The New Development Bank After the Ufa Summit

Posted in: Brazil, BRICS
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BRICS 2015

By Adhemar Mineiro, CUT/DIEESE advisor and member of REBRIP

Originally posted at http://www.rebrip.org.br/noticias/o-novo-banco-de-desenvolvimento-a-partir-da-cupula-de-ufa-1a7b/

Two elements are essential to understand the developments with respect to the New Development Bank, decided upon by the BRICS in their 6th Summit in Fortaleza, and now with defined temporary directors as of the 7th Summit in Ufa, Russian Federation. The first is that, starting now, the bank, according to point 15 of the declaration, approved at the end of the meeting on July 9, begins to operate with the purpose of supporting investments in infrastructure and sustainable development projects in the BRICS countries and developing countries and emerging economies.

“We welcome the entry into effect of the New Development Bank Agreement signed at the 6th BRICS Summit in Fortaleza. We also welcome the inaugural meeting of the Board of Governors of the NDB, held on the eve of the Ufa Summit and presided over by Russia, as well as the work done by the Temporary Board of Directors and the Pre-Management Group aimed at launching the bank as soon as possible. We reiterate that the NDB will serve as a powerful tool to finance investments in infrastructure and sustainable development projects in the BRICS and other developing countries and emerging market economies and to improve economic cooperation between our countries. We hope that the NDB will approve its first investment projects at the beginning of 2016. We accept the proposal that the NDB should cooperate strictly with the new and existing financing mechanisms, including the Asian Infrastructure Investment Bank.”

It is not exactly clear what this means, and this will begin to be worked out and made explicit as the directing bodies of the bank, now established, begin their operation. However, beyond a general orientation, there are many things to be determined starting now, which should encourage the social organizations in the five countries to work more closely on the theme. It is noteworthy, however, that the meeting of organized social organizations with the approval of the Russian presidency of the BRICS in Moscow put such little emphasis on this discussion close to a week before the Ufa meeting, referring to the bank in only one paragraph (4 of the sub-item “Sustainable Development,” of the final declaration of that meeting, circumscribing the NDB without a deeper discussion on what so far has been the main effective result of the coordination of these countries, together with the Contingency Reserve Arrangement. The big question, the debate and the pressure to perform now is how the New Development Bank can serve another development strategy rather than that so far dominated by financial capital at the global level, where most of the BRICS countries were limited to a secondary role as suppliers of agricultural, mineral and/or energy commodities in a project of unsustainable development.

The second important element of the Ufa Summit on the theme of the NDB is the so-called “Memorandum of Understanding” between the new bank and the development banks already existing in each of the BRICS countries (BNDES, in the case of Brazil). This document, although it only provides guidelines, establishes areas and means of cooperation between these institutions, showing that beyond its own operation, the NDB has an informal objective of “coordinating” and supporting financing of a development strategy in the five countries.

The big question that remains is, after all, what is this strategy?

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