Bank of the South and Chile
The Chilean government announced it would put $50 million into the Corporación Andina de Fomento (CAF) and would not participate in the Banco del Sur. The Bachelet administration says it is interested in funding existing institutions that work and not create new ones there are more “uncertain.”
That has always been the position of the Bachelet administration, but it’s interesting that this gesture is being made just shortly before the bank officially opens (on December 5). It could be coincidence, since it occurred during the Iberoamerican Summit, but the bank seems always to have particularly annoyed the Chilean government.
7 comments:
the bank seems always to have particularly annoyed the Chilean government.
Any ideas as to why?
Actually, no. The most common argument is that the bank will be politicized, but I’ve never heard that come from the Chilean government. Bachelet has a solid relationship with Chávez, Lula and Kirchner, and Chile doesn’t care about competing to be a regional leader. Yet the government doesn’t just ignore the bank—it periodically makes a point that it duplicates current institutions. There must be something else going on, but I don’t know what.
Greg, In other order of ideas. How do you think the king impasse affected Bachelet's popularity?
If it hurts Bachelet, it will be indirect (i.e. showing more discord within her cabinet). I am going to write another post about all this today.
... I can understand Chilean reservations over the need for Banco del Sur because the concept appears to duplicate that of the CAF, which is a perfectly fine, well capitalized sub-regional development bank based in Caracas, with a 30+ year track record in successful loans to private and (mostly) public sector borrowers. Its stockholders are all/all of the SA countries (there's similar outfit in CA, BCIE, which is another story), its Andean name notwithstanding.
Lest anyone compare CAF to Correa's hated enemies, the IMF and the WB and their lending policies, the CAF does not engage in sector loan activities like those of the WB, or policy conditionality like the Fund. In short, proponents of the BdelS can't criticize the CAF. Indeed, I haven't seen any kinds of comments on the CAF at all, in the BdelS context; it's as if the CAF doesn't exist, which is a shame, because it would make much more sense, in my opinion, to simply beef up the capital structure of the CAF rather than re-invent a perfectly good wheel.
So why a Banco del Sur? I don't see any good reason for it, frankly, and so I can understand Chilean reservations about it.
Bogger comments on the BdelS that I've seen posit its possible use as a source of political job patronage (you see a good deal of this in the BID) or (improbably) that the BdelS would be used to push reverse (anti-neoliberal) policy conditionality. Frankly, I don't have clue myself. Just as puzzling is why the Brazilians and Argentines would buy into the BdelS; they're CAF members and stockholders already and have been for years. The only thing I can figure is that they're buying into the BdelS to humor Chavez, Correa, et al - and why that is, is beyond me.....
It's a good point that although the Chilean government uses the CAF as an example of why the Banco del Sur is not necessary, I have never seen a rebuttal by bank supporters. Unless there is something the bank does that CAF does not, but I do not know what that might be.
It's a good point that although the Chilean government uses the CAF as an example of why the Banco del Sur is not necessary, I have never seen a rebuttal by bank supporters. Unless there is something the bank does that CAF does not, but I do not know what that might be.
I haven't looked into the question in detail, but my general sense is that the Banco del Sur will be more oriented toward regional integration (which may partly explain why Chile is not so keen on the idea). To one degree or another, the major players in the Banco del Sur see regional integration as an alternative to hemispheric integration (i.e. the FTAA). The Chileans, by contrast, have been big boosters of hemispheric integration. I suspect this has something to do with their distaste for the Banco del Sur.
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