Friday, June 22, 2007

Latin American countries will join to create Banco del Sur, a regional alternative to the World Bank and IMF


Montevideo COMM—“Crearan Banco del Sur en Julio”

Reuters America Latina—“Venezuela espera firmar creacion del Banco del Sur en julio”

Next month the leaders of seven Latin American states—Argentina, Brazil, Bolivia, Ecuador, Nicaragua, Paraguay and Venezuela—hope to finalize the creation of a regional development bank that is to be called Banco del Sur (trans. Bank of the South). Originally, the plan had been to kick-off the new institution on June 26, but delays were caused by disagreements between the leaders of the six states, according to the Venezuelan finance minister. Nicaragua is the latest addition to the states that will form Banco del Sur, announcing its intent to be a part of this venture today.

July will mark the signing of an act to create Banco del Sur; the constitution and implementing instruments of the new institution will follow. However, there is little doubt that Banco del Sur’s creators intend to use this entity to support a different approach to development than the brand they claim has been advanced by the World Bank and IMF.

Banco del Sur, the brainchild of Venezuelan President Hugo Chavez, is intended to offer Latin American countries an alternative to the World Bank and IMF models of development. The World Bank and IMF have been criticized—particularly by Latin American states—for focusing only on liberalized free market models of development, an approach which some believe is at cross-purposes with the World Bank and IMF’s stated goals of poverty reduction and sustainable development. Specifically, President Chavez has accused the World Bank and IMF of serving as little more than instruments of the United States’ imperialism.

Each of the soon-to-be member states of Banco del Sur have expressed confidence that the act to form this new institution will be signed in July, according to schedule.

For discussion:

In the last decade, Latin America was rocked by financial crises that resulted in economic and political destabilization across the region—detailed in the E-Book found on this website at Part 3, Section VI. Is it arguable that this episode served to foster distrust and disenchantment with the development approaches advanced by the World Bank and IMF?

Do you think Banco del Sur is necessary in Latin America, that is, are there viable alternative to liberalized free market development models?

Should the creation of Banco del Sur act as a wake-up call to the World Bank and IMF, and by extension to the United States and Europe (the two countries that exercise the most control over these institutions)?

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