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Several Latin American governments as well as civil society organizations and movements are looking for alternatives sources for financing development in the region. The proposal of a Souhtern Bank is an attempt to fulfill this objective. However, we must ensure that it be a democratic institution, as well as an economically, socially and environmentally fair one. Above all, the Southern Bank should not reproduce the institutional, economic or political model of current multilateral financial institutions.

In the past few decades, the World Bank, International Monetary Fund (IMF) and Inter-American Development Bank (IDB) have been dictating "rules of good behaviour" to Southern governments, thus violating the sovereignty and right to self-determination of nations. Indeed, such rules have been responsible for a significant economic, cultural, environmental and social destruction in those countries. It was after monitoring those institutions and therefore acknowledging the serious problems related to their performance (power system, political influence, interests and policies prescribed) that civil society organizations and movements – when building alternatives aimed at financing the development of Latin America and other Southern continents – proposed the creation of a public bank controlled by Southern countries. This proposal ripened upon the arrival of popular governments to power in Latin America – mainly of Venezuelan president Hugo Chávez, who jointly with Néstor Kirchner of Argentina launched the proposal. Recently it was also undertaken by Ecuador, Bolivia, Paraguay and Brazil.

This is an unprecedented opportunity to reconquer our sovereignty, to ensure external security and to increase our influence within the system of globalisation, since it could certainly strengthen the process of regional integration. Nevertheless, we must ensure that it be democratic institution, as well as an economically, socially and environmentally fair one. Above all, the Southern Bank should not reproduce the institutional, economic or political model of current multilateral financial institutions that operate as tools for the implementation of US and European colonising interests. This Bank should be built so as to become an instrument for the development of countries and people, by allocating financing to national and regional needs.

The experience in monitoring the World Bank, IMF and IDB in recent decades has shown that in order to ensure another kind of development finance, the Southern Bank should:
• have an transparent and accessible information policy, thus enabling monitoring of its operations by civil society, bearing in mind that it handles public resources;
• guarantee institutional (as well non-institutional) spaces for the effective, broad and diversified participation of civil society in the definition of policies and strategies, in the ellaboration of the Bank’s financing criteria and in the definition of credits;
• allow external auditing of its policies, loans and internal operation;
• demand all country directors to render account of their actions before civil society and their respective parliaments from time to time, ensuring the right of legislators to approve them (or not);
• have an equitable decision-making process to prevent the bank from being dominated by the richest countries in the region. To this effect, voting power should operate on the basis of one-country-one-vote rather than on quotas. Although financial contributions should consider the specific conditions of each country, this should not affect voting power. That is to say, the Bank must not reiterate the "one-dollar-one vote" model of the IMF, World Bank and IDB;
• ban the possibility of having multilateral financial institutions as shareholders – either with or without voting power. This should also apply to Northern countries that have historically acted in a perverse way in our countries, being debtors of huge historical, ecological and social debts;
• have a democratic process to select candidates for the post of president and other key positions at the Bank – involving a broad consultation process within legislative bodies in each country and within civil society;
• take into account the internal matters of each country for the allocation of finance. The Bank should give priority to countries in a situation of greater vulnerability once internal inequalities have been considered, preventing large companies and/or local elites to have control over those resources;
• ban the imposition of conditionalities – either implicit or explicit – that have operated as tools for controlling and violating sovereignty;
• have a code of conduct aimed at ensuring the financial and socioenvironmental responsibility of countries having access to credits and of the Bank itself;
• have an inclusive clause for each allocation of financing to countries, so that the projects submitted take the regional, gender, racial, ethnic and generational dimensions into account.
• have a clause linking credits to the respect and promotion of human rights;
• promote the social and cultural integration of countries, protecting the autonomy of each one of them to decide on their relationship with the Bank;
• ensure that infrastructure projects have their socioenvironmental counterweights;
• define annual as well as pluri-annual goals to address the historical demands of our region, such as for instance:
- goals to provide sanitation to 100 per cent of urban and rural households in South America;
- guarantee free, public and good quality schools for all children in the region;
- allocation of financing to public policies aimed at food and nutritional sovereignty and security for each citizen of this region;
- financing aimed at reconstructing the production capacity of our countries, with a view to addressing all these demands.

Finally, the Southern Bank should not be based on a logic dominated by financial criteria but rather on a logic of complementarity, reciprocity and solidarity built on other development strategies different from neo-liberal and developmental policies. The Bank cannot condition access to credit on the essential profitability of projects, on macroeconomic indicators or the hiring of certain companies to implement the projects. In that case, the Bank should not support projects aimed at financial and trade liberalisation and privatisation (Public-Private Partnerships – PPPs) that have been proposed and supported by International Financial Institutions (IFIs) such as for example, the Initiative for the Integration of Regional Infrastructure in South America (IIRSA). On the contrary, the Bank should act as protection for Southern countries against the negative impacts of the economic and political globalisation, by supporting an autonomous development both at regional and domestic level.

This article was first published in Portugues language by Rede Brasil. See the full original version.

Related Information:

* The Southern Bank, between economics and politics, by IFIs Latin American Monitor

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