Draft prepared for ISA Annual Convention 2019, 27-30 March, Toronto - Do not

quote

BRICS, the New Development Bank and political economy of South-South

relations

Ana Garcia*

The formation of BRICS is one of the main features of globalization in the 21st
century. This group of countries from the ‘Global South and East’ gathered
collaborative momentum throughout the decade 2000-2010, after Goldman Sachs
initially conceived the acronym BRIC in the identification of promising markets for
economic and financial agents1. As Altvater (2015, p. 239) has once stated “It is one of
the rare cases in history in which an historical event had a name before it really
happened.” In 2003, two other relevant articulations paved the way for the BRICS: the
formation of IBSA – India, Brazil and South Africa – focusing on South-South
cooperation, and the WTO meeting in Cancun, where Brazil, India and other
‘developing countries’ came together to seek better terms for access to world
agricultural markets (Prashad, 2013). In 2006, a meeting between Brazil, India, Russia
and China took place on the margins of the UN General Assembly2. However, it is with
the global financial crisis, which began in the U.S. in 2008, that the discussion on the
role of BRICS gained relevance. The crisis gave rise to the idea that ‘core’ countries
were losing power in the world order, while China, along with other countries with so-
called ‘emerging economies’, would challenge the dominant position of the U.S.,

*
Professor in International Relations, Federal Rural University of Rio de Janeiro, Brazil. This paper
results from the work of the research group ‘BNDES: public finance, the State and private capital in
national and international context’, Regional and Urban Planning Graduate Program (IPPUR)/UFRJ. I
thank the students assistants Lucas Rezende and Mariana Teixeira for data gathering and figures
elaboration. An earlier version of the paper was presented at the conference Der Springpunkt der
Politischen Ökonomie: Das Kapital gegen Arbeit und Natur Zur Krisendynamik in Zeiten des
Kapitalozäns Symposion zu Ehren von Elmar Altvater (24.8.1938 – 1.5.2018), held in honor of Prof.
Elmar Altvater, at the Rosa Luxemburg Foundation, 14-15. December 2018.
1
https://www.goldmansachs.com/insights/archive/archive-pdfs/build-better-brics.pdf
2
http://www.itamaraty.gov.br/pt-BR/politica-externa/mecanismos-inter-regionais/3672-brics

1
Europe and Japan. It also consolidated the new role of the G20, which had to include
the BRICS’ states from 2008 onwards.

For Altvater (2015), the capitalist world order was destabilized, and the global
political power structure needed to be reshaped,

‘This became obvious at the G8 summit of Heiligendamm (Germany) in 2007 when

the G8 were forced to open their elitist meeting and to accept some newcomers, Brazil, India,
China and South Africa, as partners. They treated the BRICS – Russia already was a member
of the G8 – as subaltern partners but they had to take their new political importance into
consideration, for the traditional G8 was not able to find a solution to global imbalances,
caused by the trade deficit of the USA and the resulting exploding external debt of the
superpower, without including the new creditor countries in a political solution. This was
especially true for China, but also for the other BRICS countries.’ (Altvater 2015, p. 238,
emphasis added)

In the following year, 2009, the first BRICs summit took place in Russia, and started
a succession of annual summits that gave body and content to the grouping, in addition
to identifying markets. In 2011, ‘BRIC’ became ‘BRICS’, as South Africa was
incorporated as a ‘gateway [for investors] to Africa’. After one decade, BRICS went
through a process of institutional densification (Ramos et. al., 2018). Besides
cooperation between government agencies in several sector, BRICS must be seen as
more than a group of states, as they have created civil society and business entities as
well, namely the BRICS Business Council3 (which organises the annual BRICS
Business Forum), the Think Tanks Council and Academic Forum4 and the ‘Civil
BRICS’5. Social movements, NGOs and grassroots organisations that are more critical
of the BRICS have been organising parallel ‘BRICS from below’ summits since 20136.
This paper discusses the role of the BRICS financial institution, questioning the
capacity of the New Development Bank, in providing a new model of development
finance. I start by a critical review on the role of the BRICS countries as investors in
other ‘developing countries’ of the Global South. Then, I discuss the creation of the

