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Just a t the entrance of the International Fair of Havana, in a simple and colorful stand, there was the Sucre –– Unitarian System of Regional Payment Compensation ––, a finance currency expression of the Latin American.
The privilege position was of the institution’s interest, Cuba’s too, to multiply visibility to a project that “is just a little arm from ALBA-PTT (People’s Trade Treaty),” as it was defined by the Venezuelan lawyer Beronica Franco, had of the legal Regional Currency Council.
Together with the Alba Bank (Bolivarian Alliance of the Peoples of America), the Sucre has set out, from the finance to commerce, to stimulate prosperity and integration of the Latin American and Caribbean region. Doing so, also means to challenge the world economic order born by mid last century in the United States (U.S.) and it is at present marked by inequality and the asymmetry.
Trabajadores Newspaper interviewed Benigno L. Regueira, Executive Director on the part of Cuba in the Regional Monetary Council of Sucre, a responsibility he shares as Deputy Director of the Vice-presidency of the Macro-economy of the Central Bank of Cuba, in search to some answers on how this has advanced since its foundation in 2010 up-to-now.
What is the Sucre?
It is a payment system that uses a virtual currency and has a system of compensation every six months. Among its purposes is to find equilibrium in trade operations among the country members.
The ideal thing is would be that at the end of each period, there would be nothing to compensate, but that the export volume of what was exported would be equivalent to the volume imported and that there would be no currency mediation at all, but that is almost impossible. Anyhow, it is supported that at the end of the period, as it is a multilateral compensation, the states ill have to distribute less currencies they will pay in other ways.
Another objective is to promote the complementation of our economies. Identify, between the country members, the products that could be exchanged and this way they will not have to go to other markets. It also highlights the purpose to decrease the use of currency in trade and finance operations, mainly the dollar.
Sucre has also other advantages like the reduction of the finance costs of the operations and the payment are charged in real time, that is, in the moment a country for instance, Venezuela, makes an exportation to Cuba, it will be paid and charged.
Which funds does Sucre count on, which support does it have in each country?
There must be commerce to have a system of payment. The support of the system is the exchange between the country members. The Regional Monetary Council makes a distribution of the virtual money at the beginning of every period; it is what we call assignment that is backed by the local currency of the country. Those having greater commerce will have greater assignment and those having few will receive less. The assignments are modifiable. It is analyzed as much as necessary. They can increase or decrease and also make lending among the country members.
Which countries are using Sucre in commerce?
At present, the member countries are Bolivia, Cuba, Ecuador, Nicaragua, Venezuela and Uruguay which is in a process of addition. The two nations with greater volumes of exchanges are Ecuador and Venezuela. Bolivia has some growing trade levels by Sucre. We are working in Cuba to increase its use and its presence in the International Havana Fair responded to this will.
Why Cuban businessmen have not reached this payment system with greater intensity?
Constitutive Agreement established the trade exchange of goods and services associated to them, for instance charter and insurance. It also respects the integrity for each country to include or not bilateral or intergovernmental agreements as that existing between Venezuela and Cuba. It is the legal authority of the countries to show the most convenient way.
The performance of the Cuban economy, based on planning, establishes the need to regulate import and export operations in the country, which is also applied in commerce by means of Sucre, so, the enterprises can count on them with this alternative, if those operations are in their plans.
It is necessary that the businessmen know better the advantages of the system, for that we delivered chats, staff advice and we are always in devoted to help directly.
Why are not the services in the system?
Since the beginning we decided concentrate on merchandises because the services have other structures and risks. We are now in conditions to partially incorporate them. Some countries are interested in tourism, for instance Ecuador and Venezuela.
Which are the Cuban enterprises that have participated with Sucre?
Biocubafarma, Alimport, ALBA Cultural Fund, IMECO, Publishing Company Pueblo and Educacion, among others have carried out operations, but not with high volumes.
Sucre’s evolution graphic shows a tendency of decrease. What is the explanation of this behavior?
It has been more an adjustment than a decrease. Sucre’s main goal is equilibrium, the lack of balance at the beginning are not favorable. In 2012 there was a boom, mainly due to the operations between Ecuador and Mexico, but some of the products exchanged by that system, were not good for the States and were adjusted the following years. The closing of 2014 should be similar to 2013 and it would be greater for Cuba.
In these years the country members have readjusted their economies ad in Venezuela, for example, they are at present working with the planning of imports.
