Bank of the South

"Sooner or later, those institutions will fall due to their own weight. They will wear away, the International Monetary Fund, the World Bank and all those institutions. We're better off without the Fund and without the World Bank."

So the Venezuelan President Hugo Chávez has told a meeting of Latin American leaders. Mr Chávez says he wants to formalise his country's exit from the World Bank and IMF and is developing an alternative economic vision for the continent called the Bolivarian Alternative for the Americas (ALBA) to rival the Free Trade Area of the Americas (FTAA) being championed by the United States.

Following the precedent set by the Bolivian President Evo Morales, who nationalised his country's natural gas industry last year, Mr Chávez has this week taken control of Venezuela's last oil field projects that were still being run by foreign companies, which will increase his ability to provide alternative forms of credit and financial support for other countries in the region. The foreign firms, which include Britain's BP, are more than likely to remain involved, in part because of the significant investment that they have already put into the projects and in part because the country's Orinoco River basin is the world's largest known oil deposit, holding a possible 1.2 trillion barrels of extra-heavy crude, rivalling even Saudi Arabia's reserves.

Venezuela's share of the IMF is apparently worth $3.9 billion, although it is not clear how much money the fund or the World Bank might have to return to Caracas. One can't but be reminded of another intergovernmental giant and refrains of "Better off out!"

Spot The Difference

Read the following in the latest International Herald Tribune and then replace Cuba with Iran. Sound familiar?

It's time to trade with Cuba

Two things should be clear concerning America's Cuba policy: Everything the United States has tried over the past five decades has failed, and it is high time that Washington does something to help transform the country's Communist system. ...

All of this is not bad in itself. The danger is that this Cuban-Venezuelan axis will stimulate anti-American populism across the whole region.

If the risks of keeping the status quo in place seem obvious, it is even more evident that Washington's travel bans, economic sanctions, and the refusal to extend diplomatic ties to Cuba have not only failed, they have damaged Washington's interests.

These tough measures have harmed both ordinary Cubans and Washington's relations with Latin America and Europe. They have strengthened Cuba's Communist regime by increasing the state's grip on key economic resources, and they have helped cement Cuba's alliance with Venezuela.

Since we have not succeeded in bullying the Cubans into submission, we should try to woo them by offering trade with the United States and integration into the international market system. How long could the Communist economy - or the Communist government - survive such an opening?

As the article goes on to note about Iranian sanctions, "U.S. sanctions imposed in the era before President Mahmoud Ahmadinejad came to power blocked Iranian reforms, undermined the country's liberals, strengthened the clerical regime's grip on the economy and perpetuated its rule."