BRICS Development Bank to be Capitalized with 100 Billion
At the sidelines of the G20 in St. Petersburg, the BRICS member countries decided to capitalize the BRICS Development Bank with USD 100 billion.
Christof Lehmann (nsnbc) , - The reserves are aimed at financing joint development ventures and to balance the dominance of the World Bank and the IMF. The decision was made against the backdrop of US threats of military strikes against Syria, in violation of international law. China´s President Xi Jinping warned against the potential negative economic consequences of unilateral US military action.
The decision is an additional step towards the decline of the Bretton Woods institutions, which have been riddled by corruption scandals and which are becoming increasingly discredited for debt enslavement rather than the development of developing nations. During the opening of the G20 Summit, Russia´s President, Vladimir Putin, said that the BRICS Forex reserve pool will be capitalized with 100 billion USD.
According to a BRICS press release on Thursday, Brazil, India and Russia will be contributing USD 18 billion to the reserve pool. China will contribute USD 41 billion and South Africa will contribute USD 5 billion. Russia´s Finance Minister, Sergei Storchak said earlier this week, that it may take a year before the bank will assume its work, pointing out that there are many, and complicated issues which have to be discussed and resolved.
The decision to establish the BRICS Development Bank was made in June 2013, during the BRICS Summit in Durban, South Africa. Earlier this year, the Russian Finance Minister said, that the bank would be up and running by 2015.
Russia´s Foreign Minister, Sergei Lavrov, said that the bank will “help avoid the negative impacts that fluctuations in currency markets have on our economies“. The establishment of the bank and the reserve pools may also help their drive towards reform votes and quotas in the International Monetary Fund, IMF. Currently, the USA is dominating the IMF, having the highest quota of any country, 17.08 %, which allows the USA to veto any decision as all decisions require 85 % of all votes before they can be adopted.
The BRICS countries represent a rising and considerable force in the worlds finances, with trade within the group amounting to 16.8 % of global commerce at USD 6.1 billion. During the BRICS Summit in Durban, in June, South Africa´s President, Jacob Zuma, pointed out that the strength of the BRICS countries is amplified by the fact that the members combined represent 43 % of the world´s population.
An additional factor that amplifies the financial, economic and political significance of the BRICS is, that China also is a primary member of ASEAN, which is about to open the ASEAN inner market in less than two years. Many analysts agree that one of the motivations behind the establishment of the BRICS Bank is the fact that a powerful cartel or super-entity has taken control over the Bretton Woods institutions, which are the World Bank, the IMF and the International Bank For Development to such a degree, that it has become all but impossible to address rampant corruption.
Another motivating factor cited by many analysts is, that Russia and China especially, are reasserting a multi-polar world, after the USA, subsequent to the end of the so-called “Cold War” has gone on a rampant spree of aggressions, spreading low-intensity conflicts in an attempted strategic encirclement of Russia and China. The decision to finance the BRICS Development Bank with USD 100 billion was also made against the backdrop of US threats of an illegal, unilateral military strike against Syria, in circumvention of the UN Security Council. Today, China´s President, Xi Junping, warned against the potential, negative, global economic consequences a unilateral military action by the USA against Syria could have.