How Brazil’s Currency Devaluation Harmed Mercosur’s Members

Spanish wise man Felipe Gonzalez An idea which "involved a fantastic but frustrated will power." That's the way former Spanish Socialist president Felipe Gonzalez describes Mercosur, the South American common market. A previous common infrastructure commitment is more important for integration than having "political groupings such as Mercosur."

Gonzalez who ruled Spain from 1982 to 1996 and was invited to participate during the discussions for the creation of the Mercosur Treaty of Asunción in 1991, said that the great starting error of the four countries, Argentina, Brazil, Paraguay and Uruguay, was not having included a clause indicating that whenever one of the members was forced to modify its exchange rate, the others automatically could increase import duties in the same percentage as the modification of that currency's value.

He pointed out to the January 1999 experience when Brazil abruptly decided to devalue its currency, leaving the other three members economies under great strain since it was not contemplated they could increase their import duties.

"This was Mercosur's first major mistake," underlined Gonzalez during a forum to young Spanish and Latinamerican leaders held in Madrid. Felipe Gonzalez was recently named president of the EU Council of Wise Men

He went on to argue that Latin America's solution was not the integration into political groups, "such as Mercosur," but rather creating a net of infrastructure in energy, education and highways in all the region's countries. "It is essential to promote physical capital," he said.

"Lack of infrastructure in highways, links between countries is one of the main problems which impede Latinamerican integration," said Gonzalez who added that the region has an absence of a network of communications, water distribution, "but even more important energy."

"What are missing are projects, not funds," underlined Gonzalez who insisted that integration processes must be "practical" and "not only political or ideological."

Another area to be addressed according to Gonzalez is bringing down inflation to enable Latin American countries to combat poverty, which is one of the main points why "there's no sustained development in the area, and therefore no Latin American integration."

Gonzalez also identified as one of the basic needs in Latin America the redistribution of wealth, both directly and indirectly. This means promoting education, public health for the poorest sectors, particularly children so they can access to information and in the future it won't make a difference where they are born. Similarly with job opportunities, so wealth distribution really becomes fair for all.

"Creating and training human capital is vital," but not only learning, "you must teach people so they know what they can do with the knowledge they receive."

Finally and talking more directly about politics, the EU wise man said that one of the big problems in Latin America is that incoming governments present themselves as "saviors of motherland" and pretend to ignore the teachings of history and experiences in other countries of the continent.

Gonzalez won four Spanish elections running to complete thirteen and a half years in office; he convinced his countrymen to join NATO, the European Economic Community and helped transform Spain from one of the most backward to one of the leading countries in Europe. He also revamped the Socialist party from a Marxist orientation to main stream European social democracy.

Mercopress

Tags:

You May Also Like

In Europe, Brazil President Says World Needs to Shop More to Get Out of Crisis

The president of Brazil, Dilma Rousseff told reporters she did not recommend adopting harsh ...

Brazilians Fail PT, But Give Lula High Marks

The latest National Transportation Confederation/Sensus Institute poll (CNT-Sensus) shows that the popularity of the ...

Monsanto Applauds Brazil’s New Biosafety Law

Brazil’s President Luiz Inácio Lula da Silva signed, today, a biosafety bill into law ...

Brazilian Banks Grow 130% Charging Customers 74 Different Fees

A just-released Brazilian Central Bank report shows that over the last ten years Brazilian ...

The Worse the Better

It’s important to note that by and large, Brazilians weren’t exactly enthralled by their ...

When the People Take Over in Brazil

Avenida Paulista, a three-kilometer long avenue, is regarded as São Paulo’s best-known landmark. Why ...

Pan-American Games Open in Brazil with Olympic Boos for Lula, US and Argentina

The world's foremost sports event right after the Olympics, the Pan American Games, saw ...

Navigating the Labyrinth of Brazil’s Petrobras Scandal

Since March 2014, Brazil has been shaken by the revelations from Operation Lava Jato ...

South Africa One of the Stops on Brazil Lula’s Fifth Trip to Africa

Brazilian President Luiz Inácio Lula da Silva will begin Tuesday, February 6, his fifth ...

More than 5,000 Mayors Take Office in Brazil

Mayors elected in Brazil’s municipalities took office on Saturday, January 1st. According to the ...