A proposal for relaunching the currently defunct USAN, the Union of South American Nations, profiles a future monetary integration amongst the countries of the organization. The proposal, made by several former presidents of countries in Latam, reinforces the need for regional integration to overcome common problems in the area, including poverty.
USAN Relaunch Proposal Includes Monetary Integration
The recent political changes in Colombia and Brazil have given rise to a series of processes seeking to integrate the countries of South America into a new organization. On Nov. 14, a proposal for relaunching USAN, a Latam-based integration organization launched back in 2008 and comprising 12 countries, including Brazil and Argentina, has been prepared by several former presidents of the region. Among them are Michelle Bachelet, Rafael Correa, José Mujica, Dilma Rouseff, and Ernesto Samper.
The document describes the need for tight regional integration in order to overcome the obstacles that the current organization of the world presents for the nations of this area, and to develop the capabilities of its countries as a bloc.
The proposal, directed as a letter to Venezuelan president Nicolas Maduro, explicitly mentions monetary integration as one of the priorities of the relaunched organization. The letter calls for:
The establishment of a working group to move towards a financing system for commercial exchanges with a view to future monetary integration when macroeconomic conditions allow it.
Other key matters include establishing a common approach to foreign debt and international financing for middle-income countries and implementing measures that favor cooperation between companies in the region, such as joint public procurement and regulatory harmonization.
Possible Support for a Common Currency
Apart from the relaunch of the USAN, other actors on the continent have declared their support for the establishment of a common currency, highlighting the benefits that such development might bring to Latam. Brazilian President-Elect Lula da Silva was one of the first to float the idea during a rally in his campaign.
In May, Lula stated:
We are going to restore our relationship with Latin America. God willing, we will create a Latin American currency.
Lula also explained that the objective of the creation of this currency would be to leave behind the dependence on the U.S. dollar, which has caused high levels of inflation in countries with troubled economies in the area. Argentina is an example of this, having 14 different dollar exchange rates currently in place to try to curb its capital flight numbers and its inflation rate, projected to reach more than 100% this year.
The government of Colombian President Gustavo Petro has also signaled support for this initiative since its inauguration day, when minister Roy Barreras also called for the establishment of a common currency.
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