CELAC: Regional Financial Actions in the face of the crisis
There are distinct signs that the problems of cash flow the Latin American and Caribbean region is facing could be prolonged for at least a decade.
There are distinct signs that the problems of cash flow the Latin American and Caribbean region is facing could be prolonged for at least a decade, gravely affecting economic and social development. If the region could move from discourse to concrete action to defend their common interests, channel liquidity and complement their economies, it would be in better conditions to face the crisis.
That was the central message of the public forum on "Regional financial actions to confront the crisis", that took place on Monday, January 25, in Quito, just before the CELAC Summit (January 26, 27). The forum was organized by Flacso and the Coordinating Ministry of Knowledge and Human Talent of Ecuador.
The region has advanced a great deal in political integration and discourse, with some concrete achievements, particularly in favour of peace; but the process tends to get stuck at the technical level, when attempting to define concrete mechanisms of integration, for example between central banks, as pointed out by academic Fander Falconi, a former Foreign Minister of Ecuador,
After citing a study by Flacso that indicates that price fluctuations of commodities seem to follow long cycles and that because of this, the current depression of prices could last at least ten years, the academic put forward several ideas.
The first is related to commerce and commodity prices. On one hand, with complementary circuits, for example in agricultural production, the region could reduce the outflow of foreign currency by an amount of between four and five billion dollars. At the same time, creating cartels for Latin American export products would not only help to defend the prices on the international markets, but also to confront the ecologically unequal exchanges, due to a greater exploitation of commodities on international markets, according to Falconi.
A second important element is the search for new elements of capitalization for the region. There is a great contradiction in the fact that the region has a lack of available cash, when at the same time it has close to a trillion dollars deposited overseas, for example in US Treasury bonds or in British banks. Such resources could ideally be utilized for development projects in the region. Because of this, it is essential for the Bank of the South ("Banco del Sur") to begin to function, since this not would only make it possible to channel these resources, but also to strengthen local production, giving predominance to intraregional procurement.
Thirdly, it is important to strengthen political integration. The academic believes that CELAC could play a much more proactive role, both by adopting common measures to mitigate the economic crisis, as well as proposing new international rules, new agreements, such as in questions of dealing with investments. For this, he notes that "it is the societies, the peoples that should provide the impulse, because it is not only a question of technical and financial mechanisms, but the basis of an integrationist political vision that begins with regional interests".
For his part, Andrés Arauz, Coordinating Minister of Knowledge and Human Talent of Ecuador, pointed to clear indications of structural changes in the world economy. Comparing the present situation with that of 1981, he noted signs of an imminent raise of interest rates in the US that will entail the unviability of many small businesses, with increasing mergers and monopolization.
In this context, the Minister underlined the urgency of actions of a regional character to create protection from external shocks, indicating that other blocks of countries are already doing this with much greater speed. For example, in 2015 alone, there were three very significant events: first, the Chinese money (renmimbi) is included in the basket of Special Drawing Rights (SDR) of the IMF (the last change was in 1971, when Richard Nixon put an end to the dollar-gold parity). Second, there was an agreement on the creation of the BRICS bank, with a capital of 100 billion dollars and the pact to make loans in the currency of BRICS countries, a fact that is likely to contribute to loans being used for purchases in the country whose currency is employed. And third, the Asian Infrastructure Investment Bank was set up, with the participation of dozens of countries, not only of Asia but also of Europe. With this bank, China proposes to develop two silk routes -- maritime and terrestrial -- linking isolated zones of Asia and with access to Europe, which will involve an enormous change towards endogenous development for all of Asia.
South America, on the other hand, has spent nine years discussing the proposal of the Bank of the South, which to date is not yet functioning, in spite of having resolved the technical aspects, lamented Arauz. The region has very good conditions: it is an area of peace, with resources and capacities. With the implementation of large infrastructure projects (a fiber-optic network, aqueducts, food reserves for facing periods of shortage, etc.) it would be possible to overcome two centuries of extraverted development. And, it must be noted, this development can be financed with resources from the region.
One of the conditions for this is simply to put into operation the Bank of the South, emphasized the Minister, who is also the Ecuadorian representative to the board of directors of this entity. It would signify an important support for regional productivity, since according to the agreement of the Bank, in contrast to most development banks that demand that loans be spent in the lending country, the Bank of the South stipulates that public purchases should be made, as a first priority, in the country that receives the loan; if that is not possible, in the region, and if this cannot be done, in the exterior but in association with an enterprise from the region and with transfer of technology. A similar criterion is applied for the purchase of supplies.
What is needed for the Bank of the South to begin to function is that at least four of the seven members of the board be named, according to Verónica Artola, subdirector of Programmes and Regulation of the Central Bank of Ecuador. Bolivia, Ecuador and Venezuela have already named their representatives, in Uruguay the nomination is awaiting ratification by the new government. Brazil, Argentina and Paraguay have not moved on this. The initial amount of investment (from five of the seven countries that have confirmed this) amounts to some 9 million dollars, which is an insignificant amount in itself. But what is relevant is that having taken this step, it will then be possible to attract other deposits. This should involve the Fund of the South, which would allow for bringing in reserve funds from the exterior. With only 5% of reserves from the region now overseas, there would be an initial fund of 5 billion.
(Translated for ALAI by Jordan Bishop)
URL de este artículo: http://www.alainet.org/es/articulo/175026
Del mismo autor
- A social pact for education 17/03/2021
- Un pacto social por la educación 05/02/2021
- Forum social mondial virtuel 2021 19/01/2021
- Foro Social Mundial Virtual 2021 19/01/2021
- Virtual World Social Forum 2021 19/01/2021
- Julian Assange e o julgamento da liberdade de imprensa 12/01/2021
- Julian Assange and the trial against press freedom 05/01/2021
- Julian Assange y el juicio a la libertad de prensa 04/01/2021
- Ola Bini case: Judge denies annulment of trial 16/12/2020
- Aumentan presiones para la liberación de Julian Assange 10/12/2020
- Adalid Contreras Baspineiro 13/10/2021
- Juan J. Paz-y-Miño Cepeda 21/09/2021
- Peoples Dispatch 20/09/2021
- Javier Tolcachier 13/08/2021
- Jorge Elbaum 08/08/2021
- François Houtart 24/02/2016
- Luis Langarica Arreola 02/02/2016
- Rafael Correa 01/02/2016
- Laura García Vázquez 31/01/2016
- Juan Manuel Karg 30/01/2016