Chavez pulls out of IMF and World Bank

Hugo Chavez has announced that Venezuela are to pull out of the World Bank and the International Monetary Fund. He has also promised to nationalise four oil field projects currently being run by foreign companies.

Though Venezuela has paid off its loans to the two international lending organisations, Mr Chavez's announcement that he intends to quit the organisations is powerfully symbolic. It is likely to lead to other smaller nations to question their membership and demand a greater say in the organisations' policies.

"We will no longer have to go to Washington, nor to the IMF, nor to the World Bank, not to anyone," said Mr Chavez. "I want to formalise our exit from the World Bank and the IMF."

Despite Venezuela's close trading relationship with the US over oil - it is the fourth largest supplier of crude in the United States - Mr Chavez has long been critical of US interference in Latin America, be it political, military or economic. He has long derided the IMF and the World Bank for being controlled by US and Western interests and has said their policies of tight budget controls, privatisation and open markets have benefited foreign companies while leaving much of Latin America in grinding poverty.

Chavez has done wonderful things since taking power and has used Venezuela's considerable wealth to huge effect reducing poverty inside Venezuela and increasing access to education and healthcare for his population. These are all moves that the World Bank and US controlled IMF would no doubt dismiss as socialism, but then the US system of healthcare is not one that is emulated by any other developed nation, most of which recognise the principle of healthcare being available to all irrespective of wealth.

The irony, of course, is that the US spend a larger amount of their GDP (15%) on healthcare than anyone else in the world, and yet their system is ranked 37th in the world according to the World Health Oraganisation, so one wonders what position they are in to criticise Chavez.

One also must remember that the IMF supported the groups that briefly managed to oust Chavez in the 2002 coup, so there really is no love lost between Chavez and these financial organisations.

Mark Weisbrot, director of the Washington-based Centre for Economic Policy Research, was refreshingly frank when he spoke of the IMF:

"The IMF is not really an independent actor," said Mr Weisbrot. "I don't think there's anyone in this town who would tell you with a straight face that it is not controlled by the US Treasury. There was no reason for Venezuela to remain a member... I think it's possible that other countries will pull out."

It will be interesting to see what the US do next as Chavez has promised to use Venezuela's oil wealth as a "Bank of the South" to help other nations and provide an alternative to the US controlled IMF and World Bank.

Mr Chavez made his announcement on Monday, a day after criticising the lending organisations during a meeting with leaders from Bolivia, Nicaragua, Cuba and Haiti. He predicted that "sooner or later, those institutions will fall due to their own weight".

On Monday, Mr Chavez announced that some of the world's largest oil companies would lose operational control over projects in the Orinoco Belt reserve in Venezuela. Britain's BP, the United States' ConocoPhillips, Chevron and Exxon Mobil, Norway's Statoil and France's Total agreed to obey a decree to transfer operational control. The move came a year after the Bolivian President Evo Morales took control of his country's gas fields.

"President Chavez has ordered us to take full control over the sovereignty of our oil, and we are doing that today," said Venezuela's Oil Minister Rafael Ramirez.

Good for Chavez. I expect the Jackals are being despatched by Washington as we speak, after all democracy is something they only respect when it yields results that they agree with.

Click title for full article.

Tags: Chavez, Venezuela, World Bank, IMF, International Monetary Fund