Skip to main content

Banco Del Sur - A Reality Check On The State Of South American Relations

(Dec. 12, 2007) The signing of the "founding act" of the new Banco del Sur raises so many questions that it is difficult to know where to begin. Set against the backdrop of the assumption of Cristina Fernandez de Kirchner in Buenos Aires, Argentina, the meeting highlighted the continued difficulties South America faces as it attempts to form a continent wide union.

As reported in the BBC, Brazilian President Lula da Silva called the founding of the bank a "decisive step" towards the integration of South America; Venezuelan President Hugo Chávez called it a "political reality that forms part of an economic and social war;" and Bolivian President Evo Morales said it brings "new hope" to a region struggling to combat poverty.

The problem as we see it is that while these statements may be accurate on a hypothetical level, they completely miss the mark when it comes to describing the actual reality of regional relations.

As much as Brazil would like to think that the Banco del Sur will be a decisive step toward regional integration, the statements made Sunday by Mr. Chávez about an ongoing economic war underline the deep policy divisions between Brazil and Venezuela, the two most important members of the new bank. Instead of declaring war on the economic and social policies of the last 20 years, most South American nations are actively promoting the neoliberal policies that Chávez is trying to fight.

Ironically, three days after launching such a "major initiative" to bring the continent closer together, President Chavez slammed on the brakes Wednesday by announcing that Venezuela will not return to the Andean Community (as expected) while Colombia remains a member. Although Colombia is not a signing member of the Banco del Sur (it pulled out a month ago after Chávez placed their bilateral relations in "a freezer"), it is a member of the Union of South American Nations (Unasur), the formal political institution in charge of coordinating the development projects the bank will be asked to finance.

The statements made by Bolivia's president are perhaps the most tragicomic of the day. In what must have been a Freudian slip, Morales spoke of a new hope at the same time as his political opposition at home was declaring war against him for approving a new national constitution without opposition support.

Ruben Costas, the governor of the Bolivian province of Santa Cruz, issued a statement Monday calling on citizens to "participate militantly to defend and conquer the hate and resentment that wants to crush us," adding that the new constitution threatens "the destruction of our homes, our workplaces and, above all, the very existence of our people as free citizens." A return to authoritarian rule is nothing to hope for.

Finally, the very fact that South America is forming its own international lending agency raises the question, what is wrong with the ones the world has now?

The obvious answer is that current lending institutions are dominated by Washington. Another answer is that they aren’t offering South America any money. As we understand it, both problems are related.

The imposition of social austerity measures in the 1990s in countries that owed large amounts to foreign creditors created unacceptable social conditions in local communities, eventually leading to a broad rejection of the Washington Consensus, a subsequent default on international loans, and finally the election of number anti-U.S. populists who promised to end their respective nations' dependence on the United States.

As a result, these new political leaders were caught in a Catch-22, called on to provide national development while at the same time forced to distance themselves from the very groups they needed to finance this growth. After seven years of trying to have it both ways, the Banco del Sur has been created as a work around to provide financing without the institutional reform demanded by the international lenders.

Given these problems and the fact that no country has actually said how much money it will contribute to the bank's start-up capital, it may be too early to start celebrating a new era in South American history. However, it would be wonderful if things did turn out for the best, especially for the millions of poor children that will face the same problems tomorrow that their parents face today if something serious is not done soon.
---
By Nathan Gill - Southern Affairs
www.southernaffairs.org

Comments

Popular posts from this blog

Moving to the Suburbs: Reducciones in Recent Latin American Historiography

In 1503, the Spanish monarchy issued its first decree for the resettlement of indigenous groups in the Caribbean so that they would “live together” and “not remain or wander separated from each other in the backcountry.”[1]

As the European conquest spread to North, Central, and South America, these new settlements – known as reducciones and congregaciones in Spanish and descimentos in Portuguese – became sites of forced labor, evangelism, experimental agricultural, and refuge. Through a series of imperial policies decreed over the next decades and centuries of colonial rule, Spanish and Portuguese officials attempted to reshape the New World, including its human and natural landscapes. How colonial historians explain this process and indigenous peoples’ reactions to it is the focus of this essay.

In a review of the recent historiography of reducciones, several trends emerge that signal a shift in our understanding of the practice. As this paper will show, one common element is that …

77-Year-Old Wall Street Favorite to Face Fujimori in Peru Runoff

By Nathan Gill and John Quigley April 12, 2016 (Bloomberg) -- The victory by Pedro Pablo Kuczynski, a former finance minister, for second place in Sunday’s Peruvian president elections sets up a showdown between two business-friendly candidates, part of a regional backlash against left-wing politicians.
Kuczynski, a 77-year-old Oxford-trained political economist who’s spent more than 50 years championing debt control and free trade, won 21 percent of vote with 96 percent of the ballots counted, according to the electoral office. He will face Keiko Fujimori, who won 39.8 percent, in a second-round vote on June 5.
Click here to read the full story on Bloomberg News.

Bailout Risk Grows for Ecuador After Worst Earthquake in Decades

By Nathan Gill April 19, 2016 (Bloomberg) -- Before a 7.8-magnitude earthquake struck Ecuador on Saturday, the South American nation’s finances were already in tatters as the government struggled to meet payments to municipal authorities, oil companies and even cancer hospitals. Cut off from global bond markets, President Rafael Correa must now find enough money to rehouse thousands.
As volunteers continue to rescue victims from the rubble of collapsed homes and buildings on Ecuador’s Pacific coast, doubts are growing about the country’s ability to pay for the reconstruction. The nation is already in its worst recession since the financial system collapsed in the late 1990s, and international reserves are at their lowest levels in almost seven years.
Click hereto read the full story on Bloomberg News.