Chavez during a political rally on Saturday apprised that the leaders would meet on Monday in Caracas to further shape an extraordinary project” on a currency that will “break the dependency on the dollar, its economic and financial colonialism.

The currency called Sucre was named after Jose Antonio de Sucre who fought for independence from Spain alongside the Venezuelan hero Simon Bolivar in the early 19th century. The currency is expected to initially function as an electronic instrument before it is made to a paper format.

The Sucre is likely to be in circulation as the ECU, which was a forerunner to the euro. Then, the ECU was operational as an account unit managing the stable exchange rates between member states before the national currencies were assimilated to the euro.

Since the signing of MOU on the Latin American currency last year, Chavez has repeatedly urged his member states to cut down foreign reserves in the form of the US dollars. Most South American countries stored their reserves in the US dollars, and for the past several years the socialist states of the region wanted to detach them from the US domination in regional trade. The growing influence of China in the region has also compels the left countries seeking new ways to store cash.

The ALBA comprises of Venezuela, Bolivia, Cuba, Ecuador, Nicaragua, Honduras, Dominica, Saint Vincent and the Grenadines, and Antigua and Barbuda. The ALBA was founded in 2004 by Venezuela and Cuba as a counterweight to the Free Trade Area of the Americas that the US and some Latin American nations were proposing at the time.

Toboc Trade News

With this action, Chavez has brought another business sector under state control, in an attempt to reduce prices of essential items, with the country peaking at the end of last year with an inflation of 25 percent, the highest among the Latin American countries. Chavez has repeatedly threatened to seize businesses that raise prices in response to the country’s first currency devaluation since 2005.

On January 8 this year, Chavez devalued bolivar against dollar to perk up the economy in tatters. He declared a new two-tiered rate: 2.6 per dollar for priority goods, such as food and medicine, and 4.3 for imports of non-essential items, such as air conditioners and electronics.

In the past 11 years in office, Chavez has nationalized major businesses from the economy, including oil, banking, electricity and telecommunications; and the retail chain seizure is latest in the line. Exito, headquartered in Colombia, runs six hypermarkets and around 32 supermarkets in Venezuela.

According to the Venezuelan president, after nationalization, the stores run by Exito and several other stores including a newly built shopping mall in Caracas will be used to strengthen Comerso, a new government retail initiative which plans to sell products at highly subsidized rates. “How much longer are we going to allow transnational companies to come here to speculate with our prices?” the Venezuelan leader asked viewers of his weekly TV program, Alo Presidente.

Chavez said legal reforms were under way to take over companies accused of speculation. In this manner, more than 200 stores are likely to get nationalized or would be added to the recently announced state-run retail chain.

According to sources, businessmen fear that the hounding of businesses by the government will only dent the confidence of the economy, and also alienate foreign investments. The head of Caracas Chamber of Commerce, Industry and Services, Victor Maldonado said Chavez’s efforts to boost the state’s role in the economy with takeovers were going to ruin the country.

Toboc Trade News