The head of Nicaragua’s largest private business council (COSEP) says Nicaraguan companies that export to Venezuela are unlikely to start using the SUCRE, the virtual currency invented by ALBA countries to avoid dealing in dollars for international trade.
COSEP president José Adán Aguerri says the SUCRE, which Nicaragua implemented last week, is a “voluntary market mechanism” that is mostly attractive to businesses in Venezuela, where the government tightly controls access to U.S. dollars. But most Nicaraguan exporters prefer doing business in greenbacks, Aguerri said.
“We are already exporting almost $400 million a year to Venezuela, and that has happened without the SUCRE. And I image that those exports will continue to happen without using the SUCRE,” Aguerri told journalists last Friday.
If the Sandinista government really wants to encourage more trade with Venezuela, Nicaragua needs to negotiate a bilateral free-trade agreement with its ALBA amigo—something COSEP has been asking for since 2007. With Venezuelan President Hugo Chávez’s health failing rapidly, some business leaders say there is an increasing urgency to institutionalize Nicaragua’s growing commercial relations with Venezuela before the political winds shift.
“We are still waiting for a trade agreement with Venezuela,” Aguerri said.
Exponential export growth under ALBA
Since President Daniel Ortega returned to power democratically in 2007, Nicaraguan exports to Venezuela have increased by more than 17,000% under the Bolivarian Alliance for Our Americas (ALBA), a Venezuelan-backed cooperation agreement between eight leftist governments in Latin America and the Caribbean. Venezuela is now Nicaragua’s No. 2 trade partner after the United States, up from 29th in 2006.
Nicaragua does very little trade with any of its other ALBA partners. Other than Venezuela, no other ALBA-bloc country even ranks in Nicaragua’s top 25 trade partners. In fact, Nicaragua does six times more trade with Haiti than Cuba, and has virtually no commercial relationship at all with Bolivia (Bolivia doesn’t even have an embassy here). So in practical terms, Nicaragua’s adoption of the SUCRE will essentially provide an alternative currency that will be used only for select business dealings with Venezuela—and even then, Nicaragua’s private sector doesn’t seem too eager to use the new virtual mazuma.
The SUCRE could, however, encourage some new niche-market commerce with Venezuela, Aguerri says.
“There could be new market niches that happen with the SUCRE,” the COSEP chief said. “Remember that Venezuela has limited access to U.S. dollars, and that makes exchange rates difficult and makes it hard for Venezuelan businesses to have trade relations with businesses from other countries.”
Still, he stressed, the ALBA governments would do more to encourage commerce by passing a trade agreement that sets clear, institutionalized rules and incentives for trade.