New acronyms sometimes signal change in international affairs. In announcing the creation of New Development Bank (NDB) at the BRICS Summit in Fortaleza, the leaders of Brazil, Russia, India, China and South Africa have put to rest the myth that emerging powers cannot act in concert for long and build institutions of global significance. The BRICS nations have long complained about western dominance of economic institutions like the World Bank and International Monetary Fund. Since the financial crash in 2008, they have pushed for greater voice and representation as part of the wider reform of the global governance architecture. The creation of the NDB is an immensely significant step by BRICS nations to develop alternative financial institutions that serve their own policy priorities and interests better. The NDB, with an initial authorised capital of $100 billion, will fund infrastructure and sustainable development projects in BRICS nations and developing economies. BRICS leaders have also agreed on a Contingent Reserve Arrangement (CRA), worth $100 billion, to act as a safety net for countries to tackle short-term liquidity pressures and enhance their financial stability. The leaders have shown remarkable perspicacity in setting aside their own aspirations for control and agreed on an equitable power-sharing structure.
There is a great degree of commendable urgency in the Fortaleza Declaration that the leaders have signed. They want to develop a roadmap to raise economic cooperation within the group to a ‘qualitatively new level’. To that end, the Fortaleza Action Plan envisages intensive contact among BRICS ministers, national security advisers, sherpas and senior officials across various ministries and sectors.
Critics will contend that BRICS adopts predictable positions on political questions and does not pull its weight as a group in addressing the pressing challenges of the day such as the crises in Iraq, Syria and Israel-Palestine. That is a reflection of the lack of consensus within the group — and a firm reiteration that the leaders envisage BRICS as essentially as a vehicle that focuses on economic deliverables for now. At a time when decisive leadership is hard to find on the world stage, as the United States looks inward and groups like the European Union experience internal discord, BRICS leaders have done well to take a genuine crack at fixing a broken economic system. Their improved coordination through intensive engagement could be the game-changer for world politics.