Source:
IBASE
Mon May 28 2007
On Tuesday, May 22, the presidents of MERCOSUR countries gathered in Asuncion had the possibility of making a historical decision: the creation of the Bank of the South. Initially proposed by Argentina and Venezuela, the Bank of the South must be at the same time a development bank and a regional reserve fund to protect its partners against speculative attacks. Beyond the evident economic significance, this initiative will have a huge political impact, since it will perceptibly reduce the power exerted by the United States in South America through the IMF and the World Bank.
Notwithstanding this, the economic dimension represents just one part of the possibilities that would be opened by the creation of a financial institution, both designed and supported by South American governments, outside the US dollar sphere. The Bank of the South may (and should) take responsibilities that go far beyond being just an alternative to the US currency.
In a time in which the world finally acknowledges that the carbon civilization places human existence at risk, a Bank that is born under the sign of the greatest change to the global financial architecture since the creation of the Bretton Woods institutions in July 1944 and the subsequent adoption of the dollar standard in the early 1970s, should be used to overcome the gap brought about by climate changes.
It may, for instance, finance the development of an economy that punishes the use of carbon-rich processes and products, but fosters the maintenance of entire forest areas (particularly the Amazon one) and discourages the use of carbon-intensive energy sources and processes.
If these two trends were coordinated through the financing of complementary economic activities among countries in the region, and were aimed at addressing the historical demands in the areas of education, health care, housing and other social areas, this Bank would certainly mark a second independence of South American countries, thus aiming in the future at a far less concentrated income within the region.
Birth difficulties
In spite of its noble mission, the birth of the Bank of the South is facing difficulties. The region’s largest economy – the Brazilian – is concerned with giving priority attention to the international market, which places it farther away from an institution that is focused on the regional market. And to make matters even more complicated, the most enthusiastic supporters of the Bank of the South – Hugo Chávez, of Venezuela, Evo Morales, of Bolivia, and Rafael Correa, of Ecuador – are basing their economic growth strategies on the exploitation of major natural gas and oil reserves owned by their countries, which would place the Bank on a collision course with the development of an anti-carbon economy.
Anyway, whether they agree or not, the governments supporting the idea of the Bank of the South are well aware of the fact that they cannot waste time. The juncture that enables the creation of the Bank of the South depends on China’s huge craving for commodities – and nobody knows how long this craving is going to last. In spite of their social and environmental effects, exports to China will result in the largest-ever amount of dollar reserves in the history of South American countries, which will be selling hundreds of millions of tons of steel, copper, meat and soybean.
Provided the Bank of the South is not created now, taking advantage of the present juncture, the current political and economic prosperity will hardly be repeated at some other time. It is now or never.
Brasilia hesitates; Ecuador takes the lead
The Bank of the South’s partners disagree on several issues. Brasilia is more concerned about its specific economic weight and certain advantages brought by this condition in the international market. This is why Brazil is not betting big on this new financial institution. It was the last among the six countries (Argentina, Bolivia, Brazil, Ecuador, Venezuela and Paraguay) to join (on May 3) the group that has been discussing the issue since January (Argentina, Bolivia and Venezuela).
It hesitates to join the initiative but knows that it cannot afford to be left out of it. Chávez, who already plays the informal role of lender of last resort, by purchasing Argentine, Uruguayan and Bolivian bonds, becomes the trainbearer of the new institution as well as the unquestionable leader of the region. Chávez and Kirchner had even invited Asian and African observers to participate in the Bank’s discussions, thus opening the future possibility of joining the institution to other regions, in a clear global confrontation strategy against the IMF and the United States.
On account of this, technical experts of the Finance Ministry did not fail to attend the meetings (another one will be held in Brasilia in early June) and Guido Mantega stated that Brazil will join the Bank. However, neither Lula nor the foreign office at Itamaraty have spoken firmly in favour of the new institution.
The curious thing is that Brazil’s hesitant position ends up adding a pinch of prudence to the initiative. The first rough drafts of the Bank that were put forward by Argentina and Venezuela, promoted the re-edition of the same neo-liberal instruments for attracting resources and producing indebtedness that led the Inter-American Development Bank (IDB), the World Bank and International Monetary Fund to their current situation of incompetence.
Upon noticing this problem, the government of Ecuador – the main Bank coordinator, through its Finance Minister Jorge Patiño – altered the assumptions about the nature of the future institution, thus even starting to consider the possibility of implementing the project of a common currency for the region.
The climate and the Amazon time-bomb
If the Bank turns into the first major financing instrument of an anti-carbon economy, subsidising production processes that may help to reduce the gas emissions that result in global climate changes, it would have a huge positive impact on the whole planet, particularly on the Amazon Basin.
The Amazon area is regarded by powerful agents – state and private as well as national and international – as a simple producer of different types of energy, and in view of such a “natural mission” endowed on the region, a future scenario should be considered in which the Amazon Basin would attract the same kind of attention as that paid to oil reserves in the Middle East.
By maintaining forest areas standing and carbon sources economically uninteresting and by developing an economically sustainable occupation of the territory, an anti-carbon economy would contribute to dismantle the time-bomb of interests in the region, thus preserving vast water reserves (in the atmosphere, under the form of water vapour, and also surface and underground water), as well as natural gas and oil reserves.
If the Bank of the South fails to reach consensus now in Asuncion, there are already two other dates scheduled on which the official launch may take place. The first one would be another meeting of MERCOSUR leaders to be held at the end of June in Asuncion. The second one would be more Chávez-like and would take place at the opening of the Copa America football tournament in Venezuela, which is scheduled to be held around the same time.
Nevertheless, whatever the location chosen, they all know the time is now.
Carlos Tautz is journalist and researcher at IBASE, and also member of the cordination board of Rede Brasil. This article was first published in Portuguese language at: http://outraglobalizacao.blogspot.com/
Related Information:
* Turning back to the stakes on the Bank of the South, by Eric Toussaint (CADTM)
* Southern Bank: An alternative for development finance?, by Fabrina Furtado (Rede Brasil)
* The Bank of the South, between economics and politics, by IFIs Latin American Monitor
|
