Chomsky on The Bank of the South

There's a very concise interview with Chomsky @ alternet.org about the new South American Bank, headed up by the new left, and of course, about the failures of the IMF and World Bank. It's often hard to ask Chomsky questions that he then gives sizeable explanations (that just anyone can grasp) to in response. 

Chomsky on the fall of the IMF:

The IMF is in trouble now because it is losing its reserves. It was functioning on debt collection and if countries either restructured their debt or refused to pay it, they're in trouble. Incidentally the countries could legitimately refuse to pay much of the debt, because, in my opinion at least, it was illegal in the first place. For example, if I lend you money, and I know you're a bad risk, so I get high interest payments, and then you tell me at one point, sorry I can't pay anymore, I can't call on my neighbors to force you to pay me. Or I can't call on your neighbors to pay it off. But that's the way the IMF works. You lend money to a dictatorship and an elite, the population has nothing to do with it, you get very high interest because it's obviously risky, they say they can't pay it off, you say okay your neighbors will pay for it. It's called structural adjustment. And my neighbors will pay me off. That's the IMF as a creditors' cartel. You get higher taxes from the north.

And then when asked about what other initiatives are springing up alongside the new leftist Southern Bank: 

It's already happening. Kuwait has already made a limited move toward a basket of currencies. The United Arab Emirates and Dubai are moving toward their own partial development funds. Saudi Arabia, that's the big important one, if they join in it'll become a major independent center of funding, lending, purchasing, and so on. It's already happening. Investment in the rich countries and to some extent in the region, particularly North Africa. Separate development funds. It's a limited move; they don't want to anger the United States.

 Add to this the calls for altering the currency of oil trade by Venezuala and Iran. If they get there way, we might see the petro dollar which the US relies upon so dearly, in return investment and the like, significantly detach itself from US hegemony. What's next? The Saudi's pulling their large investment out of the US economy?