Interview by Lorena Guillén, from ABYA YALA TV, Bolivia, with Julio Gambina, president of the Foundation for Social and Political Research, Argentina, on the agreements between China and Brazil for the exchange in local currencies, without depending on the dollar. The agreement was made March 29, and the interview was made live on April 1, 2023. Published April 7 by Translation: John Catalinotto.

China and Brazil sign an accord as March 2023 ends.   Credit: Abya Yala TV

Lorena Guillén (LG): What is your opinion about the agreement between Brazil and China?

Julio Gambina (JG): It is a story from the end of March, very recent, and it is very important because China has become Brazil’s number one trading partner, and this has consequences not only in the bilateral relationship between China and Brazil, but it will also have an impact on Latin America as a whole.

We have to consider that for Argentina, Brazil is the number one trading partner; China is the number two trading partner; and for some time now, world trade and monetary relations have been complicated, especially due to the unilateral sanctions imposed by the U.S. on several countries, aggravated by the war in Ukraine.

The truth is that in recent times, the system of international trade and monetary relations is in disarray. China is emerging as a new power that opens doors to multiple commercial, economic and monetary ties.

Let us bear in mind that historically the world banking system moves through the SWIFT [Society for Worldwide Interbank Financial Telecommunications] system, an exchange system involving more than 3,500 financial entities in the world. With the war in Ukraine last year, very strong sanctions were imposed against Russia, suspending its operations in the SWIFT system.

There were already U.S. trade sanctions against China; and for more than a decade, China has been generating links and ties to manage to circumvent U.S. sanctions against China, Russia and other countries in the Latin American and Caribbean region (Cuba, Venezuela, etc.). Hence, this announcement has to do with two countries of significant relative weight.

It should be clarified that the implementation of the agreement requires a process. The agreement was only signed March 29. It is worth recalling that Brazil has had experience in exchanging local currencies with Argentina since 2008, but this has not necessarily become the main monetary link between the two countries.

Of course China has a different volume of trade with Brazil, and therefore it is to be expected that this important volume of exchange between the Asian and Latin American giants may have an impact on the region and in some way provide a solution to many difficulties that exist in the productive, economic, commercial and monetary systems. Let us say that world circulation and production are affected by this dynamic of sanctions, and it is interesting and important that signs like this one appear, showing alternative paths.

I would like to recall that, at the beginning of this year, at the meeting of CELAC, the Community of Latin American and Caribbean States, held in Buenos Aires, Brazil returned to CELAC, because in recent years during the government of Jair Bolsonaro, Brazil was outside CELAC.

On that occasion, President [Luiz Inácio Lula da Silva] Lula of Brazil stated that, “If it were up to me, I would promote a single currency in the region.” It is an individual and personal will, but it seems to me that this agreement between China and Brazil marks a trend or a course of a certain will expressed by the Brazilian president for Latin America and the Caribbean to follow other paths in monetary and financial cooperation.

This is why we should view it with expectations. China is not only Brazil’s largest trading partner but is also an important trading partner of many countries in the region. The weight of Chinese investments in Latin America and the Caribbean has grown significantly, and China has increasingly become a lender of last resort.

In this last sense, for example, in the case of Argentina in need of foreign currency, the swap agreement between Argentina and China favors that [trade without access to U.S. dollars] at a time of scarce availability of foreign currency for Argentina, the latter resorts to this financial agreement with China and solves its problems of foreign currency limits.

That is why I believe that this mercantile monetary opening, where two countries of tremendous importance in the world system and in the region are associated, is a good sign.

Are we ready?

LG: Are we Latin Americans ready for President Lula’s desire for a single currency?

JG: Well, it is not easy; it takes political will. I always remember that the current president of Bolivia, when he was minister of economy in the government of Evo Morales and he had the capital required for the Bank of the South, a bank that was created in 2007 and was never able to operate, Luis Arce said that Bolivia has the capital to contribute to the Bank of the South.

Arce suggested that the international reserves of the countries that subscribe to the Bank of the South agreement be channeled to the Bank of the South, which would give an eventual Bank of the South a very important financial economic foundation to think of alternative productive developments for the region.

It was the will of an economic minister of one of the most successful economies at that time, today president of Bolivia and a promoter of the process of nonsubordinated integration and alternative integration of CELAC.

Lula’s personal will, plus these comments I am stating, made at the time by the Bolivian Minister of Economy, could be added to other people’s personal wills, as was evident when a new financial architecture for the region was discussed, which was a policy enunciated in UNASUR [Union of South American Nations], in the first decade of the 21st century.

I would like to point out that there are instruments, there are initiatives, there are proposals, sometimes individually, sometimes formulated collectively in areas of political articulation in the Latin American and Caribbean region, which are a very important basis to generate what I would call a great political, social, cultural, ideological debate in the region.

This is so that the peoples of Latin America and the Caribbean are the ones to press for a new financial architecture, to finish setting up the Bank of the South, to generate a dynamic where the resources generated in Our America are oriented towards the financing of a production that meets the needs of our peoples.

Latin America and the Caribbean have all the necessary resources to produce goods and services to meet the needs of our peoples. It has often been said that “wealth has a father and a mother: labor and nature.” Well, Latin America and the Caribbean have a highly skilled working class, willing to carry out the production of wealth, and we have the endowment of common resources for a sovereign development in defense of the interests of our peoples, of the reproduction of nature, life and society.

