At their summit on Wednesday of last week, the BRICS nations (or the “emerging economies” of Brazil, Russia, India, China, and South Africa) announced the founding of a new international development bank. This new financial institution will, like the World Bank, provide funding for infrastructure projects throughout the developing world and, like the IMF, use reserves of various currencies to stave off financial crises.
The founding of this new bank is largely the result of the BRICS nations’ discontent with the often disproportionate power allotted to the US and European nations within the internal mechanism of the World Bank and IMF. At the moment, for instance, Brazil and Spain have similar voting shares within the IMF (which are officially determined based on the size of a given nation’s economy using figures like GDP), despite the fact that the Spanish economy is less than two-thirds the size of the Brazilian. Dr. Roslyn Fuller suggests, and rightfully so, that this new bank is the inevitable manifestation of the West’s inability to adapt to the new multipolar world, or in her words, the result of its failure to turn at this crucial turning point in global relations.
Obviously, there is a deeply geopolitical element to the founding of this new BRIC development bank. In large part, like much in the arena of diplomacy, it is a matter of ego – an opportunity for the BRICS countries to declare independence from and comparable influence to the old bastions of power in Washington, D.C. [Ed: My old foreign policy professor would call it “symbolic politics”].
The India Times refers to the new bank as a “counter-weight” to the World Bank. Reuters’ story on the topic declares in its title that “BRICS set up bank to counter Western hold on global finances.” The LA Times writes that the new bank was founded with “aspirations to challenge the dominance of the World Bank and the International Monetary Fund.”
This adversarial depiction of these two banks common to many media outlets the world over has likely left some of us development interns scratching our heads. After all, isn’t the fundamental goal of the World Bank to combat global poverty, not to preserve any uneven global power structures nor propagate US dominance? Shouldn’t this new bank be welcomed as a dearly needed partner and ally of the DC based financial institutions?
World Bank President Jim Yong Kim would most certainly agree. In a South China Morning Post article he is quoted as saying,
“For us, our competition is poverty. Our enemy is lack of economic growth…. We have no choice but to welcome any new entrants because every new entrant will help us battle poverty.”
Kim said he was eager to collaborate with this new bank in joint efforts to better aid the world’s poor.
Again we are faced with the problem of perceiving and interpreting the place of politics in development work. As William Easterly noted in his most recent book (echoing themes already present in works by James Ferguson and others prior), development organizations tend to mystify the deeply ideological roots of their policy prescriptions and the subsequent political effects of such policies in technocratic rhetoric and claims of impartiality. In such a way the World Bank, an organization with a policy history that mirrors the ideological trends of its American host (such that neoliberal structural adjustment reforms became popular during the Reagan era), can be depicted as an impartial organization advocating empirically proven policies. Many development interns and practitioners seem to get lost in the technocratic rhetorical haze and forget, or completely ignore, the political elements of this line of work.
However, when the BRICS nations founded their new international bank the global media was able to perceive this move as one with deeply political roots and implications.
The ability to distribute aid is a mark of power; even more so, the ability to determine the ideological character and political directions of this aid. The media is not hailing the bank as a new contributor in the fight against the common scourge of poverty, but a diplomatically complex assertion of growing power and international influence among BRICS nations.
One must turn to President Kim to hear the politically sterile, familiar discourse of “the global confrontation of poverty.” While development organizations have often succeeded in their efforts to appear apolitical, here his remarks stand in contrast to a mass of geographically diverse journalists, making his apolitical representation of the World Bank seem – quite candidly – illusory.
Political jostling and diplomatic hissy fits aside, I am eager to see what will come of this new development bank.
As former World Bank economist (and Nobel prize winner) Joseph Stiglitz indicates in his appearance on Democracy Now, this new bank will only expand investment within the “developing world” and encourage further efforts to stimulate economic growth therein. With reserves of over 3 trillion its seems China’s greater participation (and that of the other BRICS) in the development industry is long over due, and a serious opportunity to better meet the needs of the world’s poorest.
Further, this new bank, which will likely pull from demographic and geographic circles underrepresented in Washington, will expand the development policy debate to include previously unheard voices (essentially the goal of development blogs like this one and Why Dev). The familiar danger of “group think” among policymakers can perhaps be staved off through the inclusion of these new diverse contributors (especially since a voice on the international stage tends to be loudest when its orator has full pockets).
Of course there are also new dangers. We must be wary, as with the World Bank, of hidden political rationales embedded in what I am sure will be the technocratically defended policy proposals of this new development bank. Their foreignness to Western observers makes them no less likely to fall into the typically western pitfall of propagating their own cultural hegemony and privileging their own ways of being, thinking, and prospering in their policies.
In short, this new bank is a bit of a mystery. Its institutional history is only about to begin. Here’s to hoping its better than that of the World Bank.
Hell, if nothing else, maybe they’ll even give me job. No one else seems to be interested.