The New New World Order? Five Nations forming their Own World Bank

The group is called BRICS, and the members are all developing or newly industrialized countries that are distinguished by their large, fast-growing economies and significant influence on regional and global affairs.

From the AP:

Brazil, Russia, India, China and South Africa -the so-called BRICS countries – are seeking “alternatives to the existing world order,” said Harold Trinkunas, director of the Latin America Initiative at the Brookings Institution.

At a summit Tuesday through Thursday in Brazil, the five countries will unveil a $100 billion fund to fight financial crises, their version of the IMF. They will also launch a World Bank alternative, a new bank that will make loans for infrastructure projects across the developing world.

The five countries will invest equally in the lender, tentatively called the New Development Bank. Other countries may join later.

The BRICS powers are still jousting over the location of the bank’s headquarters – Shanghai, Moscow, New Delhi or Johannesburg. The headquarters skirmish is part of a larger struggle to keep China, the world’s second-biggest economy, from dominating the new bank the way the United States has dominated the World Bank.

The BRICS grouping’s first formal summit was held in Yekaterinburg in June 2009. Afterward, the nations announced the need for a new global reserve currency, which would have to be “diversified, stable and predictable.” While they did not directly address the perceived “dominance” of the US dollar – something that Russia has done in the past – the statement did spark a drop in the value of the dollar against other major currencies.

On Tuesday, the group’s 6th summit began in Brazil. On the agenda: the creation of a $100 billion development bank and a $100 billion dollar reserve fund, designed to boost investment in BRICS economies and reduce the power of the Western-dominated World Bank and IMF.

Thomas Wright, a fellow at Brookings’ Project on International Order and Strategy, told the AP that the BRICS countries “want a safety net if they fall out with the West.”

Congress has refused to approve legislation to provide extra money to help the IMF provide more loans to troubled countries. The most recent conflict between the BRICS countries and the US was at the spring meeting of the International Monetary Fund in Washington in April when an agreed reform of the IMF failed because of a veto by Congress.

That veto caused an increase in strained relations between Brazil, and the US, reports DW:

Following the surveillance scandal revealed by former NSA contractor Edward Snowden, Brazilian President Dilma Rousseff distanced herself from Washington, promptly cancelling her planned meeting with US President Barack Obama in September 2013.

Growing trade among emerging markets resulted in China replacing the US as the primary buyer of Brazilian products in 2009. Since 2012, the Chinese have also been Brazil’s most important import partner.

When the World Bank or IMF lends money, strings are usually attached – strings which reflect the values and interests of the US and its allies.