18 May 2007

Banking on each other

No wonder that Venezuelan president Chavez is public enemy no. 1 for the Bush administration. Not only is he smart enough to have figured out how the international financial system repeatedly stymies the poorer countries' attempts at economic progress, but he has the resources to do something about it. As news agencies and media outlets are increasingly coming under the power of corporations some reading between the lines is necessary, but the stories about the Latin American regional development bank are fairly clear to discern.

The proposed Banco del Sur is being discussed by a group of Latin American countries including Argentina, Brazil, Bolivia, Ecuador and Paraguay as well as Venezuela, a pretty comprehensive list of the countries that lost out most spectacularly as a result of their debts to the IMF. Paying interest to rich bankers in the West swallowed up the huge income they were earning from exports, preventing it from benefiting their own citizens.

The leaders of these countries, the majority now broadly on the left and including the highly colourful characters of Evo Morales of Bolivia (who meets visiting dignatories dressed in an alpaca jumper) and former union leader Lula of Brazil, as well as Chavez himself, have learned the lessons of the 1980s and 1990s. The proposed new bank will hold reserves made up of the currencies of the countries of the region and could make development loans. It could also operate as a clearing-house for regional trade, avoiding the need to use dollars and hence support the US.

The high price of petroleum enables Venezuela to step outside the exploitative international institutions that have kept the South poor since the Bretton Woods agreement. The countries of Latin America can create an internal import-export market based on parity and fair representation, rather than the one-sided system of the WTO.

I wonder if this is the little joke that Chavez was sharing with his friend and inspiration Fidel Castro in those pictures from the Havana hospital! No wonder they laughed so much!

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