July 22nd, 2014
11:28 AM ET

A rival to the World Bank?

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By Global Public Square staff

World leaders came together in Brazil last week to celebrate. And no, this had nothing to do with the World Cup. We’re talking about the 6th annual BRICS summit.

The leaders of all the BRICS nations – that is Vladimir Putin, Narendra Modi, Dilma Rousseff, Xi Jinping and Jacob Zuma – all gathered in Fortaleza, Brazil. And on Tuesday they sent a shot across the bow by announcing a $50 billion bank meant to rival the World Bank, and a $100 billion crisis fund to replace the IMF.

It’s clear why they made this move.

You see, these five nations – Brazil, Russia, India, China and South Africa – now account for more than 40 percent of the world's population, almost 20 percent of the world's total GDP and 17 percent of global trade. Yes, growth in the emerging markets has slowed recently, but these countries have still become a large enough force in the global system that they want a seat at the table.

And that hasn't happened. Their influence in international institutions has lagged behind. Only two of the five BRICS countries have permanent seats at the U.N. Security Council. And their collective voice isn't heard much at all at international economic institutions like the International Monetary Fund (whose head the Europeans appoint) and the World Bank (whose leader is put forth by the United States).

As The Economist points out, China – the world’s largest economy by some measures – has less voting power in the IMF and World Bank than Belgium, the Netherlands and Luxemburg. Remember, China has 1.3 billion people to the less than 30 million people in those three European nations.

The BRICS leaders have complained about this unfair treatment for years. American administrations pushed to give them greater voices and votes. But the small European countries haggled and then the American Congress has been its usual obstructionist force.

Now, instead of continuing to change the old system from within, the BRICS leaders are trying to subvert it. And this subversion comes on the 70th anniversary of Bretton Woods. That was the agreement, signed at a U.N. conference in the wilds of New Hampshire, which spawned the World Bank and the IMF in the first place.

Of course, there is all sorts of squabbling and disagreement amongst the BRICS, but there is one very important thing that they seem to agree on: they envisage an economic future that is both anti-Western, in some sense, and anti-dollar.

Welcome to the new world order, where we have to accommodate the rise of the rest. If the United States and the West don't do that, others will create clubs of their own to counter the existing system.

The IMF has said it will collaborate with the new bank, but is that enough? Well, there’s one tangible thing the U.S. could do as soon as tomorrow: It could pass legislation to modernize and reform the IMF.

The reforms were negotiated in 2010. They are supported by almost all 188 IMF members, and just this April, the G20 gave Congress an ultimatum of sorts: pass the reforms to give emerging countries a greater say by year-end, or we will move forward without you.

Maybe the creation of this BRICS development bank will be just the wake-up call the United States Congress needs. But given that it is the United States Congress, we wouldn't bet on it.

soundoff (40 Responses)
  1. Anne Flaherty

    Now is the time to call in all of the loans we've provided to these countries!!!! NOW!

    July 22, 2014 at 12:01 pm | Reply
    • nik

      Lol ..... did you forget who owns a very large chunk of US debt ?

      July 22, 2014 at 12:36 pm | Reply
    • venkat

      You are so funny and foolish. Don't tell China that.

      July 23, 2014 at 10:02 pm | Reply

    AMF (AFRICA MONETARY FUND) on its way.No noise we are working.

    July 22, 2014 at 12:47 pm | Reply
  3. chri§§y

    Lol @ nic so very true! This, of course, could also make sanctioning of Russia, null and void!

    July 22, 2014 at 12:51 pm | Reply
  4. Allan Kinsman©

    Look at the west. A great reason not to fall in with a group of people frankly can't balance a checkbook. There has to be some reason in a system to survive. I don't see it happening anytime soon as there seems no common sense anywhere I can see. We could have covertly caught those responsible for 9/11 as we now monitor most web sites and phone calls through NSA. But how can American business profit? What we have is a shortsighted, bully heavy, lobby laced poorly shaped paradigm acting as a government finding the most expensive non-solutions for almost every social and political issue. I would put my money some where else too if I had a choice.

    July 22, 2014 at 1:11 pm | Reply
  5. chri§§y

    Amen @ Allan! Particularly about government finding the most expensive NON~solutions!

