by Ariel Noyola Rodríguez
The economic containment strategies against Moscow and Caracas stimulated by Washington hasted the reconfiguration of alliances in the world system. Although Russia is geographically located in the northern hemisphere, its diplomatic agenda shows more connection to that of emerging economies. The same is happening in Latin American countries. According to the Russian chancellor, Serguey Lavrov, Latin America is called on to become a centrepiece in the development of a multipolar world order.
There is fundamental economic complementarity between both parties. Russian exportations to Latin America are concentrated for more than 50% on fertilizers, minerals and fuel. Meanwhile Moscow buys the Latin American countries agricultural products, meat and electronic components. In accordance with the projects elaborated by the Institute of Latin America, part of the Russian Academy of Science, the bilateral trade will reach 100 billion dollars by 2030, a 500% increase.
However, there are multiple challenges as well. The recession in the world economy, the deflationary tendency (price plunge) on the commodities market (and on the oil market in particular), the economic downturn of the Asian continent, and the economic sanctions imposed by the United States and the European Union have revealed the urgent necessity for Russia and Latin American countries to increase their diplomatic relationship.
As an effect of the downfall of trade between Russia and the European Union, Latin America somehow emerges as a substitute market and, at the same time, is the main recipient of investments in high technology. In this sense, the investment projects of the National Oil Consortium (conformed by Rosneft, Gazprom Neft LUKoil, TNK-BP and Surgutneftegas), which are engaged with companies from Brazil, Argentina, Venezuela Guyana and Cuba, among other countries, need to be highlighted.
Furthermore, there is a wide range of possibilities for the development of scientific-technological alliances that, on one hand, stimulate industrial development in Latin America, and, on the other hand, contribute to the diversification of exportations from Moscow, which are currently concentrated on hydrocarbons.
The long period of stagnation in the world economy, as well as interstate conflicts over the guarantee of supply of fundamental commodities (oil, gas, metal, minerals, rare earth etc.) in order to reproduce capital, stimulate the development of strategic alliances through preferential trade agreements, joint ventures in the energy sector, technological transfers, technological-military co-operation, etc.
Under that same perspective, the strategic partnership that Russia maintains with several Latin American countries at a bilateral level (Argentina, Brazil, Cuba, Ecuador, Nicaragua, Venezuela, etc.) aims at expansion in the South American region through the Eurasian Union (conformed of Russia, Byelorussia, Kazakhstan, Armenia, and Kyrgyzstan) as a launching point.
While president Vladimir Putin propounded (in an article published in the newspaper ‘Izvestia’) to convert the Eurasian Union into a bridging mechanism between the Asian-Pacific region and the European Union in 2011, the siege imposed against the Russian Federation by the North Atlantic Treaty Organisation (NATO) temporarily removed that possibility.
As a consequence, the Eurasian Union breaks through its continental limits by creating free trade zones with China in Asia, Egypt in North Africa and the Common Market of the South (abbreviated to Mercosur, conformed of Argentina, Brazil, Paraguay, Uruguay and Venezuela) in Latin America.
Over the course of the last years, the strategic partnership between the Eurasian Union and the Mercosur has been Russia’s biggest gamble in South America regarding regional integration: both blocks have a territory of 33 million square metres, 450 million inhabitants, and on top of that, a combined GDP of 8.5 trillion dollars (11,6% of the nominal GDP worldwide). The strategic partnership aims at two goals. In the first place, its goal is to reduce the presence of the United States and the European Union in trade flows and extra-regional investments. Furthermore, the relationship aims at speeding up the worldwide process of de-dollarization by using national currencies as a method of payment.
The Russian development of an alternative payment system to Society for Worldwide Interbank Financial Telecommunication (SWIFT) (China has recently announced the launch of their own payment system, which could start working in September), as well the Latin American experience with the Unified System of Regional Compensation (abbreviated to SUCRE) to dampen the external shocks for the region as a whole, are evidence of the increasing role of both parties in the development of institutions and new financial mechanisms that leave the orbit of the dollar behind.
In the light of the economic and geopolitical onslaught launched by North American imperialism, the emerging economies undoubtedly avoid direct confrontation through regionalization. The Eurasian Union and the Mercosur will have to focus their efforts succinctly on a greater financial cooperation and simultaneously coordinate a common front in defense of national sovereignty and the principles of international law.
In conclusion, the strategic partnership between the Eurasian Union and the Mercosur create an enormous opportunity to show the world a part of the successful response of both blocks to the deepening economic crisis that has been going on and by that, decisively contribute to weakening the cement of the hegemony of the dollar.
Russia Today (Russia)
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