South American Leaders Launch Bank of the South

Mérida, December 10, 2007 (venezuelanalysis.com) - Venezuelan President Hugo Chavez and five other South American leaders met in Argentina on Sunday to officially launch the regional development bank, Banco del Sur (Bank of the South). Chavez emphasized that the new bank will permit the nations of the region to use their reserves for development and investment in the region and will mark the beginning of true union among the nations of South America.

The founding act of the new financial entity was signed before a packed audience at the Casa Rosada presidential palace in Buenos Aires. Presidents Nestor Kirchner of Argentina, Evo Morales of Bolivia, Ignacio "Lula" da Silva of Brazil, Rafael Correa of Ecuador, Nicanor Duarte of Paraguay, and Hugo Chavez of Venezuela were all present for the signing, as well as a government representative from Uruguay.

"The Bank of the South opens the possibility to bring investment and the South American nations' reserves to our continent in order to convert them into development," said the Venezuelan president.

Chavez, who first put forth the idea in 2006, explained that the nations of the region have traditionally deposited their reserves in banks in North America and Europe, a circumstance that results in a transfer of wealth from the poor nations to the wealthy nations. He emphasized the necessity for the nations of the region to keep their financial resources in the region.

"Hundreds of billions of dollars, in treasury bonds in the United States, in Euros, in goods. The time has come to bring those resources back," he said.

The bank, which Venezuelan officials estimate will have around $7 billion to start with, is intended to grant the nations of the region greater financial and political independence. Traditionally, poor nations have been dependent on loans from the World Bank and the International Monetary Fund (IMF), institutions whose loans come with strings attached.

"They have always subjected the less-developed countries to their rules and methods upon giving them credits, without looking at the reality," said Nicanor Duarte about the international financial organizations.

But unlike financial organizations such as the World Bank and the IMF, the Bank of the South will have equal representation among all the member countries regardless of financial contribution and will dispense loans to the South American nations for regional integration plans as well as development programs to fight poverty.

"The South American nations will be able to put an end to their political and financial dependence that they have had with the neoliberal model," said President of Ecuador Rafael Correa.

Bolivian President Evo Morales said the bank is the first step towards a common currency among the South American nations and would allow them to resist the pressures of international lending institutions that have demanded the privatization of state-owned companies.

President of Ecuador Rafael Correa explained that the development of a joint fund as the central axis of the region's central banks would allow for the development of a common currency among all the South American nations. He assured that it only required the political will of the region's leaders.

"Nothing is preventing us from setting up the creation of a common currency," he explained.

The South American leaders also emphasized the importance of the new bank in the region's integration. President Chavez pointed to other projects for integration, including the regional television channel Telesur and Petrosur, an initiative for the integration of the region's energy supply.

"This integration must exist to assure our people health, housing, and decent jobs," he said.

President of Brazil Lula da Silva called it a "decisive step" in South America's integration and agreed that the institution would give the South American nations greater independence and allow them to "defeat the South American dependence on the international system."

"This will be the first international bank truly controlled by the nations of our continent," he said.

The bank will start operations in 2008 and will be based in Caracas with regional offices in Buenos Aires and La Paz. The members' financial ministers will decide funding and operation details over the next two months.