In a potential boost for foreign trade between Cuba and the region, UNASUR member nations are discussing this week in Argentina whether they might adopt the SUCRE payment compensation system.
The initiative was formally presented by Ecuador, which heads one of three working groups preparing a summit of economic and finance ministers of the UNASUR bloc in Buenos Aires this Friday. At the summit, the 12 member nations will discuss ways to brace the region for fallout from the global financial crisis, such as through creation of a joint emergency fund and an emergency loan system for member nations under speculator attack.
“The region has important interconnecting initiatives, such as electronic payment systems and the SUCRE initiative, that provide transparent, efficient and safe processes, allowing participating countries to electronically liquidate on a large scale and in real-time their intra-regional payment operations,” an Ecuadorean discussion paper said. The use of the system by regional central banks would “facilitate money flows of the region” and eliminate the need of U.S. dollar or euro reserves, the Ecuadorean paper argues.
With an eye on the troubled euro, Ecuadorean representative Pedro Páez clarified before the meetings that the SUCRE is not “a common currency but a compensation system.”
The ALBA bloc, of which Cuba is a member, set up the “Sistema Unitario de Compensación Regional de Pagos” (SUCRE) in early 2010, in order to avoid having to use U.S. dollars or euros when buying goods from other ALBA members. Its use has gradually increased; Banco del ALBA officials expect the 100 mostly state companies from Bolivia, Cuba, Ecuador, Nicaragua and Venezuela that are participating in the system to perform more than 300 trade transactions worth a total of $300 million this year. Goods involved in the transactions range from palm oil to rice, textiles and pharmaceuticals.
Although the the very first SUCRE transaction was a rice purchase of a Cuban state company from a Venezuelan producer, the Cuban government is propagating SUCRE use, and the mechanism could help Cuban companies save money on imports, only a handful of SUCRE transactions have involved businesses on the island. Because most Cuban companies are sourcing supplies in Europe and Canada rather than Venezuela or Ecuador, they are eager to generate dollar or euro income from their exports to fellow ALBA markets.
Even so, an expansion of the SUCRE to include larger producing markets such as Brazil or Argentina would make the system much more appealing to Cuban companies.
The three working groups, which are meeting Wednesday and Thursday in Buenos Aires, will present a consensus document to the economy and finance ministers before the summit on Friday. The UNASUR finance summit had been postponed from Oct. 26.
According to a Venezuelan SUCRE official, discussions are also underway with nations in Asia and Africa to adopt the system.