US President Joe Biden, through his Global Infrastructure and Investment Partnership, announced a $ 600 billion initiative in late June, confusing the media as to where all the money came from. In the face of all this sensationalism, some may be disappointed by the concurrent 14th BRICS Summit, which ended without any noteworthy news. However, as they say, “still waters are deep”.
An important source of funding
Although the annual meeting attracted more attention than usual due to the Russian-Ukrainian crisis, the bloc’s tangible work went virtually unnoticed.
A rare exception was Ana Maria Bierrenbach, a Brazilian Foreign Ministry official, who listed three concrete findings published in a report by the Brazilian Center for International Relations, a Rio de Janeiro think tank. The report calls the New Development Bank (NBD) “the biggest success of the BRICS since its establishment”. The other two are the recently commissioned vaccine research center and an agreement on customs relief for trade within the bloc.
The NBD forms the essential foundation upon which the BRICS can build new economic instruments. One of the main reasons is its credibility. Since starting its operations in 2015, with a capital of 100 billion dollars, the financial institution has established itself beyond the blockade. While the BRICS are considering admitting new partners, the NBD has moved faster, expanding to four new members last year: Bangladesh, UAE, Uruguay and Egypt.
Operationally, it was probably during the pandemic that it worked the fastest. BRICS members were able to raise funds worth $ 1 billion each through the COVID-19 emergency loan program, to support health care and economic recovery. The bank provided local assistance instead of having to knock on the door of the World Bank or the IMF.
NBD is also the ideal partner for achieving the Sustainable Development Goals. To achieve its stated objectives of reducing emissions and increasing clean energy, the bank has financed initiatives such as the solar lighting project in the Brazilian capital, Brasilia, renewable energy development programs in Russia or the ecotourism infrastructure in Brazil. state of Meghalaya in northeastern India.
The BRICS Vaccine R&D Center initiative, launched this year, is also a relevant project, especially with the emergence of new pandemics. It combines the research and epidemiological experiences of institutions in member countries to produce new vaccines in the event of new pandemics and increase the production of existing vaccines so that other developing countries can access them. The goal is to fight the “vaccination of apartheid”. Last year, the World Health Organization set a 70% target for global vaccination coverage, which should have been achieved by June of this year. However, only 58 of the 194 Member States have achieved this target.
The BRICS also support a temporary waiver of vaccine patents to bridge the vaccine gap between developed and developing countries. The research and development center, although virtual at the moment, will support the creation of local vaccine production centers. However, this is a new initiative that will take time to establish itself and gain international trust.
A bigger role to play
The current geopolitical situation has once again demonstrated the importance of a cross-border payment system and a BRICS financial rating agency.
Currently, three Western agencies dominate the sector: Fitch, Moody’s and S&P. However, there are questions about their interests. Their negative views on developing economies are not fair, but influenced by political interests. During the 2008 financial crisis, their erroneous or justified assessments came to light. Moody’s has reportedly agreed to pay more than $ 800 million to agree subprime mortgage ratings with US authorities. Overall, the rating agencies have paid more than $ 2 billion in fines.
Several BRICS members claim that they have been unfairly valued due to Western hostility towards their governments. These countries all have their own rating agencies, but they lack awareness. Therefore, the BRICS could develop their agency or form an alliance with existing ones. One of the main challenges they will face is the skepticism of Western investors. If the NBD puts all its weight behind that agency, its importance is bound to increase.
The same goes for a cross-border payment system. The attempt to disconnect Russian banks from the SWIFT international banking system after the Russian-Ukrainian crisis shows the importance of having alternatives. With geopolitical uncertainties, more BRICS members could face a similar situation, especially if hostility towards Russia continues.
A good example of cooperation
There is a positive factor to consider: the rapid growth of e-commerce. According to a BRICS business report, global business-to-business e-commerce transactions alone were worth approximately $ 7 trillion in 2020. They are projected to increase by more than 17% by 2027. Standardized customs procedures, transaction currency and system uniform payments would galvanize BRICS trade.
Much work is already underway in the Chinese port city of Xiamen, which hosted the BRICS Summit in 2017. The BRICS Partnership on New Industrial Revolution Innovation Center was established in 2020 to enable organizations and businesses across the bloc to use technologies digital or other types such as artificial intelligence, blockchain and big data. It has been proposed to create such centers also in the other member countries.
But perhaps the most notable achievement of NBD is pragmatic cooperation despite political differences. India and China, the two largest economies in the bloc, have had ups and downs in their relations, including outright military confrontations. India is also a member of the Quadrilateral Security Dialogue which also includes the United States, Japan and Australia, seen by China as a move to contain it. However, this does not prevent them from consulting each other in the BRICS and reaching a consensus. Nor has it led the NBD to lend more to one and less to the other. At a time when the world is breaking down into hostile blocs, this remains a good example to remember.
By Sudeshna Sarkar, Beijing-based journalist and editor. She is a former commentator for a regional program of Deutsche Welle Radio, she follows China’s development, culture and international ties.