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Verónica Rubio Vega | Post-crisis Responses and Prospects in Latin America
a more favourable position to accede to credit lines from these development
banks, than those with less to offer. 47
Another vital mechanism for coping with possible effects of the
financial crisis has been the use of currency swaps. Brazil and Argentina
(Brazil’s biggest trading partner in the region) have employed this instrument
48
with each other to complement their domestic crisis management measures.
Meanwhile, Argentina also announced a three-year currency swap agreement
worth US$10 billion with China in late March 2009. Even if none of this
money is ever used, its mere existence should serve to boost confidence in
the Argentinean peso 49 and in the economy in general, giving it a means of
counteracting the country’s current precarious position in the world financial
markets. This currency swap was also a response to the US Federal Reserve,
which recently approved $30 billion swaps each for Brazil and Mexico, but
was unwilling to extend a line to Argentina, due to its defaulted debt to the
Paris Club. 50
However, there is an ambiguity in the attitude of Latin American
countries towards Brazil and China, since although these two nations may
alleviate some of the external pressure placed by the US and the IFIs, they
may be also lead to decreasing domestic autonomy and weaker commitments
47 One could argue that China’s immediate interest in Latin America is also related to
ensuring access to the raw materials the region produces. Commodities imported by China
include fishmeal, soybeans, oil and gas, iron ore, copper, steel, timber and coffee from Chile,
Peru, Brazil, Argentina, Ecuador, Venezuela, Bolivia and Colombia.
48 Chin 706
49 Ibid. 706
50 Arce, Luis. “China Challenges US Dominance in Latin America.” Wsws.org World Socialist
Website, April 2009. Web. 1 Dec. 2010. line15.
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