Will the New Development Bank and the Contingent Reserve Arrangement be able to fulfill their original mission with the arrival of the new bank president Dilma Rousseff?

The first event of President Lula da Silva’s long-awaited visit to China in mid-April 2023 is the official swearing-in ceremony of Dilma Rousseff as president of the New Development Bank (popularly known as the BRICS Bank) on April 13. The appointment of the former president of Brazil to the post demonstrates the priority that Lula will give to the BRICS countries (Brazil, China, India, Russia, and South Africa) in his government. In recent years, BRICS has been losing some of its dynamism. One of the reasons was the retreat of Brazil—which had always been one of the engines of the group—in a choice made by its right-wing and far-right governments (2016-2022) to align with the United States.

This article was produced by Globetrotter.

A New Momentum for BRICS?

After the last summit meeting in 2022, hosted by Beijing and held online, the idea of expanding the group was strengthened and more countries are expected to join BRICS this year. Three countries have already officially applied to join the group (Argentina, Algeria, and Iran), and several others are already publicly considering doing so, including Indonesia, Saudi Arabia, Turkey, Egypt, Nigeria, and Mexico.

The BRICS countries occupy an increasingly important place in the world economy. In GDP PPP, China is the largest economy, India is third, Russia sixth, and Brazil eighth. BRICS now represents 31.5 percent of the global GDP PPP, while the G7 share has fallen to 30 percent. They are expected to contribute over 50 percent of global GDP by 2030, with the proposed enlargement almost certainly bringing that forward.

Bilateral trade between BRICS countries has also grown robustly: trade between Brazil and China has been breaking records every year and reached $150 billion in 2022; between Brazil and India, there was a 63 percent increase from 2020 to 2021, reaching more than $11 billion; Russia tripled exports to India from April to December 2022 compared to the same period the preceding year, expanding to $32.8 billion; while trade between China and Russia jumped from $147 billion in 2021 to $190 billion in 2022, an increase of about 30 percent.

The conflict in Ukraine has brought them closer together politically. China and Russia have never been more aligned, with a “no limits partnership,” as visible from President Xi Jinping’s recent visit to Moscow. South Africa and India have not only refused to yield to NATO pressure to condemn Russia for the conflict or impose sanctions on it, but they have moved even closer to Moscow. India, which in recent years has been closer to the United States, seems to be increasingly committed to the Global South’s strategy of cooperation.

The NDB, the CRA, and the Alternatives to the Dollar

The two most important instruments created by BRICS are the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA). The first has the objective of financing several development projects—with an emphasis on sustainability—and is regarded as a possible alternative to the World Bank. The second could become an alternative fund to the IMF, but the lack of strong leadership since its inauguration in 2015 and the absence of a solid strategy from the five member countries has prevented the CRA from taking off.

Currently, one of the major strategic battles for the Global South is the creation of alternatives to the hegemony of the dollar. As the Republican U.S. Senator Marco Rubio confessed in late March, the United States will increasingly lose its ability to sanction countries if they decrease their use of dollars. Almost once every week, there is a new agreement between countries to bypass the dollar, like the one recently announced by Brazil and China. The latter already has similar deals with 25 countries and regions.

Right now, there is a working group within BRICS whose task it is to propose its own reserve currency for the five countries that could be based on gold and other commodities. The project is called R5 due to the coincidence that all the currencies of BRICS countries start with R: renminbi, rubles, reais, rupees, and rands. This would allow these countries to slowly increase their growing mutual trade without using the dollar and also decrease the share of their international dollar reserves.

Another untapped potential so far is the use of the Contingent Reserve Arrangement (totaling $100 billion) to rescue insolvent countries. When a country’s international reserves run out of dollars (and it can no longer trade abroad or pay its foreign debts), it is forced to ask for a bailout from the IMF, which takes advantage of the country’s desperation and lack of options to impose austerity packages with cuts in state budgets and public services, privatizations, and other neoliberal austerity measures. For decades, this has been one of the weapons of the United States and the EU to ensure the implementation of neoliberalism in the countries of the Global South.

