After the conclusion of the economic bloc’s 6th meeting that took place in Fortaleza on 15 July 2014, a new turn in the bloc’s quality began to take place. As in previous sessions, all leaders were present. The proposal to create a shared development bank created a capacity that will now be executed. At the BRICS reunion, foundations were created — that are yet to be approved by the respective parliaments of each country — for a new development bank and a reserve fund, with the intention of being a compliment (and also an alternative) for both the World Bank and the International Monetary Fund (IMF).

The bank’s governmental organization will operate similarly to institutions of this sort, following a system  of checks and balances. Its worth noting that apparently such organizations operate well, but in the day-to-day operations, a tendency  of isolation exists among the decision-makers. In the organization’s hierarchy, there will be a Governor’s Council, a Council of Administration, and a Directory. The Council of Governors will be formed by the ministries of taxation from each of the respective countries and will act like the bank’s supervisor, establishing the general strategy of the institution very five years. This is aside from being responsible for choosing the president, new members, and increasing capital gains. The Council of Administration will act as supervisor of executives, without participating in the daily functioning of the bank. The Directory will be made of the president and four vice-presidents.

India will inaugurate a rotary presidency and the bank’s base will be hosted by China, in the city of Shanghai. The initial funds will be made up respectively of 50 billion USD towards the New Bank of Development and another 100 billion USD for the Contingent Agreement of Reserves. Although its based on relatively small quantities, politically, the fact that the five member countries contributed equal parts implies a great deal for future operations. In the meantime, what we see in this 21st century chess game is the construction of new structures of global power within the emerging markets of capitalism. Lead by the potential of the bloc — with China at the front — a redesign of the forms of government established during the Cold War and the inheritance of Bretton Woods is possible. Brazil finds itself better of in its new position in this initiative (and with global capitalism).

Assuming a Position

The Sixth Summit of the bloc’s leaders made up of Brazil, Russia, India, China and South Africa (BRICS) points to the realization of two certainties: the concrete fact and the geographic redistribution order of global capitalism. Establishing the pillars of a New Bank of Development and a Contingency Fund is an important step to overcome the dying system birthed by Bretton Woods. More important than struggling for a space within the IMF is creating another system that operates multilaterally in a fashion that strengthens the position of emerging fronts of the G-20. Especially the financial institutions can strengthen the Brazilian position to consolidate MERCOSUR as much, in the short term, UNASUR.

Grudgingly, this position is not shared by all of the national political elites, nor by the business clients of the Brazilian state, like the majority of contractors or agroindustry. If it is accomplished — this creation of a development bank that is not subordinate to the US superpower or the European Union (that is Germany and its satellites) — it should be consensual. It is a primary certainty that intermediary states have to create their own mechanisms, because development through the total integration of transnational capitalism is simply inevitable. When Latin Americans lived under such a principle, our societies almost disintegrated. Nearly 50% of the region’s economic activity became informal, as the public sector was dismantled and the pillars of social security (that were already fragile) were dissolved. To avoid a further return to this social catastrophe, its positive that Latin America’s leading country is a member of BRICS.

The second certainty is an inversion. In the same way that the winners of the Cold War offered nothing more than subservient integration, the losers (Russia and China) also lack dignified societies as examples. Political relativism that can tolerate the absence of political freedom or the total violation of fundamental rights does exist. So the axis of BRICS makes, at most, an economic alternative and not a recreation of political possibilities that are transformative. The new geography of global capitalism is an undesirable fruit of the victorious globalization, created by the incorporation of a billion new consumers and the abusive use of intensive labor. In fact, it makes possible another ordering of axis of expansionist capitalism.

Bruno Lima Rocha is a scholar and professor, teaches political science (Phd and Msc), international studies (focusing on geopolitics, geo strategy, international political economy and Transatlantic social movements) and is also a journalist professor (Bsc). He writes a weekly column to the most popular Brazilian political blog and is constantly present in alternative media (writing in Portuguese and Spanish, sporadically in English) and Brazilian regional and national media.

Originally published in Conjuncture Magazine