Chávez challenge to IMF and World Bank

BY SALLY GALLAGHER

THE DAYS when the most industrialised and well-off Western countries imposed policies through the International Monetary Fund, the World Bank and the World Trade Organisation on developing countries, supposedly to benefit the recipients but enriching the already powerful, are being challenged by Venezuelan President Hugo Chávez. Chávez is launching an international lending institution that will challenge IMF and World Bank hegemony.
The Bank of the South (in Portuguese: Banco do Sul, in Spanish: Banco del Sur) is a monetary fund and lending organisation devised to lend money to Latin American nations for the construction of social programmes and infrastructure. This is part of Chávez’s ‘Bolivarian Revolution’ – a vision for a united Latin America – and one of the key tools in the implementation of ALBA, an alternative development and trade area for Latin America (Cuba, Bolivia, Nicaragua, and Ecuador are already members) that would escape the dictates of their northern neighbours, the USA and Canada.
The ultimate goal of the Bank of the South is to include every nation within the region of Latin America, from Mexico to Argentina. It will lend money to any nation involved in the construction of approved development programmes. It is proposed that all member countries contribute fairly equal shares to the bank’s initial capital ($300 million to $500 million) so that no member state will control a dominant share.
The governments of Cuba, Bolivia, Nicaragua, Argentina, Brazil, Venezuela and Ecuador met in Rio de Janeiro on 8 October 2007 to plan the beginning of the bank. It was announced that the bank will be headquartered in Caracas, Venezuela and will begin operations on 3 November. All 12 South American countries will be eligible to borrow from the bank. In a surprise move, Colombia formally requested membership in the bank on 13 October 2007.

FUNDING GAS PIPELINE
The first planned mission for which funds are to be donated is an 8,000-kilometre gas pipeline from Venezuela to Argentina, to run through Brazil and Bolivia. The pipeline would cost a tremendous amount of time and money, and as such the Bank of the South would be required to raise large amounts from all involved nations.
One of the primary obstacles that the bank will face will be the reconciliation of its stance with American influence and Brazil’s close economic and political relationship with the USA. Brazil is one of the largest and most influential economies in Latin America.
Chávez sees the bank as part of a wider project combatting US influence and as an alternative to the IMF and the World Bank, from which he says Venezuela will withdraw. He has renationalised American-owned telecoms and electricity companies.
Ecuador’s president, Rafael Correa, shares Chávez’s ideas for the new bank. At a meeting of finance ministers in Quito earlier this month, he said it should combine the emergency-aid functions of the IMF with the project lending of the World Bank and the Inter-American Development Bank.

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