Creditors in Competition: Chavez and the Bank of the South versus the IMF

Since coming to power Venezuela¡¯s President Hugo Chavez has been a charismatic and polarising figure. To many of the rich and those on the political right that champion the IMF as the saviour of the poor he is seen as a dangerous and destabilizing factor in Globalisation¡¯s mission to raise the poor out of poverty. These feelings have now been exacerbated as he has set up the Bank of the South in opposition to the IMF in Latin America, as the IMF has traditionally been the biggest lender to the region. However to many of the poor and those and on the political left he is seen as a visionary people¡¯s champion against the ravages of Globalisation, as they argue his policies have greatly benefited Venezuala's poor and the poor of the Latin American region in general especially now that the Bank of the South is poised to continue those policies region wide. These people argue that the biggest beneficiaries of the IMF policies in the past were the rich and the MNC¡¯s that operated in the region, whereas they argue that the Bank of the South¡¯s policies will actually benefit the borrowers and by extension the poor. Also as an oil rich nation Venezuela has the money to lend, as its oil finances were boosted by the effects of the US / UK invasion of Iraq on world oil prices. The recent fall in oil prices will therefore need to be examined to see to what extent this will affect Chavez¡¯s plans and therefore the long term economic future of the region in terms of development loans from Venezuela and the Bank of the South. This paper will example all these issues in detail by paying particular attention to the relevant background history as this is necessary to understand the motives of the various actors in the present as well as trying to understand what the ramifications for the future may be.