Committee for the Abolition of Illegitimate Debt

Workshop on the Bank of the South within the framework of the South American People’s Summit.

Source: IFIs Latin American Monitor http://ifis.choike.org/

The following is a first report on the Workshop on the South Bank held last weekend in Montevideo. With an important participation of social movements, networks, and organizations from seven countries in the “South of the South” region, the Workshop was an opportunity to exchange information and analysis on this new entity, as well as to discuss and propose strategies and actions for the purpose of deepening the mobilization and participation of movements in the central decisions still to be taken, over the next 45 days, with regard to the Banks´structure and functions. Over the coming days, we will continue to share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. with you more of the information and proposals, in particular about the campaign to promote, collect, and systematize contributions from interested organizations and movements, with reference to THE SOUTH BANK THAT WE WANT. We hope to hear from your organization ¡ ! - Jubilee South/Americas

On Saturday, December 15^th more than 40 civil society representatives of South America attended a workshop to debate the process of the Bank of the South, and its implications in financing for development and the integration process. The workshop, entitled “Bank of the South: Which financing alternatives do we, the social movements, want?” was organized within the framework of the South American People’s Summit held in Montevideo, Uruguay simultaneously with the MERCOSUR (The Common Market of the South) Summit of South American Presidents.

The Bank of the South was officially launched by the presidents of Argentina, Bolivia, Brazil, Ecuador, Paraguay, Venezuela and Uruguay on 9 December 2007 in Buenos Aires, Argentina, after a long negotiation process. According to the constituency letter of the Bank, the aim is “to finance the economic and social development of the countries member of the Union of South American Nations (Unión Sudamericana de Naciones, en español) that are bank members, in a way that is equitable and stable using intra and extra region savings; strengthen integration; reduce the asymmetries among the countries and promote an equitable distribution of investments within member countries”.

For all this, the Bank represents a unique political and economical opportunity for the Latin American countries involved and is an independent and sovereignty declaration from the financing model promoted by the international financial institutions (International Monetary Fund IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org and World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

), where the majority of the loans are conditioned to neo liberal policies. Such policies were put in practice by Latin American governments during the 90’s, with negative results for the economical and social development.

For the civil society movements and organizations "the creation of the Bank gives a real possibility to create a public financing mechanism towards a sovereign, autonomous and just development, controlled by the countries of the South, that can encourage solidarity and complementarity among its members, that will help overcome the region’s dependency in relation to natural resources and the policies of the international financial institutions.

The debate came with the aim to involve several actors such as social networks, organizations and social movements in the process being carried by the governments, and to examine the challenges that the project poses in the short and long terms.

More than forty civil society representatives took part in the activity, representing Latin American countries: Argentina, Brazil, Paraguay, Bolivia, Peru, Venezuela and Uruguay, among others. Some of the organizations that participated were: Jubileo Sur/Americas, Rede Brasil, Marcha Mundial de las Mujeres, REMTE, Cono Sur Sustentable, Amigos de la Tierra, Servicio Paz y Justicia, Latindadd, CUT (Brasil), MOCASE/Vía Campesina, FOBOMADE and Instituto del Tercer Mundo.

The presentations and debate were divided in two stages. The first one was focused on the international and regional economic and financial context in which the Bank of the South emerges; a presentation of the project, its main actors involved and the issues that are still pending.

In the second part, civil society organizations presented their activities on the issue (public audiences with government representatives and open letters), and the work of Brazilian organizations on the Brazilian National Bank of Economical and
Social Development (BNDES, in Spanish language), also named “BNDES Platform” was explained.

At the end of the activity, participants presented different ideas and suggestions for future action in order to contribute to the debate and follow-up of the process, in the understanding that only by taking an active part will the organizations obtain greater transparency from governments, and assure that the new institution responds to a development model that is autonomous, sustainable, and socially and environmentally fair.

The notes of the workshop will soon be available.