Will we go back to the period of bartering?
It is not bartering, in another way it is finance compensation. In modern world we cannot exchange leaders by salt, things have their prices and they should be compensated.
In Sucre the balances are honored by a virtual currency. Nevertheless, and as essential part of the system, there are the principles of a fair and just commerce on which ALBA is also been built.
How is the compensation?
It is multilateral. For instance, we could have a deficit with Venezuela, because there are more importations than exportations. But when I see the numbers with Ecuador is the other way around. At the end, all of that, in a compensation chamber, is added and subtracted: what there was deficit with Venezuela could be compensated or cancel with the surplus that comes from the relation with Ecuador.
Which is the role of the Sucre in ALBA’s purposes?
Sucre is a mechanism that emerges of the vision prevailing for the new regional finance architecture. It is a system of payments, but represents jut an instrument more from ALBA-PTT, because it generates a finance system that will allow the use of local currency of the countries in the block to exchange merchandises produced in the zone.
Sucre’s nature is trade financial and inside ALBA’s components there is the ALBA Bank, a developing finance institution looking for prosperity and integration of the great Latin American and Caribbean region.
How did Sucre emerge?
At the beginning, it was the idea of Presidents from Ecuador, Rafael Correa and from Venezuela, Hugo Chavez. It was later promoted by Chavez and Fidel as the ideal mechanism for the region. It has increased and now we are processing Uruguay that has requested its inclusion. El Salvador and other countries are also interested.
It I everyday more extended the concept this region need to get to know better and exchange products, without the need to look for them in Europe, Asia or other spaces.
Which people or institutions participated in the design of Sucre system?
There was a previous process that lasted 10 months. Every country had its multidisciplinary team, including Honduras that was the founder country and after the coup to Manuel Zelaya, it withdrew. Specialists from Trade, Foreign and Foreign Investment, Economy, Planning and Finances, Labor, Foreign Relations, Central Banks and other Ministries participated in each group. We had long working meetings every month until October 2010, when finally the presidents of the country members signed the Constitutive Agreement.
Are there similar experiences?
Yes, there are for example the Aladi (Latin American Association for Integration) which has a similar system than the OECS (Organization of Eastern Caribbean States) that also has a virtual currency… There were other experiences in American that did not continue.
The original thing in Sucre is its own characteristics of the system, and it includes the way compensations are done by the compensation Chamber in ALBA Bank. In Aladi, for instance, the Central Bank from Peru is an operation center, but compensation and liquidation is through the US Federal Bank. So, Cuba is a country member of Aladi, but did not enter the payment system, for the blockade imposed by the US against Cuba that will not allow it.
If a Cuban enterprise would be interested in using Sucre what should it do?
For the Cuban enterprises, the first step is that its trade interests would be included in the economic rector planning. The second is that its organism or institution will authorize and contribute the liquidity needed for the operation, depending on the scale of priorities. This mechanism is completely volunteer and, as part of the agreements, they agree the payment by mean of Sucre which reduces the transnational links and the finance commissions. Both of them, exporters and importers should fulfill the intern regulations from each country and, I repeat, the payment, when they are done in the domestic currency; it is in real time.
Sucre has an open system, it means, and that nations which are not county members, but from the region, can join it.
You have been working in the Bank for 35 years. What is the most you have loved of this job?
The Bank I one of the most important activities of a country and you feel proud for that, although in real life, more than charm, what has motivated me the most in all these years is responsibility. I worked at Foreign Trade before and it was also an interesting experience.
We would like the Bank play a more important role in enterprise financing. It is a challenge we are called t6o fulfill with the changes in the economic model promoted by the Cuban State, and I love challenges.
Sucre is also a great challenge…
Yes, it is, perhaps that is why I am here.
Summarizing: Advantages of the Sucre
It is to have Access to a market with approximately 68 million inhabitants.
It allows the use of a local currency for the payment of importations.
It reduces costs in currency conversion for small and medium enterprises and the associative enterprises too.
It reduces other transnational costs due to asymmetric information.
It helps liquidation issued of the obligations acquired.
It reduces the differences between the value date applied to the purchases and the cessation of the currencies.
It maximizes the fluency of the liquid assets of the enterprise.
It gives a diversified offer of goods and services.
There is reduction for import costs.
Prices are lower for consumers.
Source: www.sucrealba.org
