<< http://www.mixcloud.com/antonipeychev/food-for-thought-brics-a-brac-another-development-bank/ >>
But I’m sure you’ve all read plenty on that; in fact, I’m so certain that you have that I have chosen to completely ignore the said (or sad?) topic this week and not comment on it at all as the mere thought of it all makes my blood boil.
Thankfully, my decision (as well as many Russians’ decision, I guess) to leave Cyprus alone did not result in my crying over the fact that I would not have anything to write on today.
Luckily for me, the BRICS block (Brazil, Russia, India, China and South Africa) had heard that it was my birthday yesterday and decided to formalise an agreement to set up a BRICS Development Bank.
Alas, they had clearly misread my birthday wish list; I don’t remember asking for ANOTHER development bank.
Prior to delving into any detail on the proposed arrangements to set up the first formal BRICS institution, it is worth mentioning that BRICS countries account for more than 20% of the world’s GDP and have a total population of 2.8 billion (40% of the world total).
Further, they’re on three continents and are, thus, a force not to be reckoned with.
And let us not forget that China is one of them; a country whose economy is predicted to become the world’s largest by 2020 (or earlier…).
Finally, a thing that BRICS countries have in common is that few of them are in the US fan base.
For instance, Russia recently introduced a law precluding American citizens from adopting Russian children.
Also, the US has recently blamed China for spying on its news agencies and private companies and sabotaging their operations through Chinese companies selling hardware which can be ‘potentially hazardous’.
See re former << http://online.wsj.com/article/SB10001424127887323549204578316413319639782.html >>
See re latter << http://www.nbcnews.com/business/chinas-huawei-zte-should-be-banned-us-lawmakers-1C6335293 >>
The above might, naturally, be mere speculations and simple misunderstandings; yet, in my view, they paint the picture quite well.
Going back to the initiative, however, it’s rumoured that the planned initial available operating capital of the future BRICS development bank will be some £ 33bln.
The role of the bank will be to ‘fund infrastructure and development projects throughout the developing nations’.
The only current outstanding issue that is pulling the project backwards is the countries’ inability to agree on their contribution to the bank’s capital.
It has been suggested that the capital contributed should be proportionate to the country’s wealth.
This, would, however, mean that China and India would have a significant advantage over the other three countries; something which might result in an imbalance in their influence on and control over the bank’s future affairs.
But something tells this author that a formal agreement will be reached sooner rather than later because, speculative as it may sound, there are those who have had enough of the ‘supremacy’ of the US dollar in the world’s markets.
In support of that statement, China and Brazil have agreed to a bilateral currency swap line which permits them to trade up to $30 billion annually in their own currencies.
Doing so moves almost half their trade out of US dollars.
In the light of the above, then, one might well be justified in querying what the true purpose of the BRICS meeting and the decision to set up a development bank to rival the World Bank is.
Time will tell, I guess. For now, it all looks too complicated.
That’s why we should all have a break; and have a Kit- Kat.
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