Mérida, April 16, 2007 (venezuelanalysis.com)— Brazil decided to join the Bank of the South, a joint project between Venezuela and Argentina to create a development fund for Latin America. Venezuelan President Hugo Chávez applauded the decision on his TV show last Sunday. The addition of Brazil will greatly expand the financial capacity of the proposed development fund.
Brazilian Housing Minister Guido Mantega made the announcement this Sunday at a meeting in Washington. Representatives from Brazil, Venezuela, Argentina, Bolivia and Ecuador met in Washington this weekend to discuss the formation of the new bank. The Brazilian minister said he hopes Argentina and Venezuela will formally invite Brazil to have full membership.
"Brazil is interested in the integration of South America," he said. "We will work for the creation of the Bank of the South."
Venezuelan President Hugo Chávez received the news enthusiastically on his Sunday TV program Aló Presidente. He said that the formation of the fund will be further discussed at the First South American Energy Summit that began today, where major leaders from the region, including the Brazilian president, will be present.
The addition of Brazil to the Bank of the South will be very beneficial to the fund since Brazil has the biggest financial reserves in Latin America. Brazil, with 110.5 billion US dollars in currency reserves towers over Venezuela and Argentina, which have $31.3 billion and $37.5 billion respectively.
Venezuela had initially agreed to inject $1.4 billion into the bank and Argentina would provide $350 million, or 10 percent of their total reserves. The incorporation of Brazil, however, will give the fund a significantly larger capacity by almost doubling the total amount of credit available.
The Bank of the South, initiated by Venezuelan President Hugo Chávez, is being developed jointly by South American countries as an alternative to the World Bank and the International Monetary Fund. Since these organizations demand certain conditions from governments to which they lend money, Chávez and other leaders of the region accuse them of imposing policies that are damaging to their countries.
Chávez, who announced the complete payment of Venezuela's World Bank debt last weekend, has urgently pushed for the creation of the alternative fund in order to free the nations of the region from the IMF and World Bank. Unlike these organizations, the Bank of the South will be managed and funded by the countries of the region with the intention of funding social and economic development without political conditions. Among the first projects that they will fund is an 8,000 kilometer gas pipeline across South America.
Chávez has emphasized that the bank should maintain principles of solidarity and cooperation among the countries of the region, always keeping the control of the institution among the countries of the region. Chávez hopes to have the project will be launched by the end of June, and the Bank should begin operations sometime late this year.