As all five of the BRICS nations have their own development banks, the debate continues on whether one monetary bank should be implemented to benefit infrastructure, and which country should house it
The headlines seemed to say it all: “BRICS nations fail to launch new bank” – Aljazeera; “BRICS fail to launch bank to challenge West” – The Jakarta Globe. The BRICS nations’ March summit in Durban, South Africa ended without the funding and modus operandi of a BRICS development bank, first mooted by India at the 2012 summit, being fleshed out.
While many observers were quietly smug, participants at the summit seemed to think proceedings went rather well. The host, President Jacob Zuma of South Africa later said, “We are satisfied that the establishment of a new development bank is feasible. We have decided to enter formal negotiations to establish a BRICS-led new development bank.” One might wonder if a BRICS development bank is actually needed.
At an estimate, there appear to be over 100 national and international development aid agencies already at work. All of the five BRICS nations currently have their own national development banks, as does all of the G7 group of nations. some countries on the economic sick list like Spain, Italy and Ireland, oil-rich nations from the Middle East and tiny states like Liechtenstein and Slovakia.
Building stronger banks
Among the international development banks are the African (AfDB), Inter-American (IADB), Asian (ADB), Andean (CAF), and European (EBRD and European Investment Bank). Most of the other 23 multilateral agencies grew out of Bretton Woods initiatives designed to create monetary stability among independent member states – the World Bank and IMF.
Traditionally, development banks were intended to channel public money into major infrastructure projects that were too large and long-term to be financed from other commercial sources. In most cases the argument in support of using public finance was the social and economic benefits of bringing transportation, communication, environmental and production facilities to an area. The same argument supported the extension of funding from richer nations to those in the so-called developing world.
Often, however, fund providers couldn’t resist the urge to attach conditions that recipients saw as unfair restrictions on their commercial and sovereign rights. Increasingly, the IMF and World Bank have been seen as being dominated by the west and operating a western political agenda, a view supported by the fact that those institutions have consistently drawn their chiefs from either Europe or the US, despite a growing percentage of financial contributions coming from emerging economies. The outgoing President of the World Bank Robert Zoellick acknowledged that “policy makers [of the bank] will need to break free of old constraints to connect the private sector to public policies”. Zoellick has also expressed his support for the idea of a BRICS bank, saying, “If they decide they want another financing vehicle – fine. Let’s figure out how to work with it… I’m enough of an economist that I’m not a monopolist.”
Investment Group in BRICS
- Russia’s Plan For The BRICS To Dismantle The Dollar System (12160.info)
- Can the BRICS Have Their Own World Bank? (businessweek.com)
- BRICS plan rival to world bank and IMF – Is this a real break from Rothschilds? (secretsofthefed.com)
- BRICS Bank (uosm2018.wordpress.com)
- BRICS: Changing the paradigm of international relations (Comment) (news.in.msn.com)
- Break Up the BRICS – Bloomberg (bloomberg.com)
- BRICS Without Mortar (project-syndicate.org)
- BRICS fails to launch bank to challenge West (thehimalayantimes.com)
- Will the Brics bank deliver a more just world order? (guardian.co.uk)
- BRICS Plan New $50B Bank to Rival World Bank and IMF (leaksource.wordpress.com)