Right now, the five BRICS members have no issues at all with international reserves, but countries like Argentina, Sri Lanka, Pakistan, Ghana, and Bangladesh find themselves in a bad situation. If they could access the CRA, with better conditions for repaying the loans, this would mean a political breakthrough for BRICS, which would begin to demonstrate their ability to build alternatives to the financial hegemony of Washington and Brussels.

The NDB would also need to start de-dollarizing itself, having more operations with the currencies of its five members. For instance, from the $32.8 billion of projects approved so far at NDB, around $20 billion was in dollars, and around the equivalent of $3 billion was in Euros. Only $5 billion was in RMB and very little was in other currencies.

To reorganize and expand the NDB and the CRA will be a huge challenge. The leaderships of the five countries will need to be aligned on a common strategy that ensures that both instruments fulfill their original missions, which won’t be easy. Dilma Rousseff, an experienced and globally respected leader, brings hope for a new beginning. Rousseff fought against Brazil’s civil-military dictatorship in the 1960s and 1970s and spent three years in prison for it. She became one of President Lula’s key ministers in the 2000s, and she was elected Brazil’s first female president and then won reelection (2010 and 2014). She was in office until she was overthrown by a coup based on fraudulent grounds by Congress (2016)—which has already admitted the fraud. She just returned to political life to run one of the most promising institutions in the Global South. After all, President Dilma Rousseff has never shied away from huge challenges.

Author Bio: Marco Fernandes is a researcher at Tricontinental: Institute for Social Research. He is the co-editor of Dongsheng. He is a member of the No Cold War collective. He lives in Beijing.

The world wants to see an end to the conflict in Ukraine. The NATO countries, however, want to prolong the conflict by increasing arms shipments to Ukraine and by declaring that they want to “weaken Russia.” The United States had already allocated $13.6 billion to arm Ukraine. Biden has just requested $33 billion more. By comparison, it would require $45 billion per year to end world hunger by 2030.

This article was produced by the Morning Star and Globetrotter.

Even if negotiations take place and the war ends, an actual peaceful solution will not likely be possible. Nothing leads us to believe that geopolitical tensions will decrease, since behind the conflict around Ukraine is an attempt by the West to halt the development of China, to break its links with Russia, and to end China’s strategic partnerships with the Global South.

In March, commanders of the U.S. Africa Command (General Stephen J. Townsend) and Southern Command (General Laura Richardson) warned the U.S. Senate about the perceived dangers of increased Chinese and Russian influence in Africa as well as Latin America and the Caribbean. The generals recommended that the United States weaken the influence of Moscow and Beijing in these regions. This policy is part of the 2018 national security doctrine of the United States, which frames China and Russia as its “central challenges.”

No Cold War

Latin America does not want a new cold war. The region has already suffered from decades of military rule and austerity politics justified based on the so-called “communist threat.” Tens of thousands of people lost their lives and many tens of thousands more were imprisoned, tortured, and exiled only because they wanted to create sovereign countries and decent societies. This violence was a product of the U.S.-imposed cold war on Latin America.

Latin America wants peace. Peace can only be built on regional unity, a process that began 20 years ago after a cycle of popular uprisings, driven by the tsunami of neoliberal austerity, led to the election of progressive governments: Venezuela (1999), Brazil (2002), Argentina (2003), Uruguay (2005), Bolivia (2005), Ecuador (2007), and Paraguay (2008). These countries, joined by Cuba and Nicaragua, created a set of regional organizations: the Bolivarian Alliance for the Peoples of Our America–Peoples’ Trade Treaty (ALBA-TCP) in 2004, the Union of South American Nations (UNASUR) in 2008, and the Community of Latin American and Caribbean States (CELAC) in 2011. These platforms were intended to increase regional trade and political integration. Their gains were met with increased aggression from Washington, which sought to undermine the process by attempting to overthrow the governments in many of the member countries and by dividing the regional blocs to suit Washington’s interests.

