Lídice Valenzuela García

The Bank of the South is reawakening. Seven years after the idea emerged from the Union of South American Nations, which has suffered significant losses, such as that of Argentine President Néstor Kitchner and Venezuelan President Hugo Chávez – pillars of integration – it is now being reinforced by other South American leaders.

Chávez, orchestrator and defender of Latin American and Caribbean integration, commenting on the Development Bank of the South, stated that it would be "unlike any in existence," and added, "It seems foolish that the majority of our reserves are in northern banks."

The dangers of depositing national reserves in U.S. banks is clearly demonstrated today by the situation in Argentina, which deposited its capital in New York banks and now, in a dispute with predatory hedge funds, has been blocked from accessing its money by a U.S. judge, responding to the interests of imperialism.

Deceased President Hugo Chávez Frías was a champion of the Bank of the South and Unasur.

The agreement to establish the new bank, which will serve the economic interests of Unasur member nations – also an initiative of Chávez – was signed at the Casa Rosada in Argentina, in December 2007, one day before Cristina Fernández assumed office for the first time.

Presidents of Brazil, Argentina, Venezuela, Bolivia, Uruguay, Ecuador and Paraguay signed the document, but little progress has been made since then, due to various events which occurred in the region. In addition, in order for the new bank to be establsihed, it must be ratified by the National Congress of each country.

Brazil has never ratified the document and the Paraguayan parliament has yet to approve it. However, Unasur members believe - given the BRICS Summit in Brazil and Presidents Vladimir Putin and Xi Jiping’s Latin American tour - South America should have a banking equivalent, especially if projects between the new BRICS Bank (with a reserve of up to 100 billion dollars) and Southern nations are to be consolidated.

The Bank of the South is an alternative to multilateral financial institutions.

When the Bank of the South was proposed, the initial idea was to have a regional body responsible for the protection and promotion of national economies, in order to safeguard them from the dictates of financial institutions responding to the interests of the U.S. and certain European countries, who control the International Monetary Fund (IMF) and the World Bank (WB).

Both entities are instruments which have demonstrated their inefficiency in the development of underdeveloped nations. The IMF is, as evidenced by historical realities, a tool of U.S. foreign policy, which intervenes directly in debtor countries’ policies.

The fund directs neoliberal policies which, after throwing economies into crisis, force governments to impose austerity measures on their populations, who suffer the greed of U.S. imperialism and that of world capital.

Likewise, the World Bank intervenes in decisions made by governments of debtor countries. One of its policies consists of forcing nations to privatize their largest industries, so they can then be bought by U.S. and European multinationals.

Ricardo Patiño, Ecuadorian minister, stated that the Bank of the South is now able to begin operating and will have capital of up to 20 billion dollars.

The Bank of the South’s principal objectives are the reduction of poverty in which 60 million Latin Americans live, promotion of social equality and the economic growth of countries in the region, in addition to its role as principal promoter of economic and social development, it will provide finance, training and technical assistance.

To provide capital and help, different individual characteristics of each member country must be considered - for example, available international reserves, balance of payments situation, participation in international trade, Gross Domestic Product, etc.

Now, with the trend of the new relationships established by a good number of Latin American nations with Russia and China, the Bank of the South has gained renewed energy, considering the prospects of new Latin American leftist and progressive economies, which have experienced substantial growth, such as those of Bolivia and Ecuador, and always with a socially inclusive character.

Since July 2, three meetings have been held – one of high ranking officials to promote the launch of the Bank of the South in the second half of 2014

The IMF and World Bank are two tools of domination used to serve the imperialist interests of the U.S. and main capitalist powers of Western Europe.

Following the recent meeting in Caracas of Presidents of the Southern Common Market (Mercosur), Venezuelan President Nicolás Maduro announced the approval of documents which "accelerate the steps" toward the creation of the new bank.

Maduro commented that the agreement adopted indicates, "The process is drawing close to the creation of the BRICS bank, in order to build working relationships."

The Second Plenary Session of the Bank of the South Council of Ministers began the process of naming the organization’s directors and members of the ad-hoc committee, who will put the bank into operation. The schedule of contributions from each country was also established. Primarily, Argentina, Uruguay, Venezuela, Ecuador and Bolivia will contribute a total of up to 170 million dollars. Paraguay and Brazil are yet to contribute as the agreement is still pending ratification by their respective Congresses. Meanwhile, the principal aim over the next three months is to develop policies and procedures.

The government of Ecuadorian President Rafael Correa was the first to open an account in its Central Bank to make a deposit of eight million dollars - its initial contribution to the Bank of the South.

Ricardo Patiño, Ecuadorian foreign minister stated on Ecuador TV, that the Bank of the South "has been delayed a long time in opening its doors despite the decision having been made seven years ago," but with five countries it can now begin to operate.

Patiño confirmed, "The largest countries will deposit 2 billion dollars to make a account of between 7-20 billion dollars, which is the amount of capital authorized for the Bank of the South."

Although this is a preliminary figure, "We are now saying that the doors can be opened, resources made available and the Bank of the South can begin to operate effectively," with headquarters, he stated, in Caracas, and additional offices in Bolivia and Argentina.

On January 26, 2008, the Bolivarian Alliance of the Peoples of Our America (Alba) member nations signed the Alba Bank Founding Act, days after that same measure was adopted for the creation of the Bank of the South, in Buenos Aires, Argentina.