3
https://www.bricsbusinesscouncil.co.za/brics-council/
4
Brazil’s representative in these spaces is the Institute for Applied Economic Research (IPEA, for its
acronym in Portuguese). Cf.
http://www.ipea.gov.br/portal/index.php?option=com_content&view=article&id=22930;
http://www.ipea.gov.br/portal/index.php?option=com_content&view=article&id=33351&Itemid=4
5
This is a space for civil society participation that was officially organised by the Russian government
in the summit in Ufa in 2015. Cf. http://civilbrics.ru/pt/gr-brics/
6
The first BRICS from below summit was held as a protest against the Durban summit in 2013. It
continued to be held in the years that followed, but on a smaller scale. Cf.
https://www.bricsfrombelow.org/; https://peoplesbrics.org/

2
New Development Bank, its main focus on infrastructure and energy projects, and its
policy of strengthen national systems of environmental and social protection. I argue
that the BRICS capacity of providing an alternative to the existing Bretton Woods
institutions is limited. BRICS leaders affirm that the NDB intends to be complementary,
and not opposed to the World Bank. Credits provided by BRICS countries, specially
China, do not impose conditionalities, yet may generate new structures of South-South
indebtments, reinforcing the same development model based on commodities export.
Finally, despite the nationalist approach of the NDB, projects financed by the bank
might generate social and environment impacts, for which the it does not hold
accountable.

BRICS within the capitalist world order

The rise of BRICS reinforced the deeply rooted imaginary of ‘modernization’ and
‘development’, and generated expectations on the bloc’s potential to challenge the
current status quo. BRICS economies have become main hosts of foreign direct
investment, as well international investors, with large multinational corporations
operating around the world. According to the 2018 UNCTAD World Investment
Report, these five countries together accounted for 19% of global investment inflows
and 23% of the world GDP (UNCTAD 2018, p. 5). In general terms, FDI inflows to
the BRICS countries exceeded the outflows, but outflows rose by 21% in 2016 to $2.1
trillion outward stock (UNCTAD 2017, p. 18). Inflows increased specially to Russia,
India and South Africa, whereas China became a net outward direct investor in 2016,
and second (after the U.S.) largest global investor, accounting for $183 billion in
outward FDI in that year7. This number dropped 36% to $125 billion in 2017, after
measures were taken by the Chinese government to control outflows in a few sectors
(UNCTAD 2018, p. 4). Still, BRICS multinational corporations accounted for 24% of
the top 500 largest companies in the world in 2016 (UNCTAD 2017, p. 19), and
Chinese corporations account of half of the top 10 corporations on Forbes 2018
ranking8.

7
According to this report, ‘Chinese MNEs [multinational enterprises] invested abroad to gain access to
new markets and to acquire assets that generated revenue streams in foreign currency’. UNCTAD,
World Investment Report 2017, p. 14.
8
https://www.forbes.com/global2000/list/#tab:overall

3
 In previous works, I have shown BRICS main investments in Africa, crossing data
on main investment volumes, sectors, firms and investment protection agreements
(Garcia, 2017). ‘South-South’ FDI has become one the main platforms of BRICS
emergence (upon a tripod ‘investment-credit-aid’), even if major FDI fluxes are still
between the U.S. and Europe, and between the U.S. and China. To be sure, the capitalist
development of BRICS is very uneven, and took place, in the last decades, by creating
and facilitating conditions for accumulation of foreign capital within their territories,
supported, among other mechanisms, by the framework of investment protection
agreements for foreign capital to come and stay ‘in’. However, the other side of the
coin shows that the capitalist rise of BRICS also leads to new cycles of capital
accumulation and to new expropriations in other countries and regions of the ‘South’.
Therefore, BRICS end up reproducing in ‘South-South relations’ the same logic of
competition over natural resources, labor power and market access that is imperialist in
nature. Whereas the BRICS governments seek to assert themselves as a cohesive group
in multilateral forums, in Africa and Latin America, multinational corporations and
States have their own competitive strategy and approach, producing new power
hierarchies within the ‘South and East’.

