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Global Development

South American leaders keen to offset clout of western financial institutions

The world's most powerful emerging economies are eyeing closer cooperation with the Union of South American Nations, UNASUR. Friendlier relations could come with lucrative investments on a massive scale.

BRICS development bank launched

South American leaders overwhelmingly came out in favor Wednesday of two new initiatives the world's most powerful emerging economies launched earlier in the week to offset the clout of western financial institutions and bolster infrastructure investment.
The outpouring of support from the Union of South American Nations, or UNASUR, came as presidents from the 12-member bloc met with heads of Brazil, Russia, India, China and South Africa (BRICS) in the shadow of a three-day summit in Fortaleza, Brazil.
The formation of the two new bodies, the New Development Bank and Contingency Reserve Arrangement, which were envisioned as counterweights to the western-dominated World Bank and International Monetary Fund, would "put some order in international finances, which are absolutely deranged," Argentine President Cristina Fernandez de Kirchner said.
"We have often spoken of the essential need for reform of multilateral mechanisms of credit and politics," she added.
Western dominance
De Kirchner's comments were echoed by the president of Bolivia, Evo Morales, who said the institutions would be "a new economic instrument for ending the submission and conditionality" he associated with IMF loans.
The governing councils of the IMF and the World Bank include representatives from many nations but are overwhelmingly occupied by Americans and Europeans. Many BRICS and UNASUR leaders lament that the two institutions' lending decisions often reflect developed nations' policy priorities.
Uruguay's president, Jose Mujica, welcomed the creation of the new development bank because he said it would help Latin American countries that "have a serious backlog in infrastructure investment."
"All the countries are interested," Mujica said.
Powerful investors
But Brazil's president, Dilma Rousseff, noted that initially the banks would only lend to BRICS members. She did, however, hold out the prospect that both financial institutions could be opened to other developing nations.
"We will always look with much generosity toward other countries," Rousseff said.
The announcement of the two banks - and the South Americans' glowing enthusiasm - came amid growing trade and investment ties between key members of the two blocs.
China and Russia are already eyeing major infrastructure investments in South America, including the development of a major shale gas and oil deposit in Argentina and a new railway connecting the Brazilian and Peruvian coasts.
nz/cjc (dpa, epd, dfpa, IPS)

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