25 October 2007 Edition

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International : Bank of the South launched for Latin America

Chávez challenge to IMF and World Bank


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.

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.

 News in Brief 

Poland elects new government
THE liberal conservative Civic Platform has been elected as Poland’s new government, ousting the Law and Justice Party led by Prime Minister Jaroslaw Kaczynski and his twin brother, President Lech Kaczynski.
The Civic Platform wants closer ties with the EU and plans to adopt the euro by 2013, introduce lower taxes and push privatisation.

Turkish Army poised to hit Kurds

AN ATTACK by independence fighters from the Kurdistan Workers’ Party last Sunday left 12 Turkish soldiers dead. The Turkish military said that eight other personnel were missing.
On 18 October, Turkey’s parliament approved cross-border raids into Kurdish areas of Iraq after an escalation of attacks. Ankara later agreed to a US request to delay action but only on condition that Washington takes “swift steps” against the rebels.

Bhutto wants outside probe of suicide bombings
FORMER Prime Minister Benazir Bhutto has called for foreign help to investigate the double suicide bomb attacks on her motorcade in Karachi on 18 October.
The cavalcade was bringing her home from eight years in self-imposed exile after she was removed from office in 1996, for the second time, amid allegations of corruption.
Bhutto was unhurt but the explosions caused the deaths of 139 supporters and many more were injured.
Bhutto heads the country’s largest political force, the Pakistan People’s Party (PPP). She has been negotiating with President Pervez Musharraf over a possible power-sharing deal.

Tamil Tigers’ air strike on air base
NINE MEMBERS of the Sri Lankan military and 20 Tamil Tiger ground fighters were killed after two rebel planes bombed a government air force base in the Tigers’ first combined air and land assault.
Four more airmen were killed when their helicopter sent on a follow-up search operation crashed in the area. The rebels said they still held parts of the base, at Anuradhapura, 210km (130 miles) north of the capital, Colombo, hours after the attack.
The Tamil Tigers are fighting for a Tamil homeland in the north and east of the island. The fighting on Sri Lanka’s northern fronts has intensified recently.

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