New financial institutions, new debts

The BRICS countries sought to coordinate their interventions in multilateral forums

to demand reforms to the structures of global economic governance, primarily the
International Monetary Fund and the World Bank (Kiely, 2015). This agenda of reforms
was clearly one source of tension with Western powers9, which sought to delay or even
halt reform to the institutions created in the post-war period. For a country like Brazil,
which passed through a default in the 1980s and other debt crisis in the 1990s, and
thereby through the structural adjustment programs of the IMF, it was very significant
to become a creditor of the IMF in the mid-2000s. Yet, paradoxically, as Bond (2018)
has indicated, the reform to the Fund, reached in 2015, increased the voting power of

9
Among others, we can mention the disputes over intellectual property rights on drugs at the World
Trade Organisation in the early 2000s or, more recently, the tensions with Russia in the conflict in
Crimea or concern with China in the creation of the Asian Infrastructure Investment Bank. Other
tensions surfaced when Russia granted asylum to a former National Security Agency agent, Edward
Snowden, and on different occasions when attempts were made to substitute the US dollar with local
currencies in trade and financial relations between the BRICS. See Bond and Garcia (2015).

4
China (37%), Brazil (23%), India (11%) and Russia (8%) at the expense of other
‘developing’ countries: South Africa lost 21% of its voting power, while countries such
as Nigeria and Venezuela lost 41%10. Greater participation of those BRICS countries
within the IMF did not alter the position of the U.S, and, more importantly, did not alter
its norms and rules, with which the Fund dealt with Greece11, Argentina12 or Angola13
(to name a few of recent borrowers), which continues in line with austerity
programmes, despite BRICS increased voting power.

While demanding reforms in the Bretton Woods institutions, the BRICS have
created new multilateral financial institutions: New Development Bank (NDB), that
would finance infrastructure and sustainable energy projects, and the Contingent
Reserve Arrangement (CRA), that would lend to countries with balance of payment
problems. After the idea of the BRICS bank was first made public in the third summit
in Delhi in 2012, the agreement to establish the NDB was signed two years later, in
2014, the same year that the Asian Infrastructure Investment Bank (AIIB) was also
created.

This was a highpoint to those who have considered the BRICS as challengers of U.S.
economic supremacy14. The creation of new multilateral financial institutions
composed primarily by ‘developing’ economies, without the leadership of the U.S. or
other Western powers, was considered to reflect the need for a new equilibrium in the
world order. They could eventually substitute Bretton Woods institutions by financing
development in poor countries15. As Elmar Altvater wrote in a piece to the 70th
anniversary of the Bretton Woods institutions – also in 2014- the need for reform was
on the top of the agenda, but decision-makers were still reluctant to lose power.
According to Altvater (2014),

10
https://www.counterpunch.org/2018/07/19/state-of-the-brics-class-struggle-social-dialogue-reform-
frustrations/
11
https://www.imf.org/en/News/Articles/2018/07/30/NA07302018
12
https://www.theguardian.com/world/2018/sep/26/argentina-imf-biggest-loan
13
https://www.ft.com/content/91d90c12-a56e-11e8-926a-7342fe5e173f
14
For example: Rhadika Desai, ‘The BRICS are building a challenge to western economic supremacy’.
The Guardian, 2 April, 2013; or Walden Bello, ‘The BRICS: Challengers to the global status-quo’.
Foreign Policy in Focus, 29 August, 2014.
15
‘Banco dos BRICS muda equilíbrio mundial, diz economista’. Interview with Deepak Nayyar in
Folha de Sao Paulo, 16 August, 2014;

5
 ‘To lessen dependency on the IMF, the World Bank and Wall Street, and to increase their
developmental leeway, similarly structured organizations of the Global South are being
formed against the Monetary Fund and the Development Banks of the Global North. The 70th
anniversary of the Bretton Woods System may be the date later historians will write that it is
the birth of an autonomous political formation of the global South against the global North.’ 16

With initial authorized capital of US$ 100 billion and initial US$50 billion
subscribed to the bank, US$10 billion per country, one positive aspect of the NDB is
that the internal governance statute has guaranteed equal voting power within the bank.
In the bank’s narrative, it is precisely ‘new’ because it is a 21st century multilateral
development bank that builds on the experiences of existing institutions and reflects the
growing role of BRICS in world economy (NDB 2017a, p. 7-8). The founding
members are the five BRICS countries, but the NDB will be open to other UN members.
With headquarters in Shanghai, the bank has opened an African regional office in
Johannesburg in 2017 and in 2019, it will open the Americas regional office in São
Paulo17. Under the new Bolsonaro government, Brazil will also name its next president.
The NDB began its operations in 2016 and according to its 2017 annual report, it had
approved 13 projects for a total of approximately US$3.5 billion in these two years
(NDB 2017b, p. 42).

