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The Bank of the South

DEVELOPMENTS

Venezuelan President Hugo Chavez is making headlines once again. Only months after he proposed scrapping presidential term limits, his new plan to create the Bank of the South is moving forward. The Bank will finance regional development projects and would enhance, and perhaps ultimately replace, Washington-based and U.S. controlled institutions like the World Bank, the International Monetary Fund (IMF), and the Inter-American Development Bank (IDB) as the main source of external funding for Latin American development projects.

Chavez and others in Latin America have decried the World Bank, IMF and IDB as puppet institutions controlled by the United States. Before agreeing to any loan package these institutions often require governments to commit to neo-liberal, free market economic reforms (which include things like free-trade, government deregulation and weakened labor unions).

Chavez has garnered support for the creation of the Bank of the South from his buddies in Argentina, Brazil, Bolivia, Ecuador, and Paraguay. Brazil's apparent commitment solidifies the Bank's short-term viability because of the size and importance of its economy. Colombia, another major economy that has grown steadily in the last five years, also appears ready and able to participate. Chile, which boasts Latin America's healthiest economy,however, is not participating. The Bank of the South would be supported with up to $7 billion in initial capital provided by member countries and could begin operating as early as 2008.

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About the Author

Rommel A. Gallo

Rommel A. Gallo is an attorney at Greenberg Traurig, P.A. in Miami, Florida. Rommel was previously an intern with the Congressional Hispanic Caucus Institute, where he worked on issues related to U.S.-Latin America relations. He has also conducted independent academic work on the rule of law in Latin America, with a particular focus on the relationship between the strength of the judiciary and economic and political development. In addition, Rommel's thesis explored whether and how affirmative action is an appropriate response to racial inequality in Brazil.Rommel maintains a strong interest in how the rule of law can be used as a vehicle for economic and political development in Latin America. He is also particularly interested in the question of race in Latin America, and how the amelioration of racial inequality can facilitate social and economic development generally and reduce overall inequality in the region.Rommel received his A.B from Princeton University's Woodrow Wilson School of International Affairs and his J.D. from Columbia University School of Law.

November 1, 2007
First Issue - November 2007
Americas