BRICS can build a better world
It is impossible to ignore the incongruity of the economically troubled US and Europe having a monopoly on the leadership of premier development institutions the World Bank and International Monetary Fund. The annual summit in New Delhi last month of the BRICS nations - Brazil, Russia, India, China and South Africa - made that seem doubly so. Together, they comprise 40 per cent of the population of the developing world and 28 per cent of the global economy. Yet their voices can barely be heard within these two organisations. Frustrated by an outdated system that seems little interested in reform, they have understandably put in motion plans to set up their own bank to encourage trade in developing nations and fund projects.
The World Bank and IMF, like the UN, were created by the victors of the second world war with self-interest in mind. Their aims were outwardly noble - to lend to developing nations and help them rise economically. But seven decades later, the world is a much changed place. The model that persists in the unwritten agreement that the World Bank be led by an American and the IMF a European is out of sync with reality. In the interests of good governance, the leadership of such institutions should be held by the best global applicant. And with so many countries fast catching up economically and having differing viewpoints, policymaking should not be in the hands of a narrow elite.
For decades, there has been grudging agreement that these arrangements should change, to no avail. The departure in July of Robert Zoellick as World Bank chief has provided reason to make amends. But US President Barack Obama's nomination of American health expert Dr Jim Yong Kim is disappointing and shows the lack of resolve. Whatever Kim's merits, his choice shows the US is still in denial about the shift in global power. Although the bank remains the most important lender to poor countries, its loan portfolio is losing ground to the development banks of China and Brazil.
Against this backdrop, the BRICS meeting decided to form a working committee to consider the steps required to set up the bloc's rival to the World Bank. The aim, to better fund initiatives and improve access to capital for developing countries, is ambitious and not without challenges. BRICS, while being a catchy brand, is also a young grouping and its members have rivalries and at times lack common ground. Although the summit did not reach concrete decisions on any of the matters it discussed, positive signals were sent of a desire to speak with a single voice.
A multilateral development agency that offers an alternative to a system formulated in 1944 makes sense. But it should have fresh thinking and not fall into the trap of elitism. The ways of development have to change, and if the BRICS can overcome differences to make it happen, the world has a chance of becoming a better place.