Ibne Siraj :The first world countries, particularly the wealthy west, for years, decades and eras have been exploiting the other nations in various forms and mechanisms with the change of political and economic phases from time to time. There have been many talks lately of a need for a “New International Economic Order” between the developed and the less-developed nations. Some who argue for it begin with a guilt-mongering attack on the West, implying that the rich world is responsible for the global poverty, largely being done by the institutions like World Bank and International Monetary Fund (IMF). It is crystal clear that the third world poverty and the western wealth are the results of colonial exploitation as the colonies were held back together under different nomenclatures to use their cheap labourers and materials to make the West richer with the cycling out of time. While western colonialism has largely ended, the less developed nations are still being exploited through unfair trade terms being enforced by the institutions like the World Trade Organization (WTO) and the actions of giant multinational companies. The United States and the Western Europe, with 15 per cent of the world’s population, use about half of the world’s raw materials, thus not allowing the poor countries to catch up.The less developed nations with a view to freeing themselves from the clutches of the bloodsucker West floated dozens of political and business oriented organizations to create their own markets for own products and also investment in each other countries. Their success in such noble bids was less but failures were more as these nations in the world’s southern block have long been tied into unholy knots either bilaterally with the United States of America (USA) and its allies, or with the institutions blessed by the West. Of late, the US-led western world is experiencing a sort of backwardness both in political and economic fronts as other nations have now realized that they should stand on their own heels and say “Good Bye” to the exploiters of world economy. Perhaps with this mission in mind, leaders of five leading economies in the South have ardently felt for a multilateral development bank to be operated by the BRICS nations. Brazil, Russia, India, China and South Africa (BRICS) proposed at their Durban summit in March 2013 for the BRICS Bank and that became a reality in Brazil on July 15, 2014 in presence of apex leaders of all these countries. The new bank will present an ambitious challenge to the western-run multilateral institution that currently shape global finances.An alternative to the World/IMF, the BRICS bank will provide funds for infrastructures and create a “Contingent Reserve Arrangement” or emergency funds of $100bn to help its members counteract future financial shocks. The BRICS countries have a shared desire for a bigger voice in global economic policy as they now account for 21% of world economic output and have contributed more than 50% to the world economic growth in the past decade. The bank having its headquarters in Shanghai with the first President from India and the first board chair from Brazil is committed to help emerging and developing nations mobilize resources for infrastructure and sustainable development. After formal declaration of floating the new bank, Brazilian President Dilma Rousseff said, “these initiatives show that, despite our diversity, our countries are committed to a solid and productive association.” Russian President Vladimir Putin, now a formidable threat to the western demonism, hailed the five nations’ agreement as a “very powerful way to prevent new economic difficulties.” The Contingent Reserve Arrangement will have $100bn at its disposal to head off potential volatility linked to the United States exiting its stimulus policy. China is expected to make the biggest contribution of $41bn followed by $18bn each from Brazil, India and Russia and $5bn from South Africa.The summit comes as the economies of some BRICS countries, together representing 40% of the world population and a fifth of the world economy, are cooling down, with Russia and Brazil expecting just 1% growth this year. This is Putin’s first world summit since the G8 group deleted Russia over the Ukraine issue, giving him an opportunity to reiterate his call for a ‘multipolar’ world amid tensions with the West. For Russia, the creation of a $100bn BRICS bank with a reserve currency fund of another $100bn is a political coup as the West freezes the nation out of its own economic system. Russia is now tying itself into the financial superstructure of the next generation of economic heavyweights. The BRICS criticized the World Bank and IMF for the dominance of the rich nations of the G7 and the stringent conditions attached to their lending they feel impinges on the economic sovereignty of its members. Russia’s recent experience over Ukraine has shown that the West is ready to eject politically unruly countries from its economic system. If the nation is able to successfully establish itself, the BRICS’ inauguration of multilateral financial institutions rooted outside the reach of Western oversight could provide insulation from Western economic clout to countries like Russia and China, whose growth threatens to put it at odds with Japan, a US ally and G7 member.After years of railing against the Western-dominated global financial order, a powerful bloc of the world’s emerging economies has finally done something about it. The BRICS Bank has been billed as an answer to decades of grievances in the developing world about a global financial architecture the United States and Western Europe has exploited to enforce the subservience of the poor nations. The hotly anticipated announcement was seen as a watershed moment for a coalition that has struggled to prove it is anything more than an acronym with 20 percent of the global GDP and a shared distaste for the unipolar world order. Since its first summit in 2009, the group has struggled to institutionalize its otherwise incoherent grouping, which is often at loggerheads politically and is too geographically disparate for a security framework to be viable. It even has discordant views on how to manage trade, which has precluded a trade partnership from materializing. The impetus for launching a bank run by the emerging world was born amid the global financial crisis of 2008, when economic turmoil and imprudent financial planning by the US and Europe sent shock waves through the less industrialized world. The West had lost credibility as the world’s financial manager, a role it has held undisputed since world leaders meeting in Bretton Woods, New Hampshire, to set up the IMF and a predecessor to the World Bank in 1944.Putin, who has openly accused the West of victimizing the rest of the world through its development programs, called for his fellow BRICS leaders to “help prevent the harassment of countries that do not agree with some foreign policy decisions made by the US and their allies.” Meanwhile, the BRICS countries have made significant progress in setting up structures that would serve as an alternative to the International Monetary Fund and the World Bank, which are dominated by the US and the EU. A currency reserve pool, as a replacement for the IMF, and a BRICS development bank, as a replacement for the World Bank, will begin operating as soon as in 2015, Russian Ambassador at Large Vadim Lukov said after the formal declaration of BRICS Bank. Brazil has already drafted a charter for the BRICS Bank, while Russia is drawing up intergovernmental agreements on setting the bank up. The creation of the BRICS Bank has a political significance too, since it allows its member states to promote their interests abroad. It is a political move that can highlight the strengthening positions of countries whose opinion is frequently ignored by their developed American and European colleagues. The stronger this union and its positions on the world arena are, the easier it will be for its members to protect their own interests. (Ibne Siraj is a regular contributor of The New Nation)
