union, explained Tovar.
It began operating in January
Tovar affirmed that the sucre began operations this past January. A treaty for its constitution and usage was signed between Cuba and Venezuela. The incorporation of Bolivia, Nicaragua and Ecuador is currently in process and being discussed by the legislative bodies in those three nations.
According to Tovar, once the three countries ratify the treaty, the sucre will become fully operational, which should occur during the first semester of this year. “This doesn’t mean that currently it’s not operating. If anything characterizes us it’s that we have basic principles instilled in this project”, he underlined.
The premise of complementary trade, cooperation and solidarity guides the sucre’s operations, detailed Tovar. He also revealed that several activities destined to increase comercial development in the different membernations are underway. The Ministries of Commerce in Cuba and Venezuela are advancing projects and finalizing matters to allow for the incorporation of other products that will be negotiated over the next several months.
The President of the sucre confirmed that in the specific case of Venezuelaand Cuba, transactions have already occurred involving rice, “but other operations will happen soon, and we are finalizing some details”. Nevertheless, Tovar admitted that the operations realized to date haven’t really had a comercial impact yet, because they have been minor and were affected by the currency adjustments made in Venezuela at the beginning of this year.
However, Tovar estimates that during the first trimester of 2010, a substantial increase in transactions will have occurred. He also revealed that new transactions involving metals exchange and rice are set to take place.
Another product that will be traded using the sucre is “yute”, a natural fiber for textiles, used by millions of small agricultural producers. “These are products not generally included in traditional imports”, added Tovar.
Displacing the US currency
“The dollar is a reserve currency, but it has been losing relevancy. Through the cooperation and integration agreements between our countries, we are trying to avoid the effects of the problems generated by capitalist economies on our regional finances”, affirmed Eudomar Tovar.
“From that point on, our process of integration seeks to progressively decrease our dependence on the dollar, and diminish its regional domination as the principle currency. The United States is just one economy that emits huge quantities of dollars that actually have no real, solid support, and as a consequence, this has affected the interests of world economies”, he added.
The dollar “that enters into an economy without support on an international level, as well as being inflationary, generates internal problems, such as those we have experienced recently with the international financial crisis. We are still immersed in that situation”, warned Tovar.
The sucre will facilitate an increase in the export of non traditional products, “which means that under the criteria of complementary trade, we are going to produce more, and this will benefit small and medium-sized companies, as well as those economic agents that seek to encourage productive activities”.
To this end, “there will be a higher level of employment, considerable wages and profits, an increase in consumption and an improvement in well-being for our populations”.
A new socialist model
“One of the fundamental characteristics of the sucre is that it breaks with traditional integration schemes, which are subject to neoliberalism and encourage competition. In that scenario, if one country has an advantage over a certain product, and another nation over another product, then commerce is generated”, said Tovar.
“But with the sucre, that doesn’t happen. We are seeking complementary exchange, and cooperation, and of course, solidarity between nations. These are the fundamental principles of socialism”, he underlined.
“We provide what the other country doesn’t have, and that country provides us with what we can’t produce. We unite, we make a joint effort and we obtain the objectives that we both want. We’re advancing in a process of socialization, and the sucre has a very important role”.
Tovar also explained that with this new monetary value, commerce would increase, which is the “fundamental base for strengthening regional integration”. The idea is “to reach all sectors of our population, providing for the participation of small, medium and large producers, and allowing for the formation of a productive aparatus in each one of our nations in accordance with the degree of cooperation that exists”.