A REFLECTION ON THE UPCOMING NEW DEVELOPMENT BANK
Over a month ago, the leaders of BRICS (Brazil, Russia, India, China, and South Africa) announced that a new development bank (predictably called the New Development Bank) is to be created and based in Shanghai, along with a Contingent Reserve Arrangement; both are to be led by the BRICS nations. Consequently, many have speculated as to whether the New Development Bank is meant to be a direct threat to the post-War Bretton Woods arrangement (that is the International Monetary Fund and the World Bank). Whether it is so or not, however, is not precisely the point. Rather, the upcoming establishment should be seen as an investment towards transfiguring the transnational power arrangement of international capital.
Regardless of the intent of the New Development Bank, it is unlikely that the bank will currently shift any geopolitical power away from the United States or Western Europe. The bank, however, does indeed pose a new strategy by developing nations to shift power away from Cold War winners. If this move is successful at attracting investors towards development and infrastructural projects, new economic poles may rise that create competition for both the World Bank and the IMF, which perhaps is not a negative maneuver for developing nations. Yet, given that business tends to maintain a certain status quo, this will surely upset economic leaders in both the US and the EU.
Well-aware that most developing countries accepted assistance from both the IMF and the World Bank with reluctance given the necessary restructuring needed for the loans, the New Development Bank is likely to be seen as a welcomed innovative player in the financial arena for such countries. However, given the current economic situation in all these countries, questions must be asked. For example, for what end the bank will be used?
Both the Brazilian economy and the South African economy are industrial powerhouses in their respective continent. Brazil continues to be a great manufacturing, technological, and primary economic power. Meanwhile, South Africa is home to both industry and raw resources such as diamonds and gold. However, both countries have become mired by social inequality. This is evident in both places by recent mass mobilization and working-class struggles. Though the Brazilian government was able to hold a steady World Cup, heavy-handed policing and government involvement assisted the event. Many organizers were arrested during the mobilizations leading up to the World Cup and during the games, mostly under charges of supporting terrorism. Labor unions were defeated in ways that Margaret Thatcher would have surely approved.
Furthermore, in South Africa, NUMSA (National Union of Metal Workers of South Africa) has become increasingly dissatisfied with the ANC (African National Congress). For years now, NUMSA, the biggest single trade union in South Africa, has become increasingly aggressive and is now moving on the offensive. In fact, the union has decided to found its own political party to advance socialist progress in the country.
China, on the other hand, recently witnessed a wave of workerist struggles. Tens of thousands of workers in the city of Dongguan held a strike that lasted weeks and spread to the nearby city of Jiangxi. Analysts have rooted these newfound workerist attitudes to be the result of a growing interconnectivity in China principally influenced by Internet usage, which has been able to spread radical political ideas faster than ever before. The pertinent question here is whether China can continue to maintain a firm grip on its population and whether these worker-based struggles will indeed be able to grow. If the Chinese working-class continues to make demands of foreign companies and its own government, this could very well threaten funds that would otherwise go directly to the New Development Bank.
Moreover, despite the fact that Russia has been able to become a capitalist power quite capable of rivaling the political will of the United States, recent sanctions put in place threaten to stunt Russia’s economy. Depending on Russia’s involvement in the Ukraine, the sanctions will continue to burden its people. However, given the nationalist current that runs deep in post-communist Russia and the support of authoritarian measures, it is unlikely that worker movements will actually grow there. Western attacks on Russian banking institutions, then, could instead create strong anti-western attitudes. With the NBD, Putin has aligned himself with other countries that see themselves economically mistreated by western financial institutions.
Historically, both the IMF and the World Bank were used as institutions that asserted the power of the Western world. Thus, the question that inevitably arises is: to what end will this bank be used?
It is important to remember that mass migration out of sub-Saharan Africa due to lack of economic opportunity has stressed both Europe and South Africa. Economic and social inequality has created political radicalization in both South Africa and Brazil. Meanwhile, in China we see the growth of an autonomous working-class movement. As for Russia, its stressed economy leaves it in a dangerous position for the Western powers.
Will the New Development Bank, then, be used to establish a new, post-IMF and post-World Bank order? If so, will growing social movements in developing nations continue to stomach their own governments, since they are just as neoliberal as any Western one? Needless to say, whatever comes next will shift power anyway it goes.
