Bank of the South is Here, But Can Africa Bank on the Latin American Way of Regional Integration?

The new multilateral institution is considered as an alternative to the International Monetary Fund and the World Bank and seeks to satisfy development credits demand.

Seriously, it's more than an alternative; it's also yet another expression of Venezuela and its associate MERCOSUR members of their dissatisfaction with the prevalent neoliberal system.

I've written about this Bank of the South before and I explained that the Latin Americans had something that Africans certainly didn't. Beyond blood running through their veins, it's about a radicalism and conviction so unprecedented and emanating that any of their opponents feel it viscerally that these are people not to be toyed with.

If not, how is it that despite the articulations of Venezuela against the mighty US, Venezuela has -- along with Brazil; Argentina; Bolivia; Ecuador and Paraguay -- establish this Bank of the South [I notice no Uruguay!!]. Yet, Africans have allowed themselves to be fragmented on the so-called Economic Partnership Agreements?

The fallout of the signing of a so-called EPA-lite by the East African Community and SADC (without South Africa and Namibia) just leaves one speechless--not to mention a little bit less for wear the arduous efforts of civil society -- both in the North and the South.

That said, it's important to press on to stop the discussions between the bullying EU and the other regions.

In my view, the Bank of the South initiative, a formidable alternative indeed to the Breton Woods institutions of the World Bank and IMF in the sense that "each member country would have a single vote, irrespective of size and financial contribution" (from:http://www.nationnews.com/290175804330225.php) brings into sharp relief the necessity for greater collaboration between MERCOSUR in general/Latin America specifically and other AU regionalisms to learn lessons on how they were able to resist the Free Trade Area of the Pacific in 2005, yet AU/ACP countries allowed fragmentation by the EU.

While this issue of the Bank of the South, in my view, is one of the most progressive developments in global regional integration to date--bar the ASEAN charter-- Africans ought to contemporaneously reflect on whether there is that much of a difference between the EU and the US, for them to have allowed the EU--former colonisers at that--to hoodwink many of them into an interim agreement that will most likely destroy attempts at regional integration.

You Can Bank on Something Big Happening in MERCOSUR!

There is something rather peculiar about the calibre of political leaders in Latin America that I don not find on the continent of Africa.

Somehow, it's that ability to look beyond the handouts of the IMF and the neoliberal policies that have afflicted them, and come out with a vision that is people-centred. When Africans, especially the South Africans, are keen to espouse the notion of NEPAD, and contemporraneously and ineluctably link it with the integration of Africa, somehow, somewhere, these Latin American leaders are turning agianst this type of Pavlovian attachment to what is, frankly in my view, a new colonialism, predicated on financial ties.

It is no surprise therefore to see that there's something big coming from Latin America again--specifically the MERCOSUR region.

The Bank of the South--described as "an ambitious and strategic gambit[sic--gamble??] in regional integration"--is going to radically transform how regional integration is done in that region. It only had to be the idea of the more progressive of the MERCOSUR countries--Venezuela and Argentina.

Despite a hitch between these two countries in a joint proposal against the Ecuadorians in the conception of the Bank of the South, it is clear that this Bank is going to deliver. IT is ambitious, without a doubt, and has vision unmatched in the region thus far.

In an explicit attempt to divest itself of the IMF/WB and other neoliberal financial policies, this bank, aiming to start operations in 2008, has five key characteristics:

1. bank's clients should not be large corporations;

2. rather it should give loans "to the public sector, to small producers, to local communities, to municipalities, and to states or provinces." (Toussaint)

3.Finally the document asserts that BoS should not be a behemoth like the World Bank with its 13,000 employees,

4. it should account for operations and activities on an annual basis.

5. It required an annual public debate for the bank to explain its activities to the citizenry whose taxes it used

Chile and Uruguay are absent from the debate on the BoS on account of their proximity to the US, deemed not just antagonistic, but which policies are necessarily anathema to the progressive vision of the BoS.

It was going to be evident the US would complain about a project like this. If there have been muted complaints, it's probably because Rice and her cohorts are too busy trying to carve Africa, EU-style, by way of the Africa Growth and Opportunity Act Forum due in Accra from 16 July this year (next week).

Either way, the Bank of the South is going to be reclaiming the state:

the Bank of the South can play a decisive role in reuniting a region divided by decades of neoliberalism. To implement the neoliberal model, its main beneficiaries—the financial institutions and monopolistic corporations—have weakened or dismantled the power of the nation state. It may be that one of the primary tasks of the BoS could be rebuilding state control and regulations
from:http://www.worldpress.org/Americas/2852.cfm

It's important to just touch very briefly on how MERCOSUR is doing things, If we take the example of the BoS, we read that:

Energy will be one of the first priorities of the new bank and one of its first projects will be to finance the proposed South American Gas Pipeline, which will link Venezuela with Argentina, passing through Brazil. This will be a real regional integration project because the gas transport is oriented toward regional economic development as opposed to exporting it to markets in the developed world.