The banks’ narrative points to two important issues that differentiate it from the
Bretton Woods institutions. The first is the emphasis on national sovereignty.
According to the NDB’s General Strategy 2017-202118, “the NDB’s mandate does not
include prescribing policy, regulatory and institutional reforms to borrowing countries”
(NDB 2017a, p. 11), which would mean to follow nationally-defined laws and
procedures on project implementation without compromising project quality. This
reflects on the bank’s approach to national country’s system of environmental
protection. The second is the intention to use local currencies for its transactions, which
meets the Chinese aim to further internationalization of the renminbi, and eventually
weaken the dollar hegemony. The bank has issued so far regular bonds in member

16
Elmar Altvater. ‘70 Jahre Bretton-Woods - die Geburtsstunde von IWF und Weltbank’.
Gegenblende, 24.07.2014. Translation ASG.
17
https://economia.estadao.com.br/noticias/geral,com-foco-em-infraestrutura-banco-dos-brics-vai-
abrir-escritorio-em-sao-paulo,70002417138
18
NDB’s General Strategy 2017-2021, in https://www.ndb.int/wp-content/uploads/2017/07/NDB-
Strategy-Final.pdf

6
countries and international capital markets and intends to tap the growing market for
green bonds for its operation (Ibid, p. 4).

Despite these issues, and the geopolitical expectations over them, both NDB
and CRA have proved to be complementary, and not an opposition, to existing
multilateral institutions. According to the agreement establishing the NDB, its purpose
is “to mobilize resources for infrastructure and sustainable development projects in
BRICS and other emerging economies and developing countries, complementing the
existing efforts of multilateral and regional financial institutions for global growth and
development”19. As the Brazilian former NDB director Paulo Nogueira Batista Jr.
(2016, p. 179) clearly stated,

‘NBD is not a political bank. The bank will be guided by technical criteria to approve
projects. Our constitutional agreement makes this point clear. We want to avoid over-
politicizing the decisions that are taking place in existing multilateral institutions.’20

Soon after, the New Development Bank established a partnership with the World
Bank for infrastructure investment, thus countering those who had been expecting the
NBD to be an opposing alternative to the World Bank21. For the case of CRA, its
articles of agreement compel any borrower to acquire an IMF structural adjustment
package after receiving just 30 per cent of its lending quota (in order to access the next
70 per cent)22.
NDB’s (and AIIB’s) focus on infrastructure and energy projects follows the
same policy of several multilateral financial institutions, such as the World Bank's
Global Infrastructure Facility23, the G20’s Global Infrastructure Hub24, as well as
regional and national banks (such as the Inter-American Development Bank, BNDES
or CDB). It can be affirmed that there is a global consensus around the ‘need’ for
infrastructure to leverage economic growth through public-private partnerships.

19
https://www.ndb.int/wp-content/themes/ndb/pdf/Agreement-on-the-New-Development-Bank.pdf.
Emphasis added.
20
Translation ASG. Batista was a former representative of Brazil in the IMF and took office at the
NDB in 2016. He was taken out of the NDB by former president Michel Temer for being critical to
Dilma Rousseff’s impeachment.
21
Cf. http://www.worldbank.org/en/news/press-release/2016/09/09/world-bank-group-new-
development-bank-lay-groundwork-for-cooperation
22
For the CRA Treaty, cf.
http://civilbrics.ru/upload/iblock/b0f/b0f2e1d586c5c52e96bb2a26bb529805.pdf
23
http://www.worldbank.org/en/programs/global-Infrastructure-facility
24
http://globalinfrastructurehub.org/

7
 Based on data from the G20 Global Infrastructure Hub, the NDB affirms in its
2017 annual report that Brazil has an infrastructure gap of US$30 billion, primarily in
the logistics and highways sector. The bank’s first operation in Brazil was executed
together with the Brazilian Development Bank (BNDES) in 2016 for the amount of
US$300 million (NDB 2017b, p. 34). Besides this, it has financed three other projects
in Brazil, two sovereign loans to local governments and one non-sovereign to oil
company Petrobras25. Figures 1 and 2, below, show the main sectors of NBD’s projects
financed in Brazil in between 2017 and 2018.

