Venezuela, ALBA, and the Limits of Postneoliberal Regionalism in Latin America and the Caribbean

Abstract

This chapter analyses implementation of the Unified Regional Compensation System (SUCRE), which channels international trade using local currencies and limits the role of the US dollar. This reduces foreign exchange expenditure for states and transaction costs for firms. SUCRE-zone producers gain a competitive edge over external producers, favouring intra-ALBA trade. The SUCRE aims to promote regional production chains with higher value added, to provide access to export markets for small and associative actors, and to implicate producers from some member-states in the welfare provision of others. Implemented by ALBA’s five major Latin American members, it expanded rapidly from 2010 to 2012. But implementation was hampered by clashes between national development strategies brought into regional contact via the system. Venezuelan import dependence reduced foreign exchange savings, though regional access to scarcity products was a political boost. Ecuador’s gains in manufacturing exports often came at Venezuela’s cost, whereas Venezuela abused the SUCRE to reduce cash flow pressures. Worst of all, Venezuela’s dysfunctional currency regime combined with Ecuador’s dollarisation to facilitate massive currency arbitrage. The SUCRE ultimately delivered conflict and corruption alongside trade and production, and by 2016 its association with these problems and with an increasingly antidemocratic Maduro government left the mechanism widely unloved and largely unused.