I couldn't help but shake my head in wonderment about the--yet again--Pavlovian response by ECOWAS countries towards the West African Gas Pipeline, which has CHEVRON owning a stake. Euphemistically speaking, it is the project manager.

Honestly, can ECOWAS countries not manage their own ECOWAS gas pipeline? Perhaps, it's time to start taking cue from our MERCOSUR friends!

Don't Cry for Uruguay, Truth is She Never Left MERCOSUR!

Don't feel too sorry for Uruguay just yet.

There's an article in mercopress, maintaining that:

Uruguay and Paraguay, junior members of Mercosur have lately been at odds with Argentina and Brazil claiming the block has become a two members club, with little benefits for the smaller partners and therefore the need to establish agreements with third countries

.

Uruguay has been entertaining the US on discussions over free trade, prompting speculation in other MERCOSUR quarters that it is not as committed to the MERCOSUR project as it claims to be.

Honestly, how can anyone feel that Uruguay is not that committed when, as Xinhua, Chinese news agency maintains:

Uruguay signed a bilateral trade and investment framework agreement with the United States in January, a step analysts said put the two countries closer to a possible free-trade agreement

To boot, London's Financial times reports that:

Uruguay may downgrade its status in Mercosur, giving up its full membership, if the South American trading bloc stops the country reaching a bilateral trade deal with the United States

This type of doublespeak can only compound the apparently-conspiratorial sentiment by the rest of the MERCOSUR bloc that feels Uruguay is selling out--and to no less than the United States!

Comments like the following don't help either:

“Uruguay must find a way of making a bilateral trade deal with the US,” Uruguayan Economy Minister Danilo Astori was quoted in the newspaper on Friday as saying.

“Our small country is trapped, a prisoner of the collective wishes of the group, and this is causing us serious harm.”

Let me just quickly go back to what Andrew Hurrell says about an aspect of regional integration:

REGIONALISM…can also be seen as panacea for smaller countries when they find themselves weak in the face of strong countries. – CF Latin America (MERCOSUR); AFRICA (ECOWAS; COMESA; SADC; etc..)

i. Hegemony (existence of hegemon within a region may undermine efforts to construct inclusive regional arrangements involving all or most of the states within a region)

FOUR WAYS IN WHICH HEGEMONY MAY ACT AS POWERFUL STIMULUS TO REGIONALISM:

a. FIRST, sub-regional groupings often develop as a response to the existence of an actual or hegemonic power. Formation is a means by which to improve BOP vis-à-vis locally dominant state (CF: ASEAN > Vietnam; GCC > Iran; SADC > South Africa; MERCOSUR > USA

b. SECOND, regionalism can emerge as an attempt to restrict the free exercise of hegemonic power thru creation of REGIONAL INSTITUTIONS. (cf: specific project of regional integration in EU arose precisely as preferred means of dealing with GY (armament + ecnc rehabilitation by tying it into integrated network);

c. THIRDLY, tendency of weaker states to seek regional accommodation with local hegemon either in the hope of receiving special rewards (BANDWAGONING)

d. FOURTHLY, hegemon itself may seek to actively become involved in the creation / construction of REGIONAL INSTITUTIONS. Alternatively declining hegemony may compel hegemon towards the creation of COMMON INSTITUTIONS to pursue its interests, to share burdens; to solve probs; and to generate int’l support & legitimacy for its policies

Now, if Uruguay goes threatening to downgrade its membership in the event that its other members refuse to allow it to have a bilateral deal with the US, you have got to wonder whether this small country is into MERCOSUR for a bandwagoning spree--ready to collect whatever it can whenever it can, yet feeling reluctant to follow the leftist policies of its bigger brother Venezuela, and Brazil.

Furthermore, this type of development, to me, calls into question the major big difference between MERCOSUR and many other regional organisations that appear to be motivated merely by economic reasons. It's about the institutions!

Other than the Secretariat, a Parliamentary Commission, inter alia, what else is there that can lend some support to a a more comprehensive regional bloc--as exemplified by even the African regional economic communities of ECOWAS, which has a Parliament, and a ECOWAS Community Court

An interesting paper by Celina Pena and Ricardo Rozemberg looks at some of the institutional deficiencies around and within MERCOSUR, maintaining:

The lack of an independent technical body is, undoubtedly, one of MERCOSUR’s clearest institutional deficits. The creation of working subgroups or technical committees with national officials was not effective beyond the transition period with respect to the designing of quadripartiteinstruments. Constructing an independent technical body could turn out to be a necessary condition in order to overcome current limitations, but not enough, because its recommendations are not binding and therefore are subject to the member states’ representatives’ political decisions.In any event, a new MERCOSUR technical body might just contribute to the preparation of negotiations with third countries and regions, and to the presentation of technical proposals on issues of the internal agenda where common interests exist

All these differences apart, it's clear, in my view, that if Uruguay is feeling hemmed in, and restricted, one could easily assume that a lack of motivation by some of the smaller members on where MERCOSUR is going is one of the reasons.

Uruguay, it looks, might have to do some serious soul-searching before countries decide eto expel it!