Brazil

Because of its size and its political relevance, Brazil was a key player in these early organizations. In 2009, Brazil joined with Russia, India, China, and South Africa to form BRICS, a new alliance with the goal to rearrange the power relations of global trade and politics.

Brazil’s role did not please the White House, which—avoiding the crudeness of a military coup—staged a successful operation, in alliance with sectors of the Brazilian elite, that used the Brazilian legislature, judiciary system, and media to overthrow the government of President Dilma Rousseff in 2016 and to cause the arrest of President Lula in 2018 (who was then leading the polls in the presidential election). Both were accused of a corruption scheme involving the Brazilian state oil company, and an investigation by Brazil’s judiciary known as Operation Car Wash ensued. The participation of both the U.S. Department of Justice and the FBI in that investigation was revealed following a massive leak of the Telegram chats of Operation Car Wash’s lead prosecutor. However, before the U.S. interference was uncovered, the removal of Lula and Dilma from politics brought the right-wing back to power in Brasília; Brazil no longer played a leading role in either the regional or the global projects that could weaken U.S. power. Brazil abandoned UNASUR and CELAC, and remains in BRICS only formally—as is also the case with India—weakening the perspective of strategic alliances of the Global South.

Turning Tide

In recent years, Latin America has experienced a new wave of progressive governments. The idea of regional integration has returned to the table. After four years without a summit meeting, CELAC reconvened in September 2021 under the leadership of Mexican President Andrés Manuel López Obrador and Argentine President Alberto Fernández. Should Gustavo Petro win the Colombian presidential election in May 2022, and Lula win his campaign for reelection to Brazil’s presidency in October 2022, for the first time in decades, the four largest economies in Latin America (Brazil, Mexico, Argentina, and Colombia) would be governed by the center-left, notably supporters of Latin American and Caribbean integration. Lula has said that if he wins the presidency, Brazil will return to CELAC and will resume an active stance in BRICS.

The Global South might be prepared to reemerge by the end of the year and create space for itself within the world order. Evidence for this is in the lack of unanimity that greeted NATO’s attempt to create the largest coalition to sanction Russia. This NATO project has aroused a backlash around the Global South. Even governments that condemn the war (such as Argentina, Brazil, India, and South Africa) do not agree with NATO’s unilateral sanction policy and prefer to support negotiations for a peaceful solution. The idea of resuming a movement of the nonaligned—inspired by the initiative launched at the conference held in Bandung, Indonesia, in 1955—has found resonance in numerous circles.

Their intention is correct. They seek to de-escalate global political tensions, which are a threat to the sovereignty of countries and tend to negatively impact the global economy. The spirit of nonconfrontation, and peace, of the Bandung Conference is urgent today.

But the Non-Aligned Movement emerged as a refusal by Third World countries to choose a side in the polarization between the United States and USSR during the Cold War. They were fighting for their sovereignty and the right to have relations with the countries of both systems, without their foreign policy being decided in Washington or Moscow.

This is not the current scenario. Only the Washington-Brussels axis (and allies) demand alignment with their so-called “rules-based international order.” Those who do not align suffer from sanctions applied against dozens of countries (devastating entire economies, such as those of Venezuela and Cuba), illegal confiscation of hundreds of billions of dollars in assets (as in the cases of Venezuela, Iran, Afghanistan, and Russia), invasions and interference resulting in genocidal wars (as in Iraq, Syria, Libya, and Afghanistan), and outside support for “color revolutions” (from Ukraine in 2014 to Brazil in 2016). The demand for alignment comes only from the West, not from China or Russia.

Humanity faces urgent challenges, such as inequality, hunger, the climate crisis, and the threat of new pandemics. To overcome them, regional alliances in the Global South must be able to institute a new multipolarity in global politics. But the usual suspects may have other plans for humanity.

Author Bio: Marco Fernandes is a researcher at Tricontinental: Institute for Social Research (a pillar of the International Peoples’ Assembly). He is a member of the No Cold War campaign and is a co-founder and co-editor of News on China (Dongsheng). He lives in Shanghai.