A new Bank is added to the lexicon of world development finance. Rather than welcoming it, the merchants of poverty eradication engage in propagating its unbecoming. A completely one sided views are floating since the announcement of BRICS New Development Bank adopted in Brazil during BRICS Sixth Summit. It is a shocker to the world even after month-long soccer carnival. The question remains that weather BRIC's New Development Bank (NDB) would be able to deliver as its founding members aspire?
Since 2012 when the NDB was shared in public domain, opponents mostly based in West have been striking off the very idea by clubbing it as destine to fail as member countries have inherent contradiction as 'splinter group'. Now it's formally established, the same opponents are chokingly asked 'what next'?
The NDB is a 'paradigm shift' against existing handful 'developmental-knowledge brokers' who claims to eradicate poverty. Underneath, the leaders and large section of population of BRICS have been carrying a deep sense of aspiration to counter monopoly of West and US axis in global economic structure and development paradigm.
At Fortaleza the leaders of emerging five (E-5) have engaged in rewriting the world order when BRICS leaders are fed up with US snooping including new BJP-led NDA government in India! While India having its new Prime Minister at the helm of affairs is consciously adjusting, reorganising, restructuring, redeploying its priority from last decade's flip-flop foreign policy. It won't be traditional Nehruvian legacy which flourishes as nostalgic hangover till now among academician, experts and think tanks in India. At the beginning it was neighbourliness (SAARC) to showcase 'India is for South Asia'. Now, it is 'regionally-global' BRICS to assert India's potential at world stage.
The NDB, is an innovative, reasonably presentable, flexible, need-base approach in the global financial crisis. To establish it properly as a potentially southern development financial institution, the NDB needs to liberate from neo-colonial mindset and with open arm work with other developing countries as equal partner in development. It needs to adhere to the catchy slogan, 'Sabka Saath Sabka Vikas’ (together with all, development for all). As of now, it is an exclusive Bank of BRICS but not for BRICS, only.
The rationale of NDB under BRICS cropped up in 2009 by former Prime Minister Manmohan Singh as response to perpetual inept inertia of reforming World Bank and IMF governing structure. The US Congress has not bothered to ratify any of the reform proposals submitted during G-20 meeting. So far, developed countries (US, European countries and Japan) are holding all decisions in IFIs from restructuring economy of borrower countries to approving developmental project loans and grants, even direction!
While the reformists including Civil Society Organisations (CSOs) of trans-North Atlantic relentlessly cried for overhauling the World Bank/IMF under '50 Years is not Enough' or 'Bretton Woods Project', 'Democratising World Bank', the Siamese twins (World Bank and IMF) are still insular to reform and doing business as usual! A fortnight back, the World Bank has diluted its one of draft institutional policies (Safeguard Policy- Environment, Indigenous People and Resettlement) just to be relevant in 'development business'. This is largely due to borrower demands of less stringent policies and procedures and to supplement donor countries business status quo. Quite often, the demand by reformists to change the twin towers of global economic and development structure are misplaced and home grown.
Similarly, the E-5 feels uneasy witnessing business of consultants, private companies and technologies of donor countries which comes with the IFI projects as riders or conditionality. It is a double whammy for developed countries. The NDB is eyeing to take that space from donor-driven development business within respective countries as well as near far.
The US appoints its citizen as President of the World Bank Group. With a tacit understanding (so-called convention), Europe appoints its citizen as head of IMF since 1944. Back home in Asia, Japan appoints President of ADB. Why not merit must be criterion than citizenship for appointing such posts? The common factor is that who has large shareholding capacity in these institutions will call the shot. Besides, appointment of BoDs who approve or cancel the development projects, its policies and programs, are highly non-representative in these institutions.
There are many high risk projects in India and China and other developing countries which are being dropped or not entertained at conceptual or approval stages by IFIs as non-compliances of establish policies of the latter which anger the leaders and officials in the countries. Since 2004, India and China have been relentlessly suggesting to dilute ADB policies for receiving quick money for high risk projects. Off late, a tremendous uneasiness among the political control in these institutions has been evolving among the donor countries as one can see in the Board Meetings/Minutes proceedings.
What NDB must Begin With
The NDB must emerge as a progressive to anomalies of existing IFIs. Two immediate examples are pointing towards a convincing argument of its rationale. The President of NDB is rotational among BRICS countries and five countries are equal shareholders each amounting $ 10 Billion USD. The NDB has $ 100 billion USD capital reserve to begin with, only $ 55 billion USD less than ADB. There are many other details remaining to be worked out before it starts lending in mid-2016. It is futile or baseless to compare the equal power among members to 'doomed UN Security Council' as one US treasury member commented in The Hindu. The UNSC is a by-product of Cold War politics, not NDB.
The NDB, to be an alternative in present multiple crises situations, is not only difficult but challenging. Despite poor track records of domestic policies of respective BRICS countries, it is expected from the NDB to formulate, adhere to and comply with international standards as its institutional policies. The NDB needs to factor in decision making process by allowing five countries appointed representative have equal power in approving development projects. Further in future any developing country joins NDB, allow the same power as the E-5 despite their lesser shareholding capacity. The background work for increasing bar of NDB-institutional policies, E-5 must open the feedback channel to gather opinions and experiences from all walks of life especially vulnerable groups.
As the governing structure is important, so does the formulation, implementation and evaluation of development projects. The NDB must avoid financing 'high risk' projects not only in BRICS or Africa but beyond. Ensuring inclusive participatory development throughout development project cycle- from identifying a project to completion- would clearly put NDB an advantage point than World Bank/ADB/EBRD (European Bank for Reconstruction and Development). For ensuring successful implementation of infrastructure projects which NDB sets for financing, the Bank must take extra care at the very beginning to listen to project beneficiaries. Likewise, NDB should walk a step ahead in greater institutional accountability and transparency than existing IFIs. The NDB must avoid intra-country fissures like the infamous 2009 spat between China and India in ADB on disputed area.
India got its share to appoint first president which will be followed by Brazil, Russia. This can be considered as a token victory for Prime Minister of India in his first global summit. However, India's demand for hosting NDB headquarter was not successful which has gone to China as largest shareholder in reserve fund. India could have negotiated for Durban. Meanwhile, it should be noted that Delhi has international image problem since December 2012!
For NDB, the success remains as a unique platform of discussion, debate and dialogue on issues close to the three continents- Asia, Africa and South America - the 'continents of exploitation'. This is actual South-South Cooperation under southern leaderships!