A BRICS-Centered World Order?

A BRICS-Centered World Order?

07/17/14

Peter Harris

BRICS,

This week’s BRICS summit in Brazil largely has been overshadowed by the violent exchanges between Israel and Hamas, yet the summit’s keynote announcement has managed to make headlines: the agreement to create a global financial institution to rival the IMF and World Bank. Upon inspection, however, even this highly conspicuous and grandiose diplomatic move probably will mean less than its architects intend.

The deal signed in Fortaleza by the leaders of Brazil, Russia, India, China and South Africa was to create an international fund (rumored to be titled the New Development Bank) capable of issuing major infrastructure loans to developing countries.  Such an institution, of course, would be in direct competition with the World Bank (as well as regional institutions like the U.S. and Japanese-led Asian Development Bank and China’s Asia Infrastructure Investment Bank). 

Reports also suggest that the new bank will engage in financial bailouts, with a $100bn fund being put at its disposal in order to insulate the BRICS—and any other countries which may choose to join the new financial institution—from reliance upon the IMF in times of crisis.  All of this has led some to suggest that the BRICS are seeking to replace the western-centered international financial system.http://nationalinterest.org/blog/the-buzz/brics-centered-world-order-10904