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South America says no to protectionism on meltdown

South America says no to protectionism on meltdown

Top South American officials holding an emergency meeting to discuss the world economic crisis decided Monday that protectionist policies adopted throughout the region in past decades would be a serious mistake.
Foreign and finance ministers from Mercosur economic bloc nations also said they would try to forge a coordinated macroeconomic response to buffer South America from the crisis, which has battered the region's stocks and currencies as investors flee emerging markets.
Officials agreed that protectionist economic policies frequently adopted by individual South American nations in decades past would hurt more than they would help, Chilean Foreign Minister Alejandro Foxley said.
"The worst thing that could happen would be to use this crisis as an excuse to return to the policies we had in the 1960s, to build an old-style protectionism that generates barriers in our economies and only accentuates the crisis," he told reporters.
Brazilian Foreign Minister Celso Amorim also said protectionism "cannot be the response to the problem of the crisis," adding that South America will weather the global economic storm best by pushing hard to integrate the regions' economies.
Among examples cited was a recent move by Argentina and Brazil to let trade transactions between the two nations be conducted in pesos and reals, instead of requiring dollars.
"There's a consensus that integration will help to mitigate the effects of the international crisis," Amorim told reporters after the ministers met.
South America is being hit hard by the crisis because so many economies in the region depend on exports of commodities like soy, minerals and oil.
International demand for those products has dropped sharply, prompting steep declines in shares of big South American companies and massive sales of dollar reserves by central banks to try to prop up declining local currencies.
Ministers discussed the decline in prices of commodities and exports, but did not come up with any immediate solutions on how to ease the difficulties that producers are experiencing in finding buyers and credit to finance their operations.
Attending the meeting were foreign and finance ministers and central bank presidents from Argentina, Brazil, Chile, Uruguay and Venezuela. Lower-level officials participated from Bolivia, Colombia, Guyana, Paraguay, Peru and Suriname.
Venezuelan Finance Minister Ali Rodriguez said the United Nations should investigate the causes of the world financial crisis and impose penalties on those responsible.
Referring to the U.S.-rooted mortgage securities meltdown that sparked the crisis, Rodriguez insisted the U.N. should "propose severe punishment against the great swindlers who stole billions of dollars from investors who trusted the banking and financial system. This is literally a crime against humanity."
Chile's Foxley said South American nations must "act quickly, not only to avoid the crisis over liquidity but in order to avoid the negative social impacts that will come from this."
If no action is taken, he said the region's growth will be crimped and unemployment will rise.
"The region's countries have advanced tremendously in order to reduce poverty. We cannot be passive or this crisis will set us back,"
said.