    July 22, 2014 at 1:38 pm | Reply
    • Allan Kinsman©

      If only solutions came from an understanding of a problem through an understanding of ourselves. In my mind the American governent should be a shield against injustice not the refuge of it.

      July 22, 2014 at 1:59 pm | Reply
      • Joey Isotta-Fraschini©

        There is no absolute absence of injustice.
        The USA provides a far more just environment than any other country of its size.
        Many posts in this forum reveal inexperience regarding world travel.
        Many writers here advocate a communist economic system. For ye USA, even when the writer

        July 23, 2014 at 8:58 am |
      • Joey Isotta-Fraschini©

        Sorry, I submitted too soon, by touching the wrong area.
        ...economic system for the USA, even though the writer might not understand communism. Many writers here have never visited a communist country to see the results of communism.

        July 23, 2014 at 9:05 am |
      • Joey Isotta-Fraschini©

        My reply to @ Alan Kinsman was not intended to imply that he has not traveled, or that he might not understand economic systems.

        July 23, 2014 at 9:09 am |
  6. Zup Yapoldap

    I don't see as a rival, but as a partner, some countries are just too small for IMF and World Bank...just like in society we have minorities of all kinds, in international business is time for the "minorities" (not really since they have 60% of the population of the world) to show up.
    If people act in a smart way there will be more business on the way...

    July 22, 2014 at 3:10 pm | Reply
  7. Human as you

    Gezzz can it be more obvious these stories are written by CIA interns?? the language used is manipulative and obvious. I only came through to ck on things and they're getting weirder and weirder... written by Global Square staff?? really?? who is that? CIA cell name? gezzz

    July 23, 2014 at 2:03 am | Reply
  8. Joey Isotta-Fraschini©

    Seventy years ago, the USA was entering a period of glorious prosperity that lasted until our society began a dramatic decline during the 1960s.
    We recovered from the 1930s Depression. How can we recover from our current economic state?
    I think that the thinking of USA citizens would have to change completely, and I do not see the beginning of that change.

    July 23, 2014 at 9:37 am | Reply
  9. chri§§y

    What does any of that have to do with a new world bank?

    July 23, 2014 at 12:27 pm | Reply
  10. chri§§y

    Dircussion on a new world bank rates moderation while you have the same character on all other threads calling other bloggers names with NO moderation?? Why?

    July 23, 2014 at 12:31 pm | Reply
  11. chri§§y

    Meant "discussion"

    July 23, 2014 at 12:32 pm | Reply
  12. chri§§y

    Ok...so again...what does any of that have to do with a new world bank?

    July 23, 2014 at 12:34 pm | Reply
    • Joey Isotta-Fraschini©

      Moi, @ chrissy?
      The productivity of the USA was of massive importance to the world's economy, and therefore to the World Bank and the IMF, following Bretton Woods (#eventy years ago).
      The USA's economy is of global importance.
      All banks need money to exist.

      July 23, 2014 at 4:33 pm | Reply
  13. chri§§y

    I realise all banks need money to exist @ Joey. Im not as dumb as you like to think!!! But...the US is no longer the financial power house it used to be! We are in debt up to our eyeballs and its time you realised that! And my post was NOT to you, it was to the character posting the garbage about the CIA writing these articles for CNN so the next time you wanta pick at me find something worthwhile to pick at would you.

    July 23, 2014 at 4:58 pm | Reply
  14. chri§§y

    And @ Joey in all the years you and i have known each other have you ever known me to NOT address you if im speaking to you? No. So if i was talking to you i wouldve said so.

    July 23, 2014 at 5:02 pm | Reply
  15. chri§§y

    Now back to the topic at hand @ Joey, even though i know your alliance is to the US, you need to realise this country has made some enemies by acting like the top dog! So it isnt a big secret that other countries wish to be anti US dollar! And Congress's typical obstructionistic atti tude isnt helping either! They knew they had to make reforms and what have they done? Nothing! Typical lazy, do nothing work ethics! This will end up being the greatest treasonist act theyve done thus far!!!!

