Banking on the BRICS

The five-member BRICS countries account for roughly 18 per cent of the world's GDP [AFP]

The proposal of a development bank between the five BRICS nations – Brazil, Russia, India, China, and South Africa was the main topic of discussion at last week's 4^th Annual Brics Summit in New Delhi.  The South-South development bank would pool resources for things such as lending and infrastructure improvements as well as facilitate trade. The leaders also discussed the possibility of extending credit to member countries in local currency, side stepping the dollar as the main unit of trade between the BRICS. Talk of setting up a BRICS bank has generated a flood of news stories trying to predict the future implications. 

Here are a few examples of recent news headlines:

• BRICS summit to explore creation of bank
  Al Jazeera | http://aje.me/HdlUWX
• BRICS Can Lead Whole Global South in Quest for Financial Justice CRIENGLISH.com | http://bit.ly/HFBCtO
• Why a Brics-built bank to rival the IMF is doomed to fail 
  The Telegraph | http://tgr.ph/HblZK
• Emerging Markets Look to Drop BRICS on U.S. Dollar  
  International Business Times | http://bit.ly/HRmW8L
• The west must wake up to the growing power of the Brics The Guardian | http://bit.ly/HiAUQy                         
• World Bank Open to Partnering Brics Bank
  Wall Street Journal | http://on.wsj.com/HL2dYKv                               

You can see how these news sources are covering the same story in different ways. The order of the articles I read above also shows the progression of coverage:

1. Exploration of development bank. 
2. BRICS will free the Global South from financial dependency. 
3. The BRICS bank attempt to rival the World Bank and the IMF will fail.  
4. Uh oh, the U.S. dollar will be affected.
5. Hey, you - the West, watch out for the strengthening of the BRICS.
6. Solution to #5: Global North can "partner" with the BRICS bank. 

Why does this all matter? MONEY, POWER, CONTROL and last, but not least: the numbers. According to the Al Jazeera article:  The five members now account for roughly 18 per cent of the world's GDP, 15 per cent of global trade and hold 40 per cent of global currency reserves. They account for the 40 per cent of the world population.

Many argue the BRIC concept, conceived in 2001 by Jim O'Neill of Goldman Sachs is just that - a concept. Many articles touch on the fact that these countries do not have much in common besides being locating in the Global South and their desire to rid ties to Western institutions.  However, with the BRICS's combined global economic power and 40 percent of the world population, this "concept" is getting a little more disconcerting to the West. The news went from, "The BRIC bank is DOOMED to failure" to "The World Bank wants to partner with BRIC bank" within a week. Talking about changing tides.  Who is going to call the shots now?

Before global power relations really change, the BRICS need to get on the same page to ensure more international bargaining power. Another point of contention in the media is - Who is going to gain what from this development bank? Aren't some of the BRICS countries at a greater advantage to reap the benefits? China? An opinion column in The Bangkok Post highlights the emerging asymmetrical relations within the bloc:

"Lending and trading in renminbi is likely to boost China's international standing and clout. But its undervalued currency and hidden export subsidies have been systematically undermining manufacturing in other Brics nations, especially India and Brazil."  This excerpt points out the false notion that South-South transfer is always equitable. Undermining manufacturing in member countries?  

We will have to wait and see how the BRICS development bank progresses. Regardless, the rest of the world should realize global power is shifting. (The World Bank does and that's why it suddenly wanted to "partner" aka maintain some control.) In previous posts Jeannie has covered Iranian influences in Latin America and this latest BRICS Summit highlighted the continued relations: BRICS refuses to side with US in showdown with Iran – 

The Economic TImes http://bit.ly/HcQ287.  

The long and short of it is - the Global South is uniting. What does this mean for development and education? Where will the models of education/development come from if the Global North isn't calling all the shots?