adminBrian Mudumi and Takudzwanashe Mundenga
It is really demanding to hinge our economic recovery on a horse-rider partnership with the Global North when we already have a bona fide South-South cooperation. Finally there are rays of sunshine at the end of the gutter as the long-heralded New Development Bank (NDB) or the BRICS Bank officially commenced business on Tuesday with the first meeting of its board of governors in Moscow.
The NDB, with about $50 billion in capital to invest in public infrastructure, will compete with institutions where the US has considerably more influence, such organizations like the World Bank and the International Monetary Fund.
The formation of the New Development Bank by the BRICS nations along with the formation of the Asian Infrastructure Investment Bank (AIIB) that will hopefully break the monopoly of the IMF and World Bank and make their functioning more democratic and egalitarian. The NDB will aim to “promote reform of global economic governance”, as Chinese Finance Minister Lou Jiwei has asserted.
To begin with, the Bretton Woods institutions are popular for their structural adjustment programmes (SAPs) and currency devaluations as conditional ties to their financial aid. The US and its Western allies, being the major sponsors of these financial intermediaries, are often viewed as pushing the interests of the donor countries. Therefore the bottom line is that they are capitalist institutions safeguarding capitalist interests.
The World Bank being the global lender of last resort has historically and pathologically put emerging nations in thrall of the begging bowl of the West, thereby aggravating poverty in the developing world. The terms and conditions accompanying its loan facilities have plunged developing countries into a perpetual debt crisis. Well, the Egypt-born, former Secretary General of the United Nations, Buetros Buetros Ghali, at one time said, “Debt is a milestone rolled around the neck of Africa!” The capitalist countries are not willing to redress it because they are not ready to lose the ambience of their status as the so-called creditors.
Since their creation in the twilight of the Second World War, the IMF and World Bank have enjoyed extensive monopoly with no competitor. That is the very reason why all emerging nations inevitably borrowed from the global lender regardless of the repercussions of the strings attached to the financial packages to the emerging economies. Vladimir Ilyich Lenin, the Russian revolutionary leader, once asserted, “If it were necessary to give the briefest possible definition of imperialism we should have to say that imperialism is the monopoly stage of capitalism.” Competition is unavoidably necessary for the achievement of both proficiency and transparency.
The African Union statesman and the Southern African Development Community chairperson, President Robert Mugabe, aptly said policies foisted by the IMF and the World Bank had led to de-industrialisation and declining incomes in sub-Saharan Africa. He disapproved of both institutions for failing to deliver solutions to alleviate poverty, distribute wealth and close the inequality gap in developing countries. Furthermore, the two Bretton Woods institutions were based on “Western doctrine and exploitation” and, as such, developing countries needed to look for alternatives to secure their place in global affairs.
According to Liu Zengyi, a researcher of Shanghai Institute for International Studies, the establishment of the BRICS New Development Bank, an emergency reserve fund, and the AIIB, will break the monopoly position of the International Money Fund and the World Bank. It will motivate the IMF and the WB to function more normatively, democratically, and efficiently, in order to promote the reform of international financial system as well as democratisation of international relations.
Its main objective is to mobilise resources for infrastructure and sustainable development projects for developing countries.
Additionally, the bank will, among other things, support public or private projects through loans, guarantees, equity participation and other financial instruments. Therefore it will usher in a new world economic order that will focus on South-South co-operation and make developing countries self-sufficient.
South-South cooperation is the panacea to the relentless expansionist policies of the North. In the global political economy, if you cannot face west because there is a glare of sunlight, then the only alternative is to turn and face east where there is a shadow.
Online Reporter