25
https://www.ndb.int/projects/list-of-all-projects/

8
Source: Elaborated by the author based on information available at https://www.ndb.int/projects/list-of-
all-projects

In the case of Russia, the report states that the country invested public and
private resources in its infrastructure worth up to 6% of its GDP. Until 2017, the NDB
has approved a total of US$629 million for renewable energy production and
transportation in Russia (Ibid., p. 35). Yet, a $300 million loan to the Russian
petrochemical SIBUR was denounced for benefiting oligarchs of Vladimir Putin’s

9
inner circle, one of them his former son-in-law26. Figures 3 and 4 show the main sectors
of NDB’s projects financed in Russia between 2017 and 2018.

Source: Elaborated by the author based on information available at https://www.ndb.int/projects/list-of-

all-projects

India is identified by the bank’s annual report as a country that managed to

maintain high growth rates in 2017, which were sustained by public investments and
increased consumption and exports. According to the report, structural reforms were
implemented to increase the confidence of private investors. The NDB has approved
US$1.4 billion for projects in transportation, water and sanitation and renewable energy

26
https://www.valor.com.br/international/news/5975457/ndb-approved-loan-sibur-despite-
controversy-about-sanctions

10
in the country (Ibid., p. 36). Six out of seven projects financed in India are for local and
provincial governments27. Figures 5 and 6, below, show the main sectors of NBD’s
projects financed in India between 2016 and 2018.

Source: Elaborated by the author based on information available at https://www.ndb.int/projects/list-of-

all-projects

As for China, the report states that it maintained its strong economic
performance. The driving force behind its economic growth continues to be investments

27
https://www.ndb.int/projects/list-of-all-projects/

11
in infrastructure and renewable energy, but the pace of these investments is likely to
fall. In 2016, the NDB issued ‘green’ bonds in China for the first time, for a total of 3
billion yuan (US$449 million). As of late 2017, the bank had approved four projects in
renewable energy and water and sanitation in the country for a total of US$895 million;
three of the projects were financed directly with the Chinese currency (Ibid., p. 37),
which supports China’s strategy to internationalise the renmimbi. Figures 7 and 8 show
the main sectors of NDB’s projects financed in China between 2016 and 2018.

Source: Elaborated by the author based on information available at https://www.ndb.int/projects/list-of-

all-projects

Finally, South Africa resumed growth in 2017, though still at modest rates,
which was driven by agriculture, mining and manufacturing. Investments in
infrastructure reached a total of US$20 billion in 2016; even so, the country still has a
US$4 billion-gap in this sector. The bank approved a US$180 million project on
renewable energy with a sovereign guarantee (Ibid.). Yet, it has financed until now only
three projects, two of them to private companies, Eskom and Transnet. For the case of
Transnet, a $200 million loan was given to the expansion of a container terminal at the

12
Durban Port, an operation that, according to D’sa and Bond (2018), was done without
adequate consultation and analysis. For decades, “the South Durban Community
Environmental Alliance (SDCEA), with members from all races and classes, has
opposed the ultra-polluting port- petrochemical complex” (Ibid, p. 180) Transnet and
other corporations operating in refineries in the port area are accused of environmental
racism, for health problems and ecological degradation in a mainly black poor area.
The company had already received a loan from the China Development Bank in 2013
during the Durban BRICS summit, with which it, then, sub-contracted a Chinese firm
in over-priced deals (Ibid, p. 181-182). Figures 9 and 10 show the three sectors of
NDB’s projects financed in South Africa between 2017 and 2018.

Source: Elaborated by the author based on information available at https://www.ndb.int/projects/list-of-

all-projects

Following these lines, we can question the NDB’s capacity to finance

infrastructure projects and, simultaneously, guarantee sustainability, the environment

13
and the rights of the populations in the territories where the projects will be executed.
Indeed, Altvaver (2015, p. 242) has so precisely pointed to the ‘limits of growth’, and
how “Capitalist dynamics are overshooting the limits of the living and the natural
resources of Planet Earth”. Major constructions, roads, railways and ports – as well as
energy infrastructure, especially hydroelectric plants – within the BRICS territories and
in their hinterlands, aim at serving extractive industries and agribusiness to export their
production to international market. These infrastructural networks become, in some
cases, ‘new plunder routes’ by establishing large logistical axes that connect territories
and natural resources with external markets. The Nacala Development Corridor in
Mozambique is illustrative of this process28.

