Hugo Chavez Wants to Take On His Enemies By Playing Their Old Game

These “international lending institutions” would first loan funds to developing nations with money contrived out of thin air. Next the developing countries were expected to pay back these loans with very real capital generated by their labor and exportation of natural resources. Don’t forget that all payments had to be made with interest. Over the years developing nations would be strongly encouraged to borrow more and more until it became impossible to recover from the ever-accruing debt.

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Then something unexpected happened in late 2001 and it had very little to do with September 11th. Argentina defaulted on 9.8 billion dollars worth of IMF loans. The once new darling and shining star of the developing Third World suddenly went broke. What happened? Argentina simply borrowed more than it could possibly pay back. We know this sort of thing happens all the time with individual credit card users so it’s the same with entire national economies.

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Then last week, Hugo Chavez dropped a bomb shell in which the reverberations can still be felt along the corridors of the various Third World lending institutions head-quartered in Washington D.C. Not only was the Bank of the South going to become a reality, but the nations of Bolivia, Ecuador, Argentina and Paraguay were already signed on to it. It didn’t stop there, either. There was the strong possibility of the South American giant, Brazil, fully joining as well. The real kicker of it all was that the commencement of loans issued by the Bank of the South could begin as early as 2008. Now this was indeed shocking news. The experts are now taking Chavez’s new plans very seriously.

So far the establishment banks like the IADB are reacting rather coolly to the situation. Rivals can be tolerated as long as they play ball. A wait and see attitude seems to be prevailing. After all, isn’t international wheeling and dealing a bit odd for a supposedly devout leftist such as Chavez? After Bush’s recent South of the Border Tour, the Venezuelan President must have been beside himself when learning of his arch nemesis’s new and very lucrative ethanol deal made with neighboring Brazil. Hugo Chavez may be winning the hearts and minds of the South American public but is being seriously out-flanked on the economic front.

It’s understandable that Latin America wants to at long last determine it’s own financial destiny. On the surface at least, Chavez’s Bank of the South makes perfect sense. Yet the world of international lending was born out of serious Mafia-style conniving. Serious questions must be raised. Where is the money going to come from? How are the payments going to be made? Which countries get the most say when determining and formulating lending strategies? Who exactly is going to benefit? Are the new Partner States of Venezuela, Argentina, Bolivia, Paraguay, Ecuador and Brazil really both that politically and economically aligned with one another? Hugo Chavez is no stranger to great risk taking but does he have any idea of where all this could lead? Only time will tell, but I think everyone is holding their collective breath on this one.

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