Building BRICS of new development

22^nd April 2023

President of Brazil, Lula de Silva, with New Development Bank President, Dilma Rousseff

The establishment of the BRICS New Development Bank (NDB) in 2015 was a major step forward in opening up the possibility for developing countries, and those of the Global South, to take a step towards controlling their own development programmes and reduce reliance on international finance institutions dominated by the US dollar.

The BRICS nations (Brazil, Russia, India, China and South Africa) not only represent a huge percentage of the world’s population but some of the world’s key areas of economic growth. The group has recently added Bangladesh, the United Arab Emirates and Egypt to its cohort, while Uruguay is in the process of joining, and many other countries have expressed interest.  For example, Argentina, Iran, and Algeria have formally applied to join the extended BRICS+ bloc.

In January this year South Africa’s Foreign Minister, Naledi Pandor, indicated the group’s intention to  “develop a fairer system of monetary exchange”, with a view to weakening the dominance of the US dollar.

“The systems currently in place tend to privilege very wealthy countries and tend to be really a challenge for countries, such as ourselves, which have to make payments in dollars, which costs much more in terms of our various currencies”, she said.

In a recent visit to NDB Headquarters in Shanghai, Brazilian President, Lula de Silva, said the NDB’s goal is “creating a world with less poverty, less inequality, and more sustainability”, adding that the bank should play a “leading role in achieving a better world, without poverty or hunger”.

Lula was in Shanghai to witness the swearing in of a former Brazilian President, Dilma Rousseff, as the new President of the NDB.  In an interview following her inauguration Ms. Rousseff stressed the role of the NDB in supporting countries with regards to climate change and sustainable development goals; promoting social inclusion at every opportunity; and financing the most critical and strategic infrastructure projects. 

Ms. Rousseff also stressed the need to tackle the higher inflation and restrictive monetary policies which are a feature of developed countries and are often passed on, in the form of high interest repayments, to those developing countries struggling to build their own infrastructure.

“It is necessary to find ways to avoid foreign exchange risk and other issues, such as being dependent on a single currency, such as the US dollar,” she stated.  Critically, Ms. Rousseff went on to state that,

“At the NDB, we have committed to it in our strategy.  For the period from 2022 to 2026, the NDB has to lend 30% in local currencies, so 30% of our loan book will be financed in the currencies of our member countries.  That will be extremely important to help our countries avoid exchange rate risks and shortages in finance that hinder long-term investments.”

To date NDB has invested in 96 projects, approving $32.8 billion worth of finance to support programmes which are climate-smart, disaster-resilient, technology-integrated and socially-inclusive.

While the BRICS countries, and those looking to gain membership of the NDB, are by no means a homogeneous group in terms of their political outlook the initiative remains an important one.  The stranglehold of imperialist designed institutions such as the International Monetary Fund (IMF) and World Bank, both of which are US dominated and controlled, has tied developing nations to Western economies in ways which have thwarted, rather than encouraged, their economic independence.

In reality, the tools of the imperialist banking sector are there precisely to generate dependence and keep former colonial nations within a neo-colonial orbit.  The deployment of Western corporations, infrastructure and technology only serves to reinforce those dependencies over the long term.  Inevitably there is usually a military pay off too, with arms contracts being tied into economic support and the stationing of military bases and US hardware often being part of the deal.

The NDB cannot break such entrenched relationships all in one go and is itself still dependent upon the existing international banking arrangements in order to function.  However, the fact that the concept of “de-dollarisation” is even on the agenda of developing nations, and that there is an emerging investment network which it does not control, will be of concern to the US.

No doubt much of the current US provocation towards China stems from the fear that the unipolarity it has enjoyed since the defeat of the Soviet Union is not only being questioned but is being actively challenged.  The extent of the NDB’s success may well be measured by the increasing belligerence of the US towards those countries which are part of its network.