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In a pamphlet composed a few weeks before the 1917 October Revolution, Lenin wrote that without big banks socialism would be impossible. Venezuelan president Hugo Chavez, our young centurys most exciting and successful socialist, seems to be taking Lenins advice. Tomorrow, Chavez will officially launch the Banco del Sur, a regional development bank which will provide South America with a socially responsible alternative to the International Monetary Fund and the World Bank. The founding members of the new bank include not only Venezuela, but also Argentina, Bolivia, Brazil, Ecuador, Paraguay, and Uruguay.

The World Bank and IMF have long been criticized by the international left as tools of Western and particularly US economic imperialism. While these institutions provide much needed financing for development projects in the global south, this money comes at a high social cost. The countries that receive IMF or World Bank loans must sacrifice some of their economic independence and are often subject to devastating structural adjustment programs. These austerity programs include deep cuts in social programs, privatization of state enterprises, tax cuts to multi-national corporations, and attacks on trade unionists. The seven founding member states of the Banco de Sur are trying to create a lending institution free of such coercive power.

Chavez and company have found some unlikely allies in this struggle. The Nobel-prize winning economist Joseph Stiglitz, formerly the World Banks Chief Economist, also voiced his support for the Banco del Sur on a recent visit to Caracas. More surprisingly, the United States closest ally in South America, Colombian president Alvaro Uribe, announced on October 12th that Columbia would join the bank. Ever cautious not to annoy the US administration, Chiles center-left government has so-far declined to support the venture, but now that the head US running dog has signed on Chile is likely to follow. This would leave Guyana, Peru, and Suriname as the only non-members.

Chavez clearly sees the bank as part of a wider social, economic, and political revolution which began in Venezuela but which is spreading across Latin America. Whereas the 20th century socialist movements tended to either totalitarian excess or ineffectual reformism, the new Latin American socialists like Chavez as well as Ecuadors Rafael Correa and Bolivias Evo Morales are showing the way to a socialism which is both genuinely revolutionary and unimpeachably democratic. In Chavezs mind, the bank will be the financial engine for this regional transformation.

Unfortunately, not all of the banks founders see it the same way. The nominally center-left governments of Argentina and Brazil are unwilling to take part in this social revolution and are still deeply tied, economically and ideologically, to the powerful forces of global capitalism. This gets to the heart of the biggest question facing the Banco del Sur. Will it be just another coercive financial institution or will it fulfill its historic potential and help usher in a new age of democratic socialism?