BRICS Establishes A Development Bank

[Jefferson23]

Patrick Bond, Co-Author of BRICS: An Anti-Capitalism Critique, finds BRICS to be largely neoliberal and unequal, evident by the appointees to the bank board

- July 12, 2015

Bio

Patrick Bond is the director of the Center for Civil Society and a professor at the University of KwaZulu-Natal in South Africa. Bond is the author of the books, South Africa - The Present as History (with John Saul) and the 3rd edition of Elite Transition.

Transcript

BRICS Establishes A Development BankSHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to the Bond Report on the Real News Network. I'm Sharmini Peries coming to you from Baltimore.

BRICS, the economic bloc made up of Brazil, Russia, India, China, South Africa, met in Ufa, Russia this week. One of its key objectives is to form a New Development Bank considered an alternative to the World Bank and the IMF. The bank will be located in Shanghai and chaired by Indian banker K V Kamath for the first six years. Then Brazil and Russia will take their respective turns. Each country is expected to contribute its lion's share to the bank. The upper house of Russia just allocated $100 billion in foreign reserves for the bank. The pool is intended to protect national currencies from the volatility of global markets. The idea is that in the event of a financial emergency like that of Greece at the moment, the BRICS countries would no longer have to depend on the likes of a Troika.

But will the BRICS development bank be any different? Will this new formation be able to address the issues faced by struggling and ailing economies of China and Russia, India, Brazil, and South Africa? Here to discuss all of this with me is Patrick Bond. He is joining us from Durban, South Africa. He has recently edited a book on BRICS with Ana Garcia titled BRICS: An Anti-Capitalist Critique.

Patrick, thank you so much for joining us today.

PATRICK BOND, DIRECTOR, CENTER FOR CIVIL SOCIETY: Thank you very much. Great to be back with you, Sharmini.

PERIES: So Patrick, in the past two years the Russian economy has tanked. The stock market in China was in a freefall on the eve of this meeting. Are these large economies now looking to BRICS alliance to reinvigorate their economies?

BOND: Well, that would be a mistake. Because in fact, all the BRICS, especially now with China's $3 trillion crash of the main stock markets from the peak just about three weeks ago to today, and the 20 percent crash over the last year of its property market, the sort of horrible potential of a hard landing that would send the world economy into a tailspin, that now is certainly possible. And certainly the Brazilian economy's very, very weak at about 1 percent. South Africa will grow 1 percent or go into recession. India has not been as strong as past years. And the currencies of all of the BRICS is also under great threat. Because as the United States begins to move towards higher interest rates, that'll take liquid capital out.

So I think the broader, macroeconomic perspective for BRICS as a potential backstop for world economic growth that we had seen the last 15, 20 years, that potentially is now over. That would be very sad, because certainly Europe's in a deep depression and the U.S. economy's not doing very well, either.

However, the merits of a slower growth might be more balancing, because we've seen such extraordinary, uneven development. Extreme differentiation, inequality, and ecological destruction. So whether the period ahead can be managed now is a question. Maybe the BRICS financial institutions will be part of that management.

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