Global Notes #22
by Jerry Harris, SolidarityEconomy.net
. Financial independence in Latin America
A new South American development bank may be set-up to rival the US dominated Inter-American Development Bank (IDB). The new bank has the backing of Venezuela, Argentina, Brazil, Bolivia, Ecuador, Paraguay and Nicaragua and will have a capital base of $7B. Early priorities such as loans for education and health in Bolivia have been identified with further plans to dispense with many of the conditions normally attached to World Bank and IDB lending. An insider from the IDB was reported saying, “With the money of Venezuela and political will of Argentina and Brazil, this is a bank that could have lots of money and a different political approach. No one will say this publicly but we don’t like it.” (FT, 7/23/07, p. 6)
A big factor making the bank possible is the rise in commodity prices and a flood of liquidity allowing countries in South America to build up account surpluses and strengthen reserves. Higher commodity prices have been made possible by the rise of manufacturing in China and its huge demand for industrial inputs. Thus the global growth of third world economies allows countries to cast off (more…)