    July 23, 2014 at 5:48 pm | Reply
    • Joey Isotta-Fraschini©

      Ah, @ chrissy, but you know me, my friend, so you know that my Higher Power is power.
      It is what the USA does not produce that lowers the value of the American dollar.,,and still, we are fat.

      July 23, 2014 at 11:58 pm | Reply
  16. ✠RZ✠

    Many have adequately prepared for this eventuality and there will likely be much more to come. In the long run, it is really difficult to see how any of it can possibly bode well for the US$, to say the least. Even the immediate implementation of very strong protectionist policies, would not likely work, but I'd say it's a good place to start. So, who want's to start by convincing Apple to to bring everything home?

    July 23, 2014 at 7:44 pm | Reply
  17. chri§§y

    Lol how about you do it @ RZ! Lololol

    July 23, 2014 at 8:05 pm | Reply
    • ✠RZ✠

      You wish! But I need to make a big transition in the next 3 years. Going from retarded to retired.

      July 24, 2014 at 9:42 pm | Reply
  18. Alan

    BRICS will conquer the economy independency anyway. Nowadays the US is the owner of the world, these countries together are stronger than US and Allies, economically speaking of course. BRICS countries don't need the FMI anymore and they really have solid a plan to retain this new reality. Until now BRICS are just a economy group, but if necessary they'll extend the alliance to a military force able to conflict with OTAN. In my opinion, the world would be more fair with BRICS. I hope has a world with less war and mutual respect between all nations. And answering the main question: the rivality will depend from FMI's decisions.

    July 24, 2014 at 8:58 am | Reply
  19. j. von hettlingen

    If the BRICS development bank studies the mistakes the World Bank and IMF have made and avoids repeating them, it might have a chance to excel.

    July 24, 2014 at 10:54 am | Reply
    • j. von hettlingen

      Yet it will take years for it to match the two – WB & IMF. Meanwhile, nobody knows whether the BRICS nations would stick together forever, due to their disparate elements.

      July 24, 2014 at 10:55 am | Reply
  20. chri§§y

    @ Joey, i am not understanding your last comment very much! The "still we are fat" doesnt make much sense in regards to this topic. If you mean financially then i do disaggree and if it was a snide comment about obesity than i think that was totally uncalled for!

    July 24, 2014 at 6:38 pm | Reply
    • Joey Isotta-Fraschini©

      @ chrissy, I don't ask permission or calling before writing comments.
      The USA does not produce enough desirable goods to maintain the former value of our dollar in the global market, but spreading around of wealth enables the USA's people to maintain admirable girth.
      You didn't call on me to say that, but I've learned a NewOfficeLingo word, "proactive."

      July 25, 2014 at 8:12 am | Reply
  21. chri§§y

    @ RZ? What???

    July 24, 2014 at 11:06 pm | Reply
  22. chri§§y

    @ RZ, Who on earth has called you retarded? A word that i totally detest by the way! Just let me know who and i will gladly open a can of whoop azz on them!!!

    July 24, 2014 at 11:10 pm | Reply
  23. chri§§y

    @ Joey no one said anything about you having to ask permission to comment, least of all me! But...dont for one second think, that i will stay silent while you attempt to badger me either! What you said was uncalled for, and rude!!!

    July 25, 2014 at 12:37 pm | Reply
  24. chri§§y

    Oh and another thing @ Joey...there is no spreading around of wealth in the US as you stated! The middleclass is no longer, they are now the WORKING POOR! And there are now more poor class in the history of this country! You need to get your head out of the clouds and face reality...this country is in big trouble, and mostly its because of the wealthy!!!!

    July 25, 2014 at 2:48 pm | Reply
  25. chri§§y

    And im not saying this because im jealous because im not! If i was wealthy i wouldnt be for long because i would definitely spread it around as you say! Im saying this because "the wealthy" have become so greedy that, at the expense of THIS country, theyve hidden their wealth in off shore accounts, to get out of paying their share of taxes! And theyve shipped manufacturing out of the country, at the EXPENSE of working Americans! So yea, the demise of this country is THE FAULT OF THE WEALTHY!!!

    July 25, 2014 at 2:55 pm | Reply
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    October 15, 2014 at 1:54 am | Reply
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