Therefore, having genuine financing based on processes of financial sovereignty in the region would be very good news and a possibility to intervene at a time of disorder in the world economy, precisely because of the elements of decomposition shown by this unilateral attitude of the U.S. sanctions.

Unfortunately, these sanctions are generally supported by the [European Union] and generate additional tensions that have an impact on inflation and the growth of inequality and therefore an impact on poverty. Latin America and the Caribbean is not the poorest region in the world, but it is the region where inequality is growing fastest.

The same currency?

LG: This would involve a process such as the European Union went through at the time of integration, not only at an ideological level but also in terms of having the same currency, the euro. Latin American economies are very diverse; how should this situation be regulated in Latin America?

JG: The most important thing would be a will to integrate. I mentioned CELAC a moment ago, because it includes countries with governments with different political orientations, even contrary, but that does not prevent dialogue, capacity to face shared projects, developments that are favorable for all peoples. It is true that there is diversity in economic, political, cultural and even linguistic developments: Brazil, unlike the rest of the region, does not speak Spanish; Haiti communicates in Creole.

But how important it would be for the Latin American region as a whole, in the face of a pandemic that continues, to strengthen the developments that Cuba has made in the field of vaccines. The experience of the Southern Cone in the field of food should be spread and disseminated for the development of food sovereignty policies throughout the region — also, the energy potential that Venezuela once proposed: “let us build Petroamerica.”

At that time Argentina had a privatized oil company. Thus there was no advantage for the privatized oil company to advance toward establishing regional energy sovereignty based on hydrocarbons. Brazil has become a power with very strong international oil reserves, Argentina as well; Bolivia has a long history in this aspect, not to mention Venezuela, which is the main hydrocarbon reservoir, plus Ecuador and Colombia.

We insist that Latin America and the Caribbean, even with differences in direction, if there is political will, could make advances in programs of food sovereignty, energy sovereignty and, as we said a few moments ago, financial sovereignty.

But I have the impression that it must not only be the will of the governments but also the pressure of the social movement, of the trade unions, of social, farming, women’s and youth organizations to press for a different direction.

I have the feeling that the youth struggles that encouraged the change of political scenario in Latin America –– I am thinking of the events in Chile, in Colombia, of course the Bolivian social mobilization that confronted the situation caused by the coup, and the popular dynamics of struggle shown by an impoverished country such as Haiti — all show us that there is a widespread social and political will that should be united in a political and popular project of regional integration.

Latin America and the Caribbean must provide an integrated response to the problems of today’s world economy, which is in a moment of great disorder and crisis and where the great states of world capitalism attend only to the needs of the big banks, of big capital, at a time when inflation is spreading the problems of poverty in the world.

[The United Nations Economic Commission for Latin America and the Caribbean] ECLAC confirms it for Latin America and the Caribbean: The last 10 years have been a new lost decade for the region; all social indicators have decreased, deteriorating the pace of improvement of the economic and social situation in our countries.

Therefore, what Latin America and the Caribbean need is greater social pressure so that it can be assumed as a credible proposal from the point of view of the states in the region.

What are the implications?

LG: Going back to the agreement between Brazil and China, what repercussions could it have on the countries, especially those in the surrounding area such as Bolivia and Argentina?

JG: It will be a challenge to the whole region. We have to think that this agreement was signed by Chinese and Brazilian agencies.  Lula suspended a trip to China for health reasons, but these days this agreement is taking shape. We will have to see how this bilateral agreement will be strengthened and what course of action will follow in the region.

There is no doubt that Bolivia, Argentina, Uruguay or Paraguay, with different governmental regimes and different objectives, can strengthen and get involved in this initiative.

I insist on the importance of Brazil in the region and the importance that China has been assuming, an issue of great concern to the U.S., which is exerting pressure, for example, on Argentina and its relationship with the IMF, so that Argentina does not strengthen its relations with China. But China is Argentina’s second largest trading partner, and Brazil is the first.

There is no doubt that South American countries must be brought closer to a common and shared strategy, even in the relationship with China, because the problem is that relations with China are bilateral. How important it would be for these bilateral relations to have integrated links, to be a link between MERCOSUR [Southern Common Market] and China, between a recreated UNASUR [Union of South American Nations] and China, between ECLAC and China.

Let there be a closer, multilateral link that responds to a shared strategy, where it is not national interests but regional interests, because I insist that there is a lot to work out together.

The best proof was the historical supply of gas from Bolivia to Brazil and Argentina, in the same way that Argentina completes Bolivia’s food sovereignty with flour exports. Therefore, there are many points in common of unresolved needs of the countries that can be solved with processes of deepening trust, of productive, economic and social coordination for the benefit of the peoples and not for the profit of the transnationals, which is the logic imposed by mercantilization, privatization, financialization, with which the economic system has been developing at the world level.

I believe that the Brazil-China link is promising and that this can strengthen our region’s joint relations with China, which is undoubtedly an emerging power that, in terms of production, is at the head of the world system and, of course, in a comprehensive dispute for the hegemony of the world system, mainly with the U.S.

The region has to act in an integrated and coordinated manner and less in the bilateral relationship, which is what has happened.

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