Brics: Dilma takes over bank that has not yet shown what it came to – 04/12/2023 – Market

The idea of ​​a Brics bank emerged in India in 2012. Economists, including the American Joseph Stiglitz, proposed to the then Prime Minister that he consider creating a development bank for the group of large developing countries.

Manmohan Sing took the proposal to the other four leaders, from Brazil, Russia, China and South Africa, who welcomed it and created a negotiation channel. After two years of talks, the treaty that constituted the bank was signed in 2014, in Fortaleza, with Dilma Rousseff as host and president of the Brics that year.

The former president of the Republic takes formal office at the helm of the institution next Thursday (13th), in Shanghai, headquarters of the New Development Bank (NDB, for its acronym in English), as it ended up being called. He has already moved to the Chinese city.

Economist Paulo Nogueira Batista Jr., who participated in the negotiations to create and later became the bank’s first vice-president, recalls that Dilma “dedicated herself a lot to the Brics, an area of ​​foreign policy that she especially liked”. And she got involved in the conversations that made the institution possible.

“Dilma’s arrival is now a milestone for the bank”, he says. “He fell short of what he expected in those first years. The results were insufficient, limited by various circumstances, minor and major, of a macropolitical nature. He was never very well, not in my time either.”

He mentions the slowness in strategic issues such as the ascension of new members to the bank, which frustrates the institution that intended to be global, with an investment portfolio around the world.

Another problem would be the limited progress in operations with national currencies of the members themselves. “It continues to operate mainly in dollars. It has been a declared objective since 2016, it is in the bank’s first strategy, an old proposal, prior to this global concern with the political use of the dollar.”

The diagnosis is not very different from that of Jim O’Neill, who coined the acronym BRIC in 2001, in a study on the prospects for Brazil, Russia, India and China for the Goldman Sachs bank, where he was chief economist.

Today Baron O’Neill, of the House of Lords, he has just published another essay, “The future of the Brics and the New Development Bank”, already translated into Mandarin in the Shanghai media.

It points to “lost opportunities”, in which the countries of the bloc “could have cooperated more effectively and, as a result, could have given more strategic direction to the NDB in its activities”.

The first of these would have been India’s greater integration into Beijing’s Belt and Road Initiative, focused on trade infrastructure —and in which Brazil is being pressured to participate, at this moment, by China.

O’Neill also advocates expanding group and bank membership, suggesting criteria. He defends that a Brics Plus goes beyond “symbolism” and shelters new members who get a voice and real gains with the inclusion, in his view, of those with larger populations and economies.

The expanded NDB will be important, he warns, in a world of “less interdependence” and with institutions like the World Bank still controlled by Washington and the G7.

The economist also emphasizes, like Batista, that the Brics and its development bank must embrace national currencies in financial transactions, to reduce the exposure of member countries to the American currency.

He writes that “the excessively dominant role of the dollar” makes the US central bank’s decisions “destabilizing its monetary policies”, including those of China and India.

The expansion in the compositions of the Brics and the NDB is said to be necessary to “develop a more stable, secure multi-currency scenario, in which other currencies play a greater role alongside the dollar”.

Another point on which British and Brazilian economists agree is the need to resume the NDB’s prioritization of alternative energy projects and climate change, established six years ago and which proved to be yet another missed opportunity.

Both cite the expansion of the group and the bank as a new chance, if, for example, the entry of Indonesia, an economy larger than Brazil and also with extensive tropical forest, is confirmed.

“I don’t know if Dilma will want to emphasize this aspect, but the bank has a sustainability mandate”, says Batista. “He can act in this area of ​​environmental preservation, of green projects.”