By Konstantin Garibov
Russia and its BRICS partners – Brazil, India, China and South Africa are seeking bigger and faster changes in the International Monetary Fund, the World Bank and the global trade in general. They spelled out their position in a joint communiqué issued after their summit in New Delhi on Thursday.
The BRICS criticized the slow pace of the IMF quota and governance reform and made clear they want more voting rights in the IMF. The Delhi Declaration points out that the IMF’s lending capacity depends on whether all its member states have equal rights.
The BRICS have thus sent a strong signal to the West that they will no longer put up with a situation when agreements on redistributing voting power in favor of the emerging fast-developing markets whose share in the global economy is rapidly increasing, are actually being ignored.
“The problem did not spring up yesterday or the day before. At a G20 summit two or three years ago, the BRICS complained that the representation of their economies in the IMF governing bodies was disproportionate to their real weight. A strong joint stance on quota redistribution was forged and certain progress was achieved. China and India received more voting power. As for Russia, it gained virtually nothing. The process has been extremely slow, so the BRICS’ call for a more radical redistribution of the IMF quotas is fully justified.”
The BRICS leaders voiced concern over the sluggish reform of the World Bank. They urged its leadership to be more committed to transforming the World Bank and shifting its nature from a mediator between the rich North and the poor South to an essential mechanism that promotes equal partnership with all countries and helps overcome the decades-old division into donors and recipients.
Russia and its BRICS partners believe that the transformation of the World Bank into a multilateral institution could begin with the election of its new president in April. They reiterated their call for alternative candidacies from the developing economies for the World Bank presidency and for the candidates to be selected through an open, transparent and merit-based process.
The BRICS accused the rich nations of irresponsible policies that destabilized the world economy and provoked a global financial crisis. They criticized the monetary policy of the United States that gives the rich West unilateral advantages, while impeding the development of the rest of the world. With this in mind, the BRICS “five” took a major step forward towards a multi-polar currency system. Russia’s Vnesheconombank and similar financial institutions in other BRICS countries signed an agreement on the mutual lending in the national currencies of the BRICS members. By reducing the share of the dollar in their mutual payments, the BRICS are hoping to avoid the impact of sharp dollar fluctuations on international stock markets. In addition, mutual contracts denominated in national currencies will be cheaper for the parties involved.
To give their financial cooperation a solid footing, the BRICS decided to set up their own Development Bank. The Delhi Declaration says that the new bank will mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies.