The Argentine Minister of Economy, Sergio Massa, raised his concern about the delicate trade between the two most important nations in the regionduring the first paragraph of the press conference he offered with his partner, Fernando Haddad, at Casa Rosada.
“We must follow a path of recovery of a bilateral trade that at some point was very strong against the size of the GDP between Argentina and Brazil and that, over the last few years, has been declining. In the last 10 years, almost 40% of bilateral trade has been lost,” he warned.
Although there is a coincidence in the commercial diagnosis, between the two administrations the gradualness of the solutions differs.
Common currency between Brazil and Argentina: the disagreements between governments
While Argentina vehemently pushes a common currency, “not unique”, as Massa was concerned to point out, to correct distortions, promote intra-Mercosur trade and not depend on the US currency, the management of the center-left leader, Fernando Haddad, seems to be less reformist.
Speaking to the press, he said, “trade is very bad and the problem is precisely the foreign currency, so we are trying to find a solution, something in common that can make trade grow.”
As indicated, Argentina’s trade with Brazil had suffered due to the lack of dollars in our country, where an economic crisis has left the Frente de Todos government struggling to replenish foreign currency reserves, with an inflation rate of almost 100% during 2022.
Massa and Haddad talked about the common currency project, although the Argentine seems to be the most in a hurry.
Haddad pointed out that Argentina is an important buyer of Brazilian industrial products and that “several possibilities” are being considered, to get around their currency problems, although no decision had been made.
Before Lula Da Silva’s first official trip abroad, Haddad was asked if he could provide more details on the issue of foreign currency.
Brazil does not plan to abandon the real from its economy
Haddad, Lula’s right-hand man, former governor of São Paulo, akin to center-left thought in his country and one of those who are emerging as Lula’s successor in power, confirmed that he would clarify the matter in the coming days. adding ironically: “Above all, because there are those who say that the real is going to end”.
For Fernando Hadad, the end of the Brazilian real is not an option. There will not be a single currency like the Euro.
The real will have a long life for the Brasilia establishment and hence the clarification to journalists from Sergio Massa, so that there is no talk of a single currency between the two nations despite the fact that the intention of presidents Fernández and Da Silva is to follow a path that allows the elimination of trade barriers between the two countries that govern.
Therefore, the single currency of Mercosur is becoming a modern chiliasm, with which emblematic figures of the union between Argentina and Brazil dreamed, such as Juan Domingo Perón and Getulio Vargas, who never overcame the opposition of Itamaraty diplomacy, who preferred not hinder its deep post-war relations with the United States to create a customs union with Argentina during the Perón government, or Raúl Alfonsín and José Sarney, who finally managed to create Mercosur and, closer in time, Roberto Lavagna, during the administrations of Alfonsín, first, and of Néstor Kirchner, later, or even, during the administrations of Mauricio Macri and Jair Bolsonaro.
A common currency between Argentina and Brazil would be a strong boost for both governments, at an economic level in the region.
Common currency in Mercosur: background
For the former director of Grupo Brasil and journalist specializing in Mercosur issues, Ricardo Sarmiento, “the common currency is mentioned every time a government needs to strengthen an alliance. Since the beginning of Mercosur, there has been talk of a common currency. In other times they spoke of the “gaucho” or “gaúcho” due to the coincidence in the name of the man from Río Grande Do Sul and the man from the Argentine countryside”.
Curiously, at the time that protocol number 20 of the Viedma declaration was signed, dated July 17, 1987, between the officials of Raúl Alfonsín and José Sarney, those in a hurry or in need to advance in a common currency and in any tool of possible integration, They were the Brazilians.
José Sarney’s administration considered integration with Argentina to be of vital importance, even more so than Raúl Alfonsín’s administration. Brazil had begun to shape its regional expansion.
The document said that the governments of Argentina and Brazil “decide to create a common monetary unit, denominated Gaucho, expressed its value in the terms determined by common agreement by the Central Banks of the two countries to be issued and backed by reserves”.
The team that worked on the creation of the Gaucho was made up of Sarney’s economy minister, Dilson Funaro, the Foreign Ministry’s secretary for International Economic Relations, Jorge Romero, and the Commerce and Industry secretary, Roberto Lavagna, for whom Beatríz Nofal and Jorge collaborated. Campbell.
The idea of a common currency known as Gaucho never prospered and in the ’90s, Argentine convertibility through, the idea disappeared from the agenda between the two countries.
Economy Minister Raúl Alfonsín also fought for a common currency in 1987.
Monetary integration was re-analyzed during the management of Roberto Lavagna as Minister of Economy of Néstor Kirchner but, on that occasion, Lula decided to go ahead with an agreement with the IMF and the agreement was forgotten.
Closer in time, Mauricio Macri and Jair Bolsonaro, who showed many coincidences in political matters, just like Lula Da Silva and the Fernández family, tried to move forward with the idea of real weight.
His economy ministers, Nicolás Dujovne and Paulo Guedes, exchanged technical reports, but given the rumors of the creation of a common currency, the Central Bank of Brazil decided to issue a document stating that “… the Central Bank of Brazil does not have projects or studies underway for a monetary union with Argentina.”
Just a few years later, and before the same initiative refloated under the name of “South”, is the Brazilian Minister of Economy, Fernando Haddad, the one who puts in the freezer the initiative of a euro for the region.
