by Paolo Menchi –
The announcement that Brazil and Argentina are discussing the creation of a single currency has sparked irony and skepticism on the one hand, and on the other has revived old hopes that seemed dormant.
Having a common currency in the Latin American region, as happened in Europe with the euro, thus creating the second monetary bloc in the world which would represent 5% of world GDP, has often been hypothesized in the past.
The most cutting comment, but at the same time more realistic, was that of Juan Batteleme, professor of international relations at the University of Buenos Aires, who declared that Latin America already has its own single currency which is the US dollar .
Even if it were only a union between Brazil and Argentina, the hypothesis seems totally unlikely because it would unite the largest economy in the region with one of the weakest, Argentina, which risks its tenth default since it became independent in 1816.
Brazil has an inflation rate of 5.8% against 95% in Argentina, this figure would already be enough to block any union initiative, not to mention the different volumes of international reserves in dollars.
Apart from the utopian declarations on how nice it would be if there were a single currency, in the past the only real attempt to create something similar was the SUCRE (Sistema Unificado de Compensación Regional) wanted by Cuba to facilitate cross-border trade between countries so-called “Bolivarian regime”, that is to say in addition to Cuba itself, Bolivia, Nicaragua and Venezuela, but the project was wrecked in a short time in the face of numerous objective difficulties.
Latin America would need a single market more than a single currency, but even in this case the thing has always been extremely difficult because it clashes with the different relationships that each individual nation has with the United States and China but also among themselves.
Contrary to Europe, the social, economic and political differences are too marked to think that anyone can somehow renounce national sovereignty or privileged relations with strong nations in the name of the common good.
Whether these agreements are called free trade treaties, Mercosur or Unasur, they are always experiments that have led to little results, unless they have been alliances between two single countries linked by the same political ideologies.
Probably Lula’s proposal to work on the hypothesis of monetary union with Argentina can be seen as an attempt to want to be the leading country of the region, first involving
another great nation, hoping that the other countries in the region will follow suit, perhaps to pursue common commercial objectives, but at the moment the single currency can only remain a mirage.