A Bank of Their Own: Latin America Casting off Washington's Shackles

[marmar]

from AlterNet:



A Bank of Their Own: Latin America Casting off Washington's Shackles

By Mark Weisbrot, AlterNet. Posted October 31, 2007.


The western media call it "Chavez Bank" -- but what are they really afraid of?



"Developing nations must create their own mechanisms of finance instead of suffering under those of the IMF and the World Bank, which are institutions of rich nations . . . it is time to wake up."

That was Lula da Silva, the president of Brazil -- not Washington's nemesis, Hugo Chavez -- speaking in the Republic of Congo just two weeks ago. Although our foreign policy establishment remains in cozy denial about it, the recognition that Washington's economic policies and institutions have failed miserably in Latin America is broadly shared among leaders in the region. Commentators here -- Foreign Affairs, Foreign Policy, the editorial boards and op-ed contributors in major newspapers -- have taken pains to distinguish "good" leftist presidents (Lula of Brazil and Michele Bachelet of Chile) from the "bad" ones -- Chavez of Venezuela, Rafael Correa of Ecuador, Evo Morales of Bolivia and, depending on the pundit, sometimes Nestor Kirchner of Argentina.

But the reality is that Chavez (most flamboyantly) and his Andean colleagues are just saying out loud what everyone else believes. So official Washington, and most of the media, has been somewhat surprised by the rapid consolidation of a new "Bank of the South" proposed by Chavez just last year as an alternative to the Washington-dominated International Monetary Fund (IMF), World Bank and Inter-American Development Bank.

The media have been reluctant to take the new bank seriously, and some continue to call the institution, pejoratively, "Chavez's bank." But it has been joined by Brazil, Argentina, Bolivia, Ecuador, Uruguay and Paraguay. And just two weeks ago, Colombia, one of the Bush administration's few remaining allies in the region and the third-largest recipient of U.S. aid (after Israel and Egypt), announced that it wanted in. Et tu, Uribe?

The bank, which will be officially launched on Dec. 5, will make development loans to its member countries, with a focus on regional economic integration. This is important because these countries want to increase their trade, energy and commercial relationships for both economic and political reasons, just as the European Union has done over the last 50 years. The Inter-American Development Bank, which focuses entirely on Latin America, devotes only about 2 percent of its lending to regional integration.

Unlike the Washington-based international financial institutions, the new bank will not impose economic policy conditions on its borrowers. Such conditions are widely believed to have been a major cause of Latin America's unprecedented economic failure over the last 26 years, the worst long-term growth performance in more than a century. ......(more)

The complete piece is at: http://www.alternet.org/workplace/66529/

[jody]

1. Thanks. n/t

[Judi Lynn]

2. How beautiful it is to see someone able to spell it out, stilll!

From the article:

~snip~
.........The IMF and World Bank have 185 member countries but the United States calls the shots; it has a formal veto in the IMF, but its power is much greater than that, with Europe and Japan having almost never voted against Washington in the institution's 63-year history. The rest of the world, i.e., the majority and the countries that bear the brunt of the institutions' policies, has little to no say in decision making.
(snip)

Of course the U.S. government still has some clout in the region, but without the ability to cut off credit to disobedient governments, its power is vastly reduced.
(snip)

Mark Weisbrot is always accurate. What a pleasure to see someone who's not intimidated pointing out the truth about Latin America. The truth is in short supply these days, isn't it?

[Judi Lynn]

3. Weisbrot is quoted in this article on Bolivia and the IMF:

A Changed World?
Bolivia tries to establish itself as a trustworthy nation.

By Marcela Sanchez
Special to washingtonpost.com
Friday, November 2, 2007; 12:00 AM

WASHINGTON -- A few years ago, Bolivia's dependence on Washington as a source of cash was such that its ministers made frequent treks begging for loans to meet the government payroll. They usually had no trouble getting them because Bolivia could be counted on to follow to the letter the economic prescriptions of the international financial institutions located here.

Then in 2006, Bolivia broke with the International Monetary Fund and signaled its desire for independence. Now this week the Andean nation becomes the first country ever to withdraw from the International Center for the Settlement of Investment Disputes, a World Bank body that referees contract disagreements between foreign investors and host countries.
(snip)

These organizations may help provide a level of legitimacy to Bolivia's new approach, but if the day comes when the La Paz government must raise funds for new development, to expand its gas production, or worse, try to stanch an economic downturn, where will it turn if it has sacrificed investor confidence?

"If the investment is not forthcoming, there are other sources," said Mark Weisbrot, co-director of the Center for Economic and Policy Research, a liberal Washington think tank. "Private investment can be replaced by state investments, there are other countries: Venezuela, China. ... It is a new world."
(snip)http://www.washingtonpost.com/wp-dyn/content/article/2007/11/01/AR2007110101741.html

[Joanne98]

4. This is the best thing to happen to Latin America in 100 years!

God Bless hugo Chavez!

[Vincardog]

5. Testify Joanne God Bless hugo Chavez!

[bvar22]

6. VIVA Chavez.

I am praying that these social democratic reforms migrate to El Norte.
When we have had ENOUGH...they will.

[reprobate]

7. WE've lost whatever influence we had thru the use of Predatory Capitalism.

Fool them once, shame on us. Fool them twice, and they'll turn and bite you on the ass.