Post By BigDog-OH Brought From Intel4u
A Challenge From the BRICS
New York Times, By THE EDITORIAL BOARD JULY 23, 2014
On July 15, the leaders of Brazil, Russia, India, China and South Africa — the BRICS group of nations — announced the creation of the New Development Bank aimed at challenging the American-led global economic order.
The United States and Europe should take note that these nations are determined not to be constrained by Western institutions that fail to accommodate their ambitions.
The frustrations of this five-nation bloc are understandable, if somewhat divergent. Brazil and India blame the West’s 2008 financial crisis for sapping economic growth.
South Africa and India need capital for infrastructure development, preferably without conditions imposed by the International Monetary Fund or World Bank. China, whose economy is expected to surpass that of the United States as the world’s biggest sometime soon, doesn’t see why its currency shouldn’t replace the American dollar in a good portion of global transactions.
Russia, ousted from the Group of 8 and facing Western economic sanctions following its annexation of Crimea and support for rebels in Ukraine, is working to build closer relationships with China and the rest of its fellow BRICS.
The BRICS contain 40 percent of the world’s population and account for 20 percent of global economic output, yet only Europeans and Americans have led the I.M.F. or the World Bank.
The United States Congress has contributed to frustration by refusing to pass legislation to shift voting power more fairly among I.M.F. member states — even though this would cost the United States nothing.
China represents 70 percent of the collective gross national product of the BRICS. A China Development Bank already exists, and China is creating its own Asian Development Bank.
The New Development Bank will be based in Shanghai. India will assume the presidency of the bank for the first six years, followed by rotating terms for Brazil and Russia, but how this will counterbalance China’s economic clout is far from clear.
The bank will begin with an initial capital of $50 billion, rising to $100 billion, with a separate $100 billion Contingent Reserve Arrangement. The BRICS plan to bring in other developing countries in Africa and Asia, and they are talking about creating a regional-security alternative to NATO.
The BRICS nations have quite different political systems. Russia and China, for instance, are authoritarian regimes; India and Brazil are democracies.