The leader of the Brazilian center-left, Lula da Silvahas just proposed, as one of the axes of his presidential campaign with a view to the October elections in the neighboring country, the creation of a pan-Latin American currency to “get rid of the dollar“.
Lula, founder of the Workers’ Party in Brazil, and president for two terms, from 2003 to 2011, is the favorite in the polls. But the polarization with Bolsonaroand some of its economic guidelines in case it arrives again at the Planalto Palace, seat of the Brazilian executive, can make the election extremely close.
Among them is precisely the creation of a “Latin euro”. “We are going to create a currency in Latin America, because we cannot continue to depend on the dollar,” Lula said in a speech on May 2, where he revealed that the currency would be called Sur.
Lula explained that Latin American countries could still maintain their sovereign national currency (the Real is held in high esteem in Brazil), but that they could use the South to do bilateral trade each other instead of having to exchange for US dollars.
And that the South could also help contain inflation in the region, an evil that was globally enhanced in the post-pandemic, but that is wreaking havoc especially in Argentina. Lula stressed that the objective of the currency would be to “deepen Latin American integration and strengthen the economic sovereignty of the region, weakening its dependence on the United States.”
Under the current government of the far-right leader Jair Bolsonaro, the South American giant has subordinated itself to Washington, they say from the PT, while passionately attacking the leftist governments of the region. If he returns to the presidency, Lula promised that Brazil will “strengthen its relations with Latin America” and that he will revive the BRICS system, integrating Brazil, Russia, India, China and South Africa into an independent economic architecture to challenge Western financial hegemony, something that it already happens
The PT leader explained that these guidelines had already been exposed in 2020 in his book “For a multipolar world”: “I want the creation of a multipolar world, free from unilateral hegemonies and of sterile bipolar confrontations, which allow a true refounding of the multilateral order, based on the principles of a real multilateralism, in which international cooperation can truly flourish”, he explained.
Sucre
The attempt to create a pan latin american currency is not new: this has long been a dream of leftist leaders in the region, and Hugo Chavez He had already proposed doing it with Sucre at the time. The former president of Venezuela developed the new international currency as part of the Bolivarian Alliance (ALBA), an economic coalition of leftist governments in Latin America and the Caribbean.
The coin, whose name was an acronym for “Unified Regional Compensation System”, but also a reference to Antonio jose de sucrea partner of Simón Bolívar in the struggle for the independence of South America against Spanish colonialism, was adopted in 2009 by Venezuela, Nicaragua, Cuba, Bolivia and Ecuador, where former president Rafael Correa was the main adopter of the Sucre.
At its peak in 2012, the Sucre it was used for one billion dollars in annual bilateral trade in the region, less than half the volume that Argentina and Brazil negotiate in a month (about 2.2 billion dollars). And the currency ceased to be used in 2016, after the death of Chavez (in 2013) and a massive drop in commodity prices in 2014, accompanied by the imposition of US sanctions on Venezuela in 2015, and Nicolás Maduro’s bloody crackdown on protests against him.
In Ecuador, Lenin Morenothe heir who betrayed Correismo and established ties with the United States, later removed his country from ALBA, marking the end of Sucre and its unfounded dream of regional integration.
Managers
Lula’s advisors in this project are the former president of Banco Fator, Gabriel Galípolo, and the former mayor of São Paulo, Fernando Haddad. Both explained the guidelines of the Latin American currency, a reinterpretation of the euro in crypto keyin an article published by Folha de Sao Paulo.
The South “would be issued by a South American Central Bank, with an initial capitalization made by the member countries, proportional to their respective shares in regional trade,” said Galípolo.
The capitalization of South “it would be done with the international reserves of the countries and/or with a tax on exports from countries outside the region,” Haddad proposed. “The new currency could be used for trade and financial flows between countries in the region,” they added.
According to Haddad, who served as education minister with Lula and Dilma Rousseffand was elected in 2018 as a presidential candidate (he lost to Bolsonaro), the member countries “would receive an initial endowment of South banknotes, according to the agreed rules, and would be free to adopt it internally or keep their currencies, while the types of The exchange rate between the national currencies and the South would be floating”.
The Proposal that pleases Kirchnerism locally, does not seem to displease Bolsonaro either. Its economy minister, Paulo Guedes, argued that a single currency for Mercosur would allow for greater integration and a free trade zone, and would create a currency that could be one of the “five or six relevant currencies in the world.” And it would ideally de-anchor Venezuela, Argentina and Panama from the US dollar, critical for monetary policies.
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