🌎 An Argentina-Brazil common currency will be hard to make work
China’s and Australia’s trade ministers are back on talking terms
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Today’s briefing is a 4.5 min read:
- 💱 Argentina and Brazil are exploring a common currency.
- 🇨🇳 An early spring thaw for China and Australia?
- ➕ Plus: A guide to Latin American flags, how the papers are covering India’s documentary crackdown, and why Taiwan’s ambassador to the US has so much clout.
– VC & EP
🗺️ AROUND THE WORLD
- 🇵🇰 Pakistan: The Pakistani electrical grid failed on Monday (23 January) for the second time in three months, leaving tens of millions without water or power.
- 🇪🇪 Estonia: Russia has expelled Estonia’s ambassador on account of her country’s “total Russophobia”. She is the first ambassador from an EU country to be expelled from Russia since the war began.
- 🇳🇷 Nauru: Nauru’s ex-Consul General in Thailand had rented a home in Bangkok that was allegedly used as a passport-forging base for Chinese criminals. Nauru’s government denies knowledge of the scheme.
- 🇨🇦 Canada: A Canadian court said that the government must work to bring home four ISIS-affiliated Canadian citizens who have been detained in Kurdish-controlled Syria.
- 🇸🇿 Eswatini: A popular Liswati opposition politician, Thulani Maseko, was killed on Saturday (21 January) amid rising anti-government fervour. Activists say Eswatini’s King, the last absolute monarch in Africa, has also hired hitmen to quash dissent.
💱 SOUTH AMERICA | CURRENCY
A Latin American common currency won’t be easy to get off the ground
Briefly: Brazilian President Luiz Inacio Lula da Silva and Argentine President Alberto Fernandez plan to integrate their countries’ currencies, according to a jointly-written article featured in the Argentine newspaper Perfil.
Their goal is to create a common regional currency. If successful, a Latin American currency bloc would be the second-largest in the world and cover 5% of global GDP.
The benefits: Officials say currency integration would reduce barriers to trade and limit dependence on the US dollar. Plus, their economies already have a framework for integration through their free-trade bloc, Mercosur (including Paraguay and Uruguay).
The risks: Brazil’s economy is relatively stable, with inflation at ~5.8% in December. But you’d be hard-pressed to find someone who wants to lock arms with Argentina’s economy right now. Annual inflation is at ~100%, and lenders aren’t keen on floating credit to a country which recently defaulted on its debt (and still owes the IMF $40B).
Intrigue’s take: Economic power imbalance can be one of the gravest threats to a currency union. For example, structural weakness in Greece’s economy had driven a sovereign debt crisis that nearly took down the Eurozone in 2009 – but that situation pales in comparison to the one in Latin America.
In an exclusive comment to Intrigue, Alejo Czerwonko of UBS said he was “very skeptical this initiative will see the light of day […] Argentina would need to repair the deeply broken trust in its ability to protect the value of any currency it lays its hands on before embarking on common currency projects.”
Also worth noting:
- Regional leaders are in Buenos Aires this week for the annual Community of Latin American and Caribbean States (CELAC) Summit.
- Argentina has started buying back some foreign-held debt in an effort to improve its credit profile, which ratings agency Fitch downgraded to a CCC- in October.
📰 GLOBAL PERSPECTIVES
How newspapers covered: Indian Prime Minister Modi’s ban on a BBC documentary which explores his role in the deadly 2002 Gujarat riots.
Links: The Guardian, Times of India, DAWN
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🇨🇳 CHINA | TRADE
China’s and Australia’s trade ministers are back on talking terms
Briefly: Relations between China and Australia are starting to warm back up after three years on the ice, with Chinese state media reporting that Chinese Trade Minister Wang Wentao will soon meet with his Australian counterpart.
Some context: China imposed an unofficial import ban on several Australian commodities after former Prime Minister Scott Morrison called for an inquiry into the origins of Covid-19. Australia filed a series of formal complaints with the World Trade Organisation in response.
Intrigue’s take: Earlier this month, Chinese companies resumed importing Australian coal, which was unthinkable just a few months ago. Perhaps Beijing is concerned about the future of energy prices? It might still be too early to declare an end to China’s ‘wolf warrior diplomacy’, but Beijing’s friendlier approach to its Western counterparts is nonetheless significant.
Also worth noting:
- Australian exports to China fell from 42.1% to 29.5% between 2021 and 2022.
- Australian Foreign Minister Penny Wong said last year that a more stable relationship with China was in the “interests of both countries”.
🐦 TWEET OF THE DAY
Someone someday will have to atone for how difficult it is to differentiate between the Honduran, Nicaraguan, and Salvadorean flags 🇳🇮🇭🇳🇸🇻
— Gabriel Cohen (@GabrioCohen)
Jan 22, 2023
When Mark Twain said there was no such thing as an original idea…
… he may have been referring to the Honduran, Nicaraguan, and Salvadorean flags, which (upon first glance) are very similar to say the least. Guatemala wins creativity points for at least going vertical instead of horizontal with their blue and white bands.
It all dates back to the República Federal de Centro América, a union of Central American states which lasted from 1824-1840 and whose flag became the inspo for the flag designs of its successor states.
The yellow, blue, and red flags of Colombia, Ecuador, and Venezuela share a similar origin story, as do the sun-spotted flags of Argentina and Uruguay.
👀 EXTRA INTRIGUE
We’re very online, so you don’t have to be.
🗳️ POLL TIME!
Will China continue to soften its diplomatic approach? |
Yesterday’s poll: Would you attend the WEF Davos summit if given the chance?
🟩🟩🟩🟩🟩🟩 🙋 Yes! I’d love to be a fly on the wall (56%)
🟨🟨🟨🟨⬜️⬜️ 🙅 No, the summit doesn’t address real pressing concerns (44%)
Your two cents:
- 🙅 L.E: “An expensive talk fest that achieves very little. But I’m sure attendees enjoy every minute of it.”
- 🙋 M.H: “I’ve never had a caviar Canapé. Where else can you get one?”
