South American countries sign Articles of Agreement of BANCOSUR

14 October 2009 by Oscar Ugarteche Galarza

Twenty months after signing the founding charter of the Bank of the South in Buenos Aires, South American presidents signed the Articles of Agreement of BANCOSUR in Porlamar, Margarita Island, on Monday, 28 September 2009. The agreement contains rules that were negotiated by committees at the level of ministries of economy and finance, and include capital investments, a voting mechanism, recruitment of staff, case law, tax and legal considerations of officials and the functionality of the bank. In other words, exactly what it is for.

It is worth noting that the Bank of the South is owned by the ten member countries of UNASUR. Negotiations for its creation first began in 2006 between Venezuela and Argentina. In May 2007 Ecuador and Brazil joined in, and later on the rest of the countries also agreed to join. Unlike the Andean Development Corporation (CAF) which has 18 member countries, some from outside the continent and others from Central America, BANCOSUR is South American in essence. In this sense, Chile’s position as an observer, although frequent in relation to Latin American integration since its withdrawal from the Andean Pact in 1977, is a disadvantage compared to its small 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. of US$ 21 million in the CAF. Although the amount is mostly symbolic, it is a sign of presence. So far there has been no such sign regarding this bank. Chile’s position brings to mind the British foreign policy regarding European integration, which remained as an observer during the decades of formation of the European Economic Community, and even after the European unification, the British government maintains an independent migration policy and the pound remains in force. The British would not allow continental Europe to dictate their monetary or immigration policy.

Colombia for its part has played an ambivalent role. In 2006 was against the idea, but in the second half of 2007 said it was in favour, and then the day before the formal signature of the Articles of Agreement it withdrew, causing confusion in the charter, as it lists eight signatures but in fact there are only seven. Peru is the only South American country that is impervious to the idea, though possibly with the next government it will join in. The reason is understandable given the importance of Venezuela in the bank and the close relationship of Peruvian president Alan García with the now ousted Venezuela’s Democratic Action Party and more specifically with former president Carlos Andrés Pérez, a personal friend of the Peruvian president. In other words, the absence of Peru reflects the absence of institutional operation of the country’s foreign policy. Peru is not an active player in UNASUR as shown by the absence of president García in Isla Margarita on the weekend of September 26 and earlier in Santiago de Chile.

Peru and Colombia are in line with Washington and the policy of bilateral agreements launched by former U.S. president, George W. Bush. Both countries seem to disregard Latin American integration in their foreign policy and to join Washington’s principle of ‘divide and rule’, on the understanding that the country who wins with integration is the one whose government they do not sympathize with. They fulfill the same role with UNASUR and BANCOSUR that they performed before in the peak of the external debt crisis, with the debtors’ club of 1984, which ceased to meet in May of that year because these two countries provided a bridge for Washington’s negotiations in the opposite direction, says Ambassador Carlos Alzamora Traverso, then Permanent Secretary of the Latin American and Caribbean Economic System (SELA) in one of his renowned books.

Secretary of State says Hilary Clinton: “A central purpose of the Quadrennial Diplomacy and Development Review that I announced last week is to explore how to effectively design, fund, and implement development and foreign assistance as part of a broader foreign policy. Let’s face it. We have devoted a smaller percentage of our government budget to development than almost any other advanced country. And too little of what we have spent has contributed to genuine and lasting progress. Too much of the money has never reached its intended target, but stayed here in America to pay salaries or fund overhead in contracts. I am committed to more partnerships with NGOs, but I want more of our tax dollars to be used effectively and to deliver tangible results.” [1]

With the renewed attention in Latin America, for example, Washington supported the coup in Honduras and took a position against the deposed legitimate president, operates the seven military bases, launches the fourth fleet and supports the kidnapping of suspects from one country to another, specifically in reference to professor Beltrán from Colombia, who was kidnapped in Mexico and later appeared in a Bogota prison. Unfortunately they want to pay more attention to the region, as in the 70s.

Signature of the articles of agreement

In the context of the South American and African presidential meeting (ASA), seven of the eight South American leaders present (Hugo Chávez of Venezuela, Luiz Inacio Lula da Silva of Brazil, Rafael Correa of Ecuador, Fernando Lugo of Paraguay, Evo Morales of Bolivia, Cristina Fernández of Argentina and Tabaré Vázquez of Uruguay) signed the articles of agreement establishing the Bank of the South, whose foundation was signed in Buenos Aires the day before the inauguration of Cristina Fernández, in December 2007. They promised then, in the sixth clause of the certificate of incorporation, to do this in 60 days but it took 20 months. However, it has been much more rapid than the process of the ASEAN Multilateral Fund, which took 9 years to establish itself as such, until May 2009, or that of the European institutions, which took decades. Now as in 2007, Colombia did not sign and Peru did not appear in the photo.

Over these two years it was agreed that the Bank will begin with a total capital of US$ 7 billion, that the board’s voting procedure will be one vote per country as it will be on the advice of credit, up to US$ 70 million; over that amount, the votes will be in proportion to the subscribed capital of each country. This will be paid by the three big countries at different rates from the four small countries that will provide US$ 400 million each.

The size of the initial subscribed capital of US$ 7 billion is equivalent to double the capital of the CAF. The authorized amount by CAF is US$ 10 billion and the amount authorized by BANCOSUR is US$ 20 billion, as announced by president Chavez. It is understood that the subscribed capital of US$ 7 billion will be disbursed in the coming months to enable the recruitment of staff. The idea is that BANCOSUR will not focus on infrastructure, to which end the CAF and the IDB are already in place, but in projects aimed at closing the poverty gap in South America.


[1Foreign Policy Address at the Council on Foreign Relations,



8 rue Jonfosse
4000 - Liège- Belgique

00324 60 97 96 80