Latin America’s single-currency dreams

With more leftists coming to power across Latin America, the idea of a single shared currency is a hot topic again, Axios Latino’s Marina Elisa Franco reports.

Why it matters: It’s a signal that these leaders share the goals of greater economic cooperation and reduced dependency on the U.S. dollar.

• And even if an actual shared currency is a nonstarter in practice — which is likely the case — other areas of regional cooperation on critical economic, migration and environmental issues may soon be a reality.

The big picture: When Brazilian President-elect Luiz Inácio Lula da Silva takes power on Jan. 1, Latin America’s five biggest economies — Argentina, Brazil, Chile, Colombia and Mexico — will have left-leaning governments.

State of play: Lula wants to create the “sur,” a regional version of the euro, he said while campaigning.

• It’s an appealing idea for some politicians as the dollar exchange rate is battering nations such as Argentina.
• Lawmakers representing Bolivia, Colombia, Argentina, Venezuela, Peru and Ecuador signed a declarationlast week calling for a new Latin American parliament and single currency.
• Mexican President Andrés Manuel López Obrador has twice pitchedforming a European Union-like coalition in Latin America and the Caribbean.

Yes, but: A common currency is likely a “nonstarter,” given how past attempts at other types of regional integration have crashed and burned over disagreements, Shannon K. O’Neil, Latin America analyst at the Council on Foreign Relations, tells Axios.

• And the disparity in financial conditions between the countries is a major obstacle (it’s a problem that’s nearly toppled the eurozone before).

Yes, but, but: The growing interest in cooperation could lead to things like deals to build supply chains and economies of scale, which would collectively attract manufacturers to the region.

• They could also invest in digital and electronic systems to jointly regulate migration.
• Cecilia Tornaghi, senior director for policy at the Americas Society/Council of the Americas, said most of the leaders’ emphasis on environmental conservation could spawn regional initiatives ripe for U.S. cooperation.

Between the lines: Rising inflation and ongoing pandemic-related economic troubles could get in the way of regional integration.

• “But, at the same time, having regional success and integration could offer the (leaders) an accomplishment they can champion as contrast to domestic crises,” Tornaghi says.
• O’Neil says “the political alignment makes this more of a possibility than before.”

What to watch: The leaders of Mexico, Chile, Colombia, Peru and Ecuador are set to meet on Nov. 24 for the Pacific Alliance summit. And although they are not part of the alliance, both Argentina’s Alberto Fernández and Lula, Brazil’s president-elect, have been invited.

• They’re expected to discuss new trade agreements and adding Costa Rica to the group.

 Πηγή:axios.com