BUENOS AIRES — Venezuela and Argentina aim to establish a new regional bank for nations frustrated with conditions imposed by the International Monetary Fund (IMF).
Argentine President Nestor Kirchner announced recently that the countries will cooperate on a “binational” bond issue that will serve as a precursor to a regionwide financial institution, an idea promoted by Venezuelan President Hugo Chavez.
Regional news outlets said the so-called “bond of the South” would be valued at about $2 billion and be used to finance infrastructure projects.
The issue represents the first step “in the construction of a bank, a financial space in the south that will permit us to generate lines of finance,” Mr. Kirchner said in Buenos Aires after meeting with Mr. Chavez on the sidelines of a six-nation summit last week, in which Venezuela was accepted into the Mercosur trade bloc.
Mr. Chavez has promoted such a bank as an alternative to free-market conditions imposed by the IMF, which are used as a yardstick to qualify for loans from the IMF, World Bank and other multinational lending institutions.
Daniel Artana, an economist for the Latin American Foundation for Economic Research in Buenos Aires, said the new bonds will be highly secure “because they are backed by Argentina and Venezuela’s oil money.”
Mr. Chavez has established his country as a regional lender of last resort.
He has purchased $2.8 billion to $3 billion in Argentine bonds in January, allowing Mr. Kirchner to pay off and cut ties with the IMF.
Mr. Chavez also purchased $25 million of Ecuador’s debt last year and offered to buy $300 million more, said Mark Weisbrot, co-director of the Washington-based Center for Economic and Policy Research.
Mr. Weisbrot said the IMF is “one of the most important ways the U.S. has influenced economic policy in developing countries.”
But Mr. Chavez’s lending potential offsets that power.
“Now countries that don’t want to meet conditions of the IMF can go somewhere else,” he said.
Analysts increasingly see South America as becoming polarized between a Chavez-led axis with Bolivia and Cuba and a largely pro-U.S. bloc formed by Colombia, Chile and Peru — all of which have signed free-trade deals with Washington.
Brazil and Argentina, the region’s two biggest economies, have strong trade and relatively smooth political relations with the United States. But they also favor regional integration to offset U.S. influence.
The two recently joined Venezuela in plans to build one of the world’s largest natural-gas pipelines, spanning 5,000 miles at a cost of $20 billion.View Entire Story
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