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A ‘BRICs’ Bank? No Thanks, The IMF And World Bank Are Bad Enough, by Jens F. Laurson and George Pieler, 22 April 2013, Forbes.com LLC


Led by China, the five “BRICS” states (Brazil, Russia, India, China, South Africa) plan to set up a development bank of their own. This is loosely characterized as an IMF and World Bank rival, which is to say an unholy combination of the two. Does this mean the fast-growing graduates of the Developing World are finally coming together as a potent force?

It does not. Chen Yuan, the veteran of the China Development Bank, has been tasked with making this ill-defined BRICS Bank a reality, but as of yet there is no plan even on paper. The new institution might support infrastructure projects in the non-developed world, or leverage a stronger presence for China and its four friends anywhere they find takers, but so far it is still a phantom project.

What is most striking about this first really tangible BRICs initiative is its lack of originality. Everything so far points to the BRICs bank mimicking one or more of the Bretton Woods institutions that western nations devised after WWII with the objectives of supporting war recovery and spurring (peaceful) postwar development. (Whether their track record on development really makes them such good models for imitation is a question for another day.)

At the core of the planned development bank of the BRICs is a large void: an apparent lack of a central mission these countries want to collectively accomplish. Their development bank-project amounts more to an announcement that they will have one, too – just like the established economic powers. They’re free to have one, of course. The BRICs nations are already enmeshed in the status quo structure of international development finance, as it is, though they are clearly not satisfied with the role they play in the IMF and World Bank. China especially, which has long demanded a larger role in the Bretton Woods institutions, has a valid point.

But these institutions seem a strange model to emulate: China is renowned for offering no-strings development aid, particularly in Africa, as opposed to the tied or limited aid that usually comes from the development banks or bilateral deals. The western concern has been that its own development aims, whether in the field of human rights, public health, or improved governance, will be shot to bits if aid recipients can get unconditional deals from China.

What the supposed BRICs bank could do, though, is heighten China’s influence in places perceived as outside of its current realm of influence, yet more amenable to suasion by Russia, India, or Brazil. That would allow China to render services (or cash and credits as needed) via the other four BRICS. Aid-laundering, as it were. This also makes sense of South Africa’s membership: While the country doesn’t fit the rapid-growth criteria of the other four, it is in the mix for prestige and an African presence.

None of this will necessarily have profound geopolitical repercussions: The BRICs have not yet proposed their own trading bloc, and deal with their share of trade tensions within the group. Particularly Brazil and South Africa lock horns on agricultural products. They aren’t trying to stop the planned Trans Pacific Partnership anchored by the US. They say they are committed to the WTO principles of free trade as an aspiration of the postwar world trade order. They are certainly not planning a Euro-style currency bloc, although China keeps pushing for Renmimbi convertibility to establish its currency as an eventual competitor for the dollar. They don’t have treaties of mutual defense and support, and they continue to embrace all the status quo institutions of international relations, in short “global governance”: the UN, WTO, G20, and the various development banks.

The BRICs alliance is probably best seen as a collective effort to secure greater leverage in all these longstanding institutions, and generally to be seen as the champion(s) of less developed nations in their decision-making processes. Not an unreasonable goal, but not a very exciting one especially since the BRICs agenda doesn’t trump the BRICs members’ extant individual obligations as members of the Bretton Woods institutions, or their commitments and treaty obligations with the rest of the developed and developing world.

The BRICs are waiting expectantly, and not necessarily vulture-like, to see what their opportunities in a multipolar world will be. Everyone assumes the so-called unipolar world revolving around the United States is on its way out (if it isn’t already), and (to the extent the Eurozone is counted as part of the U.S. orbit) it isn’t daring to predict that will happen sooner, rather than later.

It’s fair enough to extrapolate from today’s trends a trajectory for the global economy, but it would be folly to assume it can’t come out any other way. And if it weren’t to happen soon, expect the loose BRICs-alliance to break apart before long. Russia needs China much more than the reverse, and the longstanding territorial rivalries between China and India are seething just below the surface. Brazil may be better placed to play a leading role in the economies of the southern hemisphere than get enmeshed in global power-plays.

Russia isn’t growing so fast these days, China’s growth has been bogged down by systemic corruption and increasingly obvious environmental and social limits, and slowed down by design, to achieve a hope-for sustainability instead of a crash. The BRICs, by pushing modification of the old order while pretending to proclaim a new one, merely reinforce the global preference for gradual evolution of global economic relations, not a revolution led by newly-wealthy players on the global stage. This makes sense, given that wealth has been won by adopting western-style markets and – at least to some extent – newfound respect for the rule of law in international relations.

 
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Posted by on April 22, 2013 in BRICs

 

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South Africa: Jamaica Endorses the Establishment of BRICS-Led Development, South African Government (Pretoria) via All Africa, Bank 9 November 2012


press release

The government of Jamaica has come up in support of the establishment of the BRICS-led Developmental Bank. Jamaican Minister of Foreign Affairs and oreign Trade, Senator Arnold Joseph Nicholson, told the Minister of Trade and Industry, Dr Rob Davies during their bilateral meeting in Jamaica today that a BRICS Bank was good for Jamaica and that his country was in support of it.

South Africa will host the fifth BRICS Summit in March next year and among the key decisions expected to come out of the summit is the formation of a BRICS Development Bank. BRICS is an acronym for the grouping of the emerging economies, which include Brazil, Russia, India, China and South Africa.

The two Ministers agreed that the BRICS Bank should play a role in mobilising resources for infrastructure and sustainable development projects in BRICS and other Emerging Economies and Developing Countries (EMDC). They also said that the Bank was not intended to replace the International Monetary Fund and the World Bank. According to them, the BRICS-led Developmental Bank will complement the two institutions.

Minister Davies said that the importance of South Africa’s membership to BRICS was not just for South Africa, but for the African continent and emerging economies. Nicholson added that Jamaica was proud to be associated with South Africa and to see that the Caribbean economic bloc, the Caribbean Community and Common Market (Caricom) was included in the South African agenda. Jamaica is a member of Caricom, which consists of 15 countries that are located in the Caribbean Sea.

“Next year you are going to assume the chairperson of BRICS and it seems to me you are not only thinking of South Africa in a traditional way of doing things. You are also looking for an expansion of opportunities and diversifying trade. We are pleased to see that Jamaica and Caricom are within that category of opportunities,” said Minister Nicholson.

Minister Davies is in Jamaica on a two-day visit to discuss trade relations between the two countries. The two ministers also agreed that there would be a South African business delegation to Jamaica sometime next year.

Davies’s visit to Jamaica follows President Jacob Zuma’s state visit in August this year.

 
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Posted by on November 10, 2012 in Uncategorized

 

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