Chávez, allies launch Bank of the South Regiona to multilaterals

Hugo Chávez and leaders of six other South American nations launched a regional development bank that they tout as the continent's answer to United States-influenced international lenders.

With as much as US$7 billion in expected start-up capital, backers say the Banco del Sur, or Bank of the South, will offer Latin American countries loans with fewer strings attached than those given by the World Bank, the International Monetary Fund or the Inter-American Development Bank.
The leaders signed the "founding act" Sunday at a ceremony at Argentina's presidential palace hosted by President Nestor Kirchner and his wife, President-elect Cristina Fernandez, who takes office Monday. "Not long ago there was a general chorus singing the praises of neoliberalism" in the region, Chávez said in a speech.
"But we are now hearing the great voice of our nations." Bolivian President Evo Morales, whose country is the continent's poorest, praised the bank as a new tool to fight poverty and ease inequalities, and criticised what he characterised as the heavy-handed practices of international lenders who demand austerity prescriptions as conditions for extending credit.
"Only strong and united can South America occupy its rightful place among nations," Brazilian President Luiz Inacio Lula da Silva said. "This will be the first international bank truly controlled by the nations of our continent."
One of several proposals
The institution is one of several proposals under Chávez's ambitious call to unite Latin American countries in a "confederation of republics". His vision also includes a transcontinental natural gas pipeline and trade alliances. Venezuela, with South America's largest known oil reserves, is expected to be a leading financier along with Brazil.
But critics note much remains to be determined about how the bank will operate and say it might turn out to be a largely symbolic project used by Chávez to spread his oil-financed influence.
"Chávez has very large resources at his disposal and will continue to promote his vision for the hemisphere," said Peter DeShazo of the Washington-based Center for Strategic and International Studies.
But he said it remains to be seen "whether it's going to be a politically oriented gesture or if it's going to be a real regional development bank." Others call it a bold stroke for Latin America's financial independence.
"What you had in the past decade was the collapse of a very powerful creditors' cartel headed by the IMF," said Mark Weisbrot of the Washington-based Center for Economic and Policy Research. "This is the first step in creating a Finance ministers of Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela will sit on the bank's board. Officials say it will dispense loans for projects from road-building to anti-poverty programmes and regional integration plans.