Thursday, June 13, 2024

LATIN AMERICA | 09-08-2023 14:55

Paraguay's president-elect calls for 'more open' Mercosur

Paraguayan president-elect Santiago Peña, supports a "more open" Mercosur and rejects the idea of a common currency for the South American bloc.

Paraguayan president-elect Santiago Peña has called for a liberalisation of the Mercosur regional trade bloc and rejected calls that member states should share a common currency

During an interview with the Infobae news portal last Saturday, the 44-year-old politician declared that he wants “a more open Mercosur” and showed understanding with Uruguay amid tensions in the bloc. 

Peña backed Montevideo's stance and the negotiation of business agreements with third-party countries without the consent of other member states, a move which has created a crisis in the group founded in 1991.

"I want a more open Mercosur. Paraguay is in between two very large economies, as is Uruguay. When the Uruguayan president [Luis Lacalle Pou] says they could negotiate separately with China, what he’s doing is raising voice and saying ‘Gentlemen, either we make Mercosur more flexible for us or we have to go out and find other markets,'" said the president-elect.

Uruguay is in the early stages of talks for an FTA with China, to which its Mercosur partners object, particularly Brazil, and has requested to join the Trans-Pacific Partnership agreement.

Uruguay's last few administrations have claimed that the lack of joint success in trade agreements should lead to a more flexible bloc that enables an individual opening at different speeds.

Peña, an economist who will be inaugurated for the Partido Colorado, replacing Mario Abdo Benítez, also rejected the idea of a common currency for Mercosur states, a push spearheaded by Brazil, supported by Argentina and rejected by Uruguay.

“A common currency is no good for anybody because the basic condition for it to work is for countries to be in the same economic cycles, which is not the case. Paraguay has a four-percent yearly inflation, Argentina’s is over 100 percent," he said.

Inflation in Argentina, which is facing a foreign exchange crisis and the sharp erosion of international reserves, is now 115 percent year-to-year. 

Peña also touched on the debate on dollarising economies, very much discussed during the campaign for Argentina's election in October.

“The exchange rate is a great tool: countries who dollarise have short-term benefits, but in the long run they have problems. It happened with the dollar-peso parity in Argentina in the 1990s", he said, regarding the crisis that hit its neighbouring country earlier this century after the parity.

Peña further pointed out that he will attempt to make the handling of the Paraná-Paraguay-Uruguay 'hidrovía' waterway, which helps in the trading of goods from his landlocked country, “a core issue on the Mercosur agenda."



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