ABSTRACT
The BRICS (Brazil, Russia, India, China and South Africa) can be considered as winners of globalization. Over the past decades, they have benefited from faster economic growth, increased their participation in world trade and attracted more foreign direct investment. Most also went beyond economic strategies to consolidate their global status, engaged in political initiatives and reached out to new geographical areas via South-South partnerships.1,2
Since 2008, Northern OECD countries have been heavily affected by the international financial crisis. Financial stability that used to be ensured by the International Monetary Fund (IMF) and the World Bank (WB) is now in question, US legitimacy has suffered and aid from Northern donors has been considerably reduced. Rising powers have stepped up with their own financial initiative and their own models of assistance. In 2015, following an Indian proposition, the BRICS launched a new multilateral financial institution, which is mainly led by China.3 It is composed of the BRICS New Development Bank (BDB) and the Contingent Reserve Arrangement (CRA). Since its inception the BDB has raised questions regarding its impacts on international financial governance. Is this new financial structure a threat to the Bretton Woods institutions or a genuine tool of development assistance from rising powers? Does it represent an alternative to the Washington Consensus? Is China really pulling all the strings? Above all, is the establishment of the BRICS New Development Bank a tool for China to propose an alternative to the Western hegemony? Could it serve China’s ambition to break the monopoly of the Bretton Woods institutions, and to diffuse the so-called ‘Chinese Model’ in Africa in order to consolidate its status as a rising power? Against this backdrop this chapter analyses if the BDB represents 1) a shift
in international governance and financial structure and 2) if it serves China’s national interests. Furthermore, this chapter wishes to accomplish three other objectives: a theoretical, a historical, and an empirical one. The theoretical objective is to apply Robert Cox’s critical theories to capture evolutions and shifts of the international structure; the historical objective is to demonstrate rising powers’ main criticisms about the current international financial
institutions and the inherent norms and ideas imposed by the traditional powers; and the empirical objective is to verify whether the BDB represents a financial and development alternative in favour of the ‘South’.4 This chapter will also address some issues regarding the rise of emerging economies, predominantly China, and their increased presence in Africa. This analysis will use a qualitative methodology using document analysis
techniques. It is based on primary sources, such as specific BRICS summits documents and official publications of the BDB and the CRA, as well as some secondary sources. The most important element that will guide this chapter is the logic behind the construction of an international historical bloc as understood by Robert Cox’s neo-Gramscian theory. We will therefore be paying close attention to the manifestation of material capabilities, institutions and ideas in our source documents to determine whether the BRICS are suggesting an alternative in terms of financial and global governance, and if that alternative has the potential to spread new norms and principles for development aid. The chapter is divided into three sections. The first section will define some
theoretical concepts, such as the notions of ‘rising powers’, ‘South-South cooperation’ (SSC) and ‘cultural hegemony’. The second section will explain the functioning and the raison d’être of the Bretton Woods institutions (IMF, World Bank). We will present the main criticisms they face and the main reforms demanded from rising countries, introducing the idea of a ‘Chinese Model’. The third section will provide an empirical analysis of the creation of the BDB to understand the strategic objectives of this new institution and to analyse the new elements it brings forward that could alter global governance order. Finally, we will evaluate some of our assumptions regarding the strategic purposes of the creation of the BDB and Chinese contestation of Western hegemony.
