Venezuela: New currency for Ecuador trade advances unity

July 10, 2010
Venezuelan foreign minister Nicolas Maduro.

Venezuelan President Hugo Chavez took a giant symbolic leap in the direction of Latin American independence on July 6 when Venezuela and Ecuador conducted the first bilateral trade deal between two countries using a new trading currency, the Sucre, instead of the US dollar.

The Unitary System of Regional Compensation (Sucre) is the currency the adopted last year by the Bolivarian Alliance of the Americas (ALBA) regional bloc to allow member states to trade without using the US dollar.

ALBA is an anti-imperialist “fair trade” bloc initiated by Venezuela and Cuba in 2004. Other members are Ecuador, Bolivia, Nicaragua, Dominica, Saint Vincent and the Grenadines, and Antigua and Barbuda.

Paying for goods with the Sucre will avoid the transaction costs incurred when using dollars on the international markets and encourage a more stable trading system, less impacted on by global economic conditions.

The first trade involved 15,000 tons of rice, sold to Venezuela from Ecuador. Venezuela paid 1.89 million Sucres (there are 1.25 Sucres to the dollar) for the rice.

Correa was in the Venezuelan capital Caracas with Chavez for the eighth quarterly bilateral presidential meeting that both leaders have committed to in order to strengthen relations between the two nations.

Ecuadoran President Rafael Correa said: “It is a very simple concept: instead of using a currency from outside of the region to trade in goods and services, we use this compensation system where you pay in national currency to your respective exporters and in that way the international currency isn’t needed.”

Venezuelan Foreign Minister Nicolas Maduro said, “The moment has arrived to make the first step in the construction of the economic base that sustains social transformation ... that frees our countries from poverty, backwardness.”

Chavez added: “The implementation of the Sucre democratizes the economy in our countries, it allows us to advance towards freeing ourselves from the dollar, decoupling ourselves from the international hegemonic system.”

[Abridged from Venezuela Analysis.]

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