In the competition over resources and markets with other countries and regions
in the South, the BRICS, especially China, entered as ‘new donors’. Some have argued
that this has changed the general framework of international development cooperation,
giving more bargaining power to African countries, because a wider range of
international aid providers could partially break with the omnipresence of Western
powers and the World Bank. Along with aid, the BRICS countries became known for
not imposing political, fiscal or macroeconomic conditionalities when lending to
African countries29. However, as Carmody and Klagelund (2016) have pointed, the
expanded relations with China and other BRICS did not alter the structural basis of
commodities-export orientated economies, therefore not breaking with dependency
relations30. The provision of credit conditioned by exports of mineral and energy
resources (‘loans-for-oil’) has created new forms of indebtedness between ‘Southern’
counties. This form of debt has an indirect conditionality, which is the reinforcement

28
It reveals, on the concrete grounds of African territories, the leading role of multinational
corporations (such as Brazilian Vale and the Japanese Mitsui), funding agencies from the North (such
as JICA) and multilateral financial institutions, such as the World Bank and the African Development
Bank, confirming the convergence of actors and initiatives in the mineral and agricultural commodities
production chain, which are an essential element of global capitalist accumulation. As discussed
elsewhere, the Nacala Corridor suggests that aid and investments efforts of emerging economies of the
BRICS, such as Brazil, participate in the same expropriation and pillaging of territories with major
global players, and not opposed to them Cf. Ana Garcia and Karina Kato. ‘A road to development? The
Nacala Corridor at the intersection between Brazilian and global investments’. Democratic Marxism
Book Series, organized by Vishwas Satgar, Wits University Press (forthcoming).
29
As the NDB states in its General Strategy 2017-2021, “is a public bank focused on development, and
will not interfere in the political affairs of member countries. Only economic and financial
considerations are relevant to the Bank’s decisions, and these considerations will be weighed
impartially in order to achieve the institution’s purposes and functions” (NDB 2017a, p. 11)
30
The authors make a critical review on the discussion of ‘agency’ of African elites in relation to China
and western powers.

14
of a productive matrix based on exports of primary goods, which weakens opportunities
for developing counties to diversify its production framework, with implications for
future generations. The result of the commodities super-cycle was, contradictorily, high
growth rates, but a ‘lost decade’ for diversification of African economies. Now some
of these economies are back to the IMF31.

The NDB elaborated a socioenvironmental framework in 2016, only after releasing

its first disbursements. This framework is composed of two parts: the first being a series
of overarching policies on the social and environmental management of the bank’s
operations, and the second, on the socioenvironmental standards related to the
environment protection, involuntary resettlement and indigenous peoples (NDB 2016,
p. 3). Among its objectives, there is the strengthen national environmental and social
systems, which would mean that, ‘Through its operations, NDB seeks to balance
economic, social, and environmental interests while fostering ownership and
accountability of member countries’ (Ibid, p. 4).
According to the NDB, there were problems of the 1980s World Bank’s
environmental and social safeguards, concerning their restrict applicability (it would be
applied exclusively to projects funded by the World Bank), imposition over national
laws (raising questions of sovereignty) and the unrecognition of the variety of legal
frameworks and enforcement capacities across developing countries (NDB 2017a, p.
16). As stated by the bank, the best way of managing social, environmental and
procurement risks would be to use and strengthen existing country systems, and not
bypass them with external standards. According to its narrative, “instead of starting
from externally-designed set of standards, the NDB will take a country’s system as a
starting point”, and follow mandated local procedures with rigor and transparency. This
would lead to the achievement of protection against misuse of project resources and
strengthening of local frameworks and implementation capacities (Ibid.)

To the sure, the policy of strengthening national systems meets the principles of
non-interference in internal affairs and preserves the scope of action of national states.
However, there is a risk that these new multilateral banks could precipitate a widespread
downgrading of standards, given the lack of environmental and social safeguards,

31
As for the case of Angola already quoted.

15
which are a result of struggles already won at the level of the World Bank. This has
been a topic of major discussion among civil society organizations32.

Notably, the NDB, the AIIB and the World Bank launched their socio-
environmental standards almost simultaneously in the same year, 2016 (Esteves;
Zoccal; Torres, 2016). NDB and AIIB placed the greater weight on the national socio-
environmental protection and risk management systems, whereas the World Bank made
an inflexion of its socio-environmental safeguards policy to follow the same
approach33. According to Esteves (2018), the use of ‘country systems’ brought together
the World Bank, the AIIB and the NDB, making them compete at the same level for
infrastructure projects in peripheral areas. In order to meet ‘global development’ goals
and minimize risks for the private sector, regulation must be made more flexible, not
only in terms of environment, but also financial management procedures, procurement,
taxation and profit remittance (Esteves 2018, p. 14).

