Jens Erik Gould
July 21, 2005
The leadership of Latin America's largest economies--Venezuela, Argentina and Brazil--has taken a noticeable turn to the left.
Many tie this trend to a regional perception that US-supported free-market policies such as privatization and tight fiscal spending have not alleviated poverty or created many jobs.
It is in this environment of free-market frustration that former Finance minister JosÈ Rojas is striving to win the presidency of the Inter-American Development Bank (IDB), the largest regional bank of its kind.
Next Wednesday, Rojas will face off against four other candidates to lead what is a major source of funding for economic, social and institutional projects and regional integration programs in Latin America and the Caribbean.
Despite the recent shift to the left in Latin American politics, Rojas told The Daily Journal that the bank needed to help strengthen the private sector in Latin America.
He thought some states had overreacted to financial crises such as that of Argentina in 2001.
"The crisis was not interpreted as a failure of the free market," said Rojas, who was also vice president of state-run Petroleos de Venezuela (PDVSA) last year. "In no moment can it be interpreted as a war against the private sector."
Rather, such crises were due to the market's inability to overcome asymmetries including heavy concentration of wealth, financial flight and the lack of redistribution of revenue by the state, he said.
"When no one bet on Argentina, the IDB was the first institution to come out and help Argentina," he said.
Rojas believed that cutting poverty rates across the hemisphere would require a more efficient and farther-reaching IDB that could intervene more quickly when its help was needed.
He added that the IDB should look for worthy partners in the public and private sectors to increase its potential as a "fundamental element of development." In so doing, the bank could do more to help countries advance their own initiatives such as selling bonds.
The economist proposed that Latin American financial markets be strengthened to increase the potential of the region's internal capital market.
For example, he thought the region's nations should be able to issue bonds without going through New York or Luxembourg.
He said this would make the region's financial system more efficient and less costly. The system would then evaluate itself, creating less risk and a more fluid flow of information.
Speaking about his own country's economy, Rojas said that today marked the first time in the country's history that it has "taken the initiative to increment its own economic model."
The Ch·vez government has put an increasingly social tint on the economy, marked by social development programs and economic policies such as co-management and expropriation of unused land.
Rojas said it was too early to judge the model, but underlined that after being historically slow to adopt new economic models, Venezuela might now be influencing other countries to adopt its model.
He urged economists to start measuring and interpreting Venezuela's new economic model outside of politics. "Until now, the only way of analyzing it has been simplistic: 'I am with or I am not with the government,'" Rojas said. "This is extremely superficial criteria."
When asked about his position on Venezuela's recent efforts to purchase Ecuadorian bonds, Rojas said, "each government is independent to advance its own politics."
"The bank doesn't criticize and shouldn't criticize," Rojas said. "The bank helps and orientates. It never gives opinions or gets involved in the internal politics of countries."
The World Bank did not dictate guidelines for countries to follow either, he said. There were only cases where the bank demanded certain policies by contract, for example, when it gives loans.
Rojas believed that the United States, which controls 30 percent of the bank's votes, "has always promoted the institutions that have missions to fight poverty," and mentioned the World Bank and the Bretton Woods project as examples.
The IDB was founded in 1959 between 19 Latin American countries and the United States. It now has 47 member states.
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JENS ERIK GOULD
Jens Erik Gould is a political, business and entertainment writer and editor who has reported from a dozen countries for media outlets including The New York Times, National Public Radio and Bloomberg News.