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Issues surrounding logistics and financial transactions require addressing to unlock substantial potential for economic cooperation between Russia and Latin America

Issues surrounding logistics and financial transactions require addressing to unlock substantial potential for economic cooperation between Russia and Latin America

The nations of Latin America are counting on building ties with Russia, increasing exports and imports, and establishing new enterprises. They are also interested in Russian investment; however, issues surrounding logistics and making financial transactions first need to be addressed. This can be done by building a unified transport system and making transactions in national currencies. Those were the conclusions reached at the Russia  Latin America session held at the St. Petersburg International Economic Forum.

 

KEY CONCLUSIONS 

Latin American nations are interested in continuing to work with Russia

“Real interaction, real economic ties, can occur when there are thousands of different ties – be they small, medium or large – between entrepreneurs. <...> This is the basic level of economic cooperation. I think the potential here is huge, and not only in relation to Cuba, but also to other countries in Latin America. However, there are some obstacles to overcome first,” Boris Titov, Chairman, Russia–Cuba Business Council. 

“Interaction between Russia and the countries of Latin and Central America is not only based on increasing exports and imports, but also on the development of joint enterprises which are – in a broad sense – very serious”, Veronika Skvortsova, Head, Federal Medical-Biological Agency of the Russian Federation.

“We are largely dependent on imports from Russia, business is largely tied to international trade and, of course, we are very interested in developing relations with Russia. <...> We think that over the next few years, our cooperation will develop apace, because both sides are interested in this. That is especially the case when it comes to investment,” Blas Cristaldo Moniz, General Director, Production Cooperative Federation of the Republic of Paraguay (FECOPROD Ltda.).

“We are very interested in the Russian market. We really want to enter your market with our innovative, high-quality products,” Cesar Ordonez, Executive Director, Colombian Association of Clothing Manufacturers.

“We look forward to Russia being an active participant and investor in our country. For that to happen, we must first create the conditions. Our legislation is about to be sent for modifications that will make investments appealing to Russians,” Juan Carlos Garcia Granda, Minister of Tourism of the Republic of Cuba.

 

National governments in Latin America are taking steps to enable tourists and investors to use the Russian rouble

“The American empire imposed sanctions on us as well. However, a favourable environment is being created for trade, mutual trade. Today, all those travelling to our country can pay in roubles, because mechanisms are being created that bypass the sanctions. Those who want to invest in Venezuela and own property there now have advantages,” Ramon Celestino Velasquez Araguayan, Minister of People's Power for Transport, Bolivarian Republic of Venezuela.

“We are now very interested in alternatives, in using the rouble,” Laureano Facundo Ortega Murillo, Special Representative of the President of the Republic of Nicaragua for Cooperation with the Russian Federation; Advisor to the President of the Republic of Nicaragua on Investment, Trade and International Cooperation.

“We need to enable Russian citizens to pay in roubles,” Juan Carlos Garcia Granda, Minister of Tourism of the Republic of Cuba. 

 

PROBLEMS 

Most countries remain dependent on the financial system developed previously 

“I should say that we must correctly assess our strengths ourselves, because we all depend on the financial system that has developed over the years. But the world is changing, and today there are many more opportunities,” Boris Titov, Chairman, Russia–Cuba Business Council.

“Finance is a very important topic. We need effective mechanisms to counter sanctions. Therefore, if we can solve the currency issue, then the issue of payment will become a priority that should be addressed by all of us for the benefit of our peoples,” Juan Carlos Garcia Granda, Minister of Tourism of the Republic of Cuba.

“We also face difficulties. We use SWIFT for international trade. However, we are also endeavouring to move over to our own currency. That involves developing and refining certain mechanisms. This is a determining factor for us when it comes to the development of traditional sectors of the economy, and particularly to boosting trade with the Russian Federation,” Blas Cristaldo Moniz, General Director, Production Cooperative Federation of the Republic of Paraguay (FECOPROD Ltda.). 

 

The need to improve logistics and the trade imbalance

“I hear our colleague speak about the need to move to making payments in national currencies. I agree that we need to do this, but the problem lies deeper. It lies in the fact that there is a trade imbalance. Until it becomes equal, until we have an approximately equal proportion of imports and exports, we will not be able to move over to national currencies, because an imbalance will invariably accumulate,” Tatyana Sakharova, Acting Chairman of the Board, State Specialized Russian Export-Import Bank.

“Another problem is logistics. <...> A lot of goods could be shipped, but only if the logistics are within reasonable grounds, at least to the extent that they were before,” Boris Titov, Chairman, Russia–Cuba Business Council.

“Over the past 18 months, the situation [regarding trade – ed.] has become somewhat more complicated. In order to overcome these problems, we need to solve a number of logistical issues,” Blas Cristaldo Moniz, General Director, Production Cooperative Federation of the Republic of Paraguay (FECOPROD Ltda.).

 

SOLUTIONS

Reducing dependence on the dollar and creating a joint currency for transactions

“I believe that de-dollarization is absolutely vital. <...> We need to de-dollarize international trade. <...> It is crucial for us to create new payment channels and disconnect from SWIFT, because this system returns money specifically to the United States,” Delcy Eloina Rodriguez Gomez, Executive Vice President, Bolivarian Republic of Venezuela.

“We just need to take the first step and either move over to national currencies today, or create a joint settlement currency which would allow us to make payments. Once <...> there was rouble clearing, which facilitated a very substantial increase in trade between countries,” Boris Titov, Chairman, Russia–Cuba Business Council.

“We are looking for new opportunities to de-dollarize so we can shake off the imperialist yoke of the dollar. <...> We want to use the MIR payment system. We can see Cuba’s experience, and are attempting to apply it to Nicaragua and train our specialists,” Laureano Facundo Ortega Murillo, Special Representative of the President of the Republic of Nicaragua for Cooperation with the Russian Federation; Advisor to the President of the Republic of Nicaragua on Investment, Trade and International Cooperation.

“In terms of currency, I spoke with the Minister of Tourism back in December last year about payments with MIR cards. It should be resolved,” Juan Carlos Garcia Granda, Minister of Tourism of the Republic of Cuba.

 

Creating a unified transport system with logistics hubs in Latin American countries

“One idea to emerge is the creation of a unified transport system that would accumulate goods [intended for shipment – ed.] from Latin America to Russia, and from Russia to one of the ports of Latin America. That way, the longest part of the journey <...> will be the same for everyone, which would make it cheap,” Boris Titov, Chairman, Russia–Cuba Business Council.

“Russian investment is very important for Cuba, for the Cuban people. We can also become a bridge that will stretch between Russia and Latin America. We have both the requisite airport and maritime infrastructures,” Juan Carlos Garcia Granda, Minister of Tourism of the Republic of Cuba.

“I think that now is the time to capitalize on this moment and really develop new, direct supply chains,” Blas Cristaldo Moniz, General Director, Production Cooperative Federation of the Republic of Paraguay (FECOPROD Ltda.). 

 

For more information, visit the Roscongress Foundation’s Information and Analytical System at roscongress.org/en

 

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