Friday, May 30, 2008

Venezuela Strengthens Financial Ties with Middle East

USA Today, WorldNetDaily, The New York Times, World Bank

Ties between Iran and Venezuela, both members of OPEC, strengthened last week as Iranian President, Mahmoud Ahmadinejad and Venezuelan President, Hugo Chavez announced plans to form a joint development bank and investment fund to finance projects in the two countries. According to reports, the purpose of the bank will be to fund programs in the areas of trade, industry, infrastructure, housing, energy, capital market, and technology. Each country will provide an equal proportion of the initial bank funding of $1.2 billion and the investment fund backing of $1 billion.

This financial plan is the culmination of over a year of planning between the two countries to put together a financial plan to fight U.S. imperialism. In January 2007, Chavez and Ahmadinejad pledged to set up a fund of $2 billion to-in Chavez's words-"permit us to underpin investments . . . above all in those countries whose governments are making efforts to liberate themselves from the [U.S.] imperialist yoke." The alliance between Chavez and Ahmadinejad formed through their common disapproval of the U.S. policy and has included many personal visits by the two leaders with Ahmadinejad presenting Chavez with Iran's highest honor for his support during Iran's nuclear standoff with the rest of the world.

This may be the next step in Venezuela and Iran becoming independent from the World Bank and the IMF (International Monetary Fund). In May 2007, Chavez denounced the World Bank and IMF after Venezuela paid off all outstanding loans to the institutions. The World Bank has nine active projects in Iran but, because of pressure by the U.S., the World Bank has suspended $5.4 million in payments. Chavez also led the formation of the Bank of the South which will begin operations this year. The Bank of the South is an attempt to bring Latin America together to reduce dependency on multilateral financial institutions like the World Bank and IMF.

1) Should world leaders be concerned about the alliance between Iran and Venezuela, both of whom have been accused of supporting terrorism? Especially because of the outspoken goal of undermining financial projects made by the West?
2) The World Bank has a stated goal of "reducing global poverty"; if financial alliances such as the ones mentioned above can better achieve this goal . . . should the international community and lending institutions step aside even with the possible negative political consequences?

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