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BRICS bank comes in misleading packaging

Astrid Prange / nhJuly 17, 2014

By setting up their own currency fund and a new development bank BRICS leaders portray themselves as anti-American ‘world saviors’. But the governments actually have different interests, DW's Astrid Prange writes.

The five leaders of BRICS states at the summit in FortalezaImage: Reuters

Anti-Americans of the world, unite! We'll free you from Washington's dictates! Reject the loans offered by the World Bank and International Monetary Fund! Forget about privatization and budget reorganization, and go get a loan from the new Development Bank launched by the BRICS states Brazil, Russia, India, China and South Africa.

Admittedly, to many developing nations this may sound like a promising prospect. Austerity programs and privatizations attached to rescue funds from Washington have indeed often had disastrous consequences on developing countries' economies.

Bank comes in misleading packaging

But this seemingly anti-American move by the BRICS state to set up their own bank can only be called misleading packaging. The loans from Shanghai to expand infrastructure in developing countries are a profitable investment opportunity for the big foreign currency reserves piled up by many BRICS states. Their new banks are not anti-American. On the contrary: they are a mirror image of theIMF and World Bank.

Deutsche Welle Astrid Prange De Oliveira
DW's Astrid PrangeImage: DW/P. Henriksen

The BRICS states‘ dream of never-ending economic growth, which is soon supposedly achieved through the loans by the new development bank, makes one think of the 1980s. At the time, the World Bank funded mega dams, nuclear power plants, bridges and roads and other expensive prestigious infrastructure undertakings. International consortiums were earning big money, but the projects were hardly of any benefit at all to the local population. Instead, all too often, the loans for those building projects only added more foreign debt. It may well be the case that the BRICS bank will trigger a new round of funding for such mega projects.

The anti-American rhetoric conceals the fact that the BRICS states‘ economic policies are often just as imperialistic as they accuse the US' economic policy of being. China has long been considered a new colonial power in many African countries. Brazil's major landowners dominate soy production in Paraguay and Russian gas suppliers use the gas price to exert political pressure.

Growing power of emerging nations

The BRICS states‘ new financial institutes are not anti-American. The criteria they will apply when granting loans will probably not be fairer, nor more socially focused than those applied by the World Bank or the International Monetary Fund. The banks are simply an expression of emerging nations‘ growing economic and political power. They no longer need the money from traditional financial institutes. They have climbed the ladder to become creditors themselves. This is a good development for the countries, one which had long been foreseen and has finally taken on a tangible form.

The BRICS states have become richer, but they are not necessarily going to show more solidarity. Long-term permanent members China and Russia still refuse to give support to economic climbers Brazil and India, their relatives from the ‘BRICS family', after all, when it comes to their aspiration to get a seat in the UN Security Council. They follow the principle of non-intervention when it comes to foreign and domestic policy – whether it's Chinese interests in Sudan, or Russia's position in Ukraine and in the Syrian war.

The BRICS summit in Fortaleza will certainly mark a historic moment, but it will fall short of being a political thunderbolt against Washington. On the contrary – its message is as American as can be: Anyone can make it, and competition is good for business. It's quite possible actually that even the World Bank and the International Monetary Fund are pleased about the new BRICS banks.