It’s worth noting that, whereas capital pushes for global investment and trade
regulation regimes (which favors capital movements worldwide), regulations over
labor, wages and work safety conditions are set at the national level, forcing workers to
compete for jobs in least favorable conditions. Here too, social and environmental
standards are left for national institutions to decide, implement and monitor, without
multilateral financial institutions taking responsibility on questions of lack of
transparency, public consultation, human rights violations and environmental disasters.
Consequently, national social-environmental standards may be put to global
competition to attract investors. As Borges and Cortez (2018) have pointed out,
although the Brazilian national environmental regulations and institutions are relatively
strong, there are many vulnerabilities concerning indigenous and traditional
communities in processes of decision making and implementation of mega-projects
such as hydroelectric plants, ports, railways, wind farms, that received huge amounts

32
For example: Center for Financial Accountability. ‘The new development banks: why AIIB and
NDB should be monitored?’. Briefing Paper, October 2016, in https://peoplesbrics.org/2016/10/07/the-
new-development-banks-why-aiib-and-ndb-should-be-monitored/; Caio Borges and Julia Cortez.
‘Country Systems and Environmental and Social Safeguards in Development Finance Institutions:
Assessment of the Brazilian System and Ways Forward for the New Development Bank’. Conectas
Human Rights, May 2018.
33
According to Esteves, Zoccal and Torres (2016), there is no clarity on the mechanisms for
strengthening national systems and on how the NDB and AIIB intend to align them with their own
parameters (Ibid.).

16
of credit from the BNDES, or from the World Bank through BNDES (Borges; Cortez
2018, p. 18).
The New Development Bank has opened channels for participation of business
entities, as well as NGOs, in its annual meetings. Some organizations have presented
suggestions and demands for the bank in terms of human rights and environmental
issues. Yet, the re-orientation of BRICS institutions will depend upon the political and
economic orientation of governments that compose BRICS. India’s liberal move in
2014 and Brazil’s far-right move in 2018 make it more difficult. Thus, we hold that
BRICS as they exist today – as a project of political elites and multinational
corporations – have not been able to effectively formulate an ideological alternative to
neoliberalism, nor institutions that can effectively found a world order on a new, more
socially and environmentally just basis. Therefore, it is necessary to reflect upon the
rise of a ‘global South and East’ within the framework of the expansion and deepening
of capitalism in the 21st century.

Conclusion

In this essay, I have presented a discussion on the new Southern financial institution,
the BRICS New Development Bank. BRICS emergence has been one of the main
features of globalization in the beginning of the 21st century, and has given rise to the
expectation of an alternative bloc to counter Western powers. The creation of the NDB
would oppose the World Bank, which did not hold true. I have shown the NDB’s main
projects and the discussion of its social and environmental framework. Its capacity to
provide a new structure of development finance has been limited. The NDB has focus
on infrastructure, complementing the efforts of existing institutions such as the World
Bank or the G20 Global Infrastructure Hub.
The future of BRICS in the current international context is uncertain. The nefarious
effects of neoliberal globalization have pushed the world into a major economic crisis
in the early twenty-first century, the political consequences of which are perceived
today. New far-right parties and movements have come to power either through
democratic or tortuous ways. Brazil’s recent election of the far-right president Jair
Bolsonaro, two years after the coup d’etat of the Workers Party president Dilma
Rousseff, is an important example. Trump's election in the U.S. and its shift to selective
protectionism places China in a new position: today it defends multilateralism and

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globalization34. Thus, the international Left faces the paradoxical situation of watching
the anti-globalization and anti-free trade discourse – which has, for years, shaped
transnational struggles – coming from the far-right, combined with xenophobia and
racism.
It is more important than ever to strengthen solidarity linkages between social
struggles within the BRICS and in its hinterlands: local communities, peasants and
workers who face and resist major projects carried out by BRICS corporations and their
financial institutions operating in their territories. It is necessary to fight for a BRICS
of, and for, the people, so that it effectively turns into a counter-hegemonic and anti-
capitalist force.

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