BRICS For The South

The bloc’s bank could, and should, help the world’s most vulnerable people.

Written by Na’eem Jeenah | Updated: July 22, 2015 12:08 am
BRICS, BRICS bank, BRICS countries, BRICS trade, BRICS local currency trade, seventh BRICS Summit, BRICS bank recruitement, central banks BRICS, foreign exchange reserve pool, BRICS bank, BRICS countries, BRICS trade, BRICS local currency trade, seventh BRICS Summit, Indian express, business news BRICS member states, despite their limited reserves, have already provided development assistance to Syria.

It has been less than six years since the so-called BRIC nations — Brazil, Russia, India and China — held their first formal summit, and five since they admitted South Africa to their club of ambitious emerging economies, BRICS. Earlier this month, BRICS leaders formalised the world’s newest bank: the New Development Bank (NDB), which will use its $100 billion in initial capital to fund infrastructure and sustainable development projects both at home and overseas.

The NDB will not only bind them together in common purpose but will introduce something not seen since the dawn of contemporary multilateralism: competition to the Western-dominated international financial system. Despite the best intentions of many working at the World Bank and IMF, existing international financial institutions have consistently fallen short of their aim to provide development assistance to the most marginalised. With their often-problematic loan conditions, they have at times impeded rather than promoted equitable development. The NDB could change this. As a bank created in, by and for the global South, the BRICS bank could be revolutionary.

It could, for example, provide critical development assistance to middle-income countries whose economic status has prevented investment by traditional donors. Jordan, Iraq, Lebanon, Turkey and Egypt are reeling from the knock-on effects of the war in Syria, now in its fifth year. They have taken in 98 per cent of the refugees, with drastic repercussions for their own economies and societies. The war has already cost Lebanon $20 billion — almost half its annual GDP — and Turkey $12.5 billion. But the World Bank, with four times as many reserves as the NDB’s committed capital, considers these countries too rich to be assisted with its more generous loans at lower or zero interest rates.

The UN estimates that Jordan, Iraq, Lebanon, Turkey and Egypt will collectively need $5.5 billion this year alone to fund their response to the Syria crisis. So far, slightly more than one-fifth of that has been funded by the international community. This abandonment perhaps gives rise to another acronym that we could employ to describe Syria’s neighbours: the JILTEd. If the BRICS bank were operational today, it could fund a part of the regional plan and have plenty left over.

BRICS member states, despite their limited reserves, have already provided development assistance to Syria. Brazil, for example, pledged $5 million at a recent international pledging conference on the Syrian crisis. But what the NDB offers is a unique, collective initiative with the potential to both amplify and institutionalise this assistance at the multilateral level. This is a great opportunity for BRICS countries to step in where traditional donors will not or cannot, thereby demonstrating their collective leadership on behalf of other emerging economies.

Supporting the response in the Middle East would also be in line with the policies espoused by individual BRICS governments, which acknowledge a correlation between development and sustainable peace. Peace and stability in the region are global public goods. By supporting development in Syria’s neighbours, the NDB could increase stability across the entire region and make peace more likely. This would be in everyone’s interests. Further, BRICS member states are awash with development expertise, especially relating to livelihood support, agriculture, water, sanitation and health. The NDB could harness the wealth of experience of its members to help Syria’s neighbours cope by improving their water, sanitation, hygiene, and electrical infrastructure.

Syria and the crisis it has caused in the region is the most pressing humanitarian disaster of our time. In this, the NDB has an opportunity to take the lead and guide the international response, which has so far been woefully inadequate. And as an institution dedicated to the public interest, it must ensure that its operations in the region are transparent. Strong accountability mechanisms must also be put in place.

The writer is executive director of the Afro-Middle East Centre, Johannesburg.

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