Citizens Electoral Council of Australia

Media Release Wednesday, 23 July 2014

Craig Isherwood‚ National Secretary
PO Box 376‚ COBURG‚ VIC 3058
Phone: 1800 636 432
Email: cec@cecaust.com.au
Website: http://cec.cecaust.com.au

BRICS nations launch New Development Bank, strike blow at London and Wall Street

Is the timing of the MH17 catastrophe in Ukraine, and the way the U.S., Britain and Australia immediately seized on it to escalate their strategy of tension against Russia and Vladimir Putin, connected to the fact that the BRICS power bloc, which includes Russia, just hours earlier struck a killer blow to London and Wall Street’s financial stranglehold over the world, by announcing the establishment of alternatives to the IMF and World Bank, and trade deals that will exclude the U.S. dollar?

The heads of state of the BRICS nations—Brazil, Russia, India, China and South Africa—announced the founding of the New Development Bank (NDB) at the conclusion of their 14-16 July summit in Fortaleza, Brazil.

The 72-point Fortaleza Declaration issued at the summit proclaims, “We call for an international financial architecture that is more conducive to overcoming development challenges.”

The purpose of the NDB, the Declaration states, is to mobilise resources for infrastructure and other development projects in BRICS and other developing economies. It will be headquartered in Shanghai, China.

The Fortaleza Declaration also announced the establishment of the BRICS Contingent Reserve Arrangement (CRA), with an initial size of $100 billion, to “help countries forestall short-term liquidity pressures.”

Special guest at the BRICS forum, Argentine President Cristina Fernández de Kirchner backed up criticism of the current IMF-based system with details of Argentina’s fight against the Vulture Funds, announcing, “it is with great pleasure that we salute this decision of the BRICS to create a development bank, focused on trade, infrastructure and also—why not?—on bringing order to international finances which are absolutely out of control. …

“We, sirs, are posing then, a new global financial order, one that is not just fair and equitable, but indispensable. … Argentina is not going to default on its debt. Argentina pays, and what we demand from the multilateral organisations, what we demand from the world is, precisely, the creation of a new global financial order which will permit sustainable and global economic growth.”

Russian President Vladimir Putin told the summit, “We are united by a desire to act from unified positions in all issues of global development and the formation of the global financial and economic architecture.” The plans we set for ourselves a year ago, of creating a New Development Bank and a Currency Reserve Pool, “have come to fruition.… The bank and the currency pool lay the foundation for coordinating a macroeconomic policy between our nations. I am confident that closer economic and financial cooperation between BRICS countries will allow us to implement truly large-scale joint programmes with the aim of securely developing our nations.”

India’s new Prime Minister Narendra Modi told the gathering that, “The world is facing a high level of economic and political turmoil. Conflict and instability is growing in many key regions.… Restoring a climate of peace and stability is an urgent global need. This calls for newer avenues of cooperation and collaboration.

“I believe BRICS can answer this call. This I do because of the uniqueness of BRICS as an international institution. For the first time it brings together a group of nations on the parameter of ‘future potential’; rather than existing prosperity or shared identities. The very idea of BRICS is thus forward-looking. I therefore believe it can add fresh perspectives and mechanisms, to existing international institutions…”

Following the summit, Chinese President Xi Jinping visited Argentina, telling an 18 July press conference that the two governments will collaborate for the “reform of the international economic and financial system”, defend the rights of developing countries, and push for a more “equitable and reasonable” world order. President Fernández added that, “A world in which some dominate others, and exist at the expense of others, isn’t going to be possible. Cooperation and ‘win-to-win,’ in which we all win, must be the centrepiece of a new global model, and in this we are absolutely in agreement with the People’s Republic of China.”

The announcement of the NDB follows China’s rapid-fire organising for an Asia Infrastructure Investment Bank (AIIB) in order to fund its proposed Silk Road Economic Belt. As part of this perspective many nations are also discussing the possibility of conducting trade in direct currency exchange, rather than relying on the intermediary of the U.S. dollar.

In London’s 19 July Daily Telegraph, economic columnist Liam Halligan pointed out that the economic strength of the rising BRICS economies is starting to match that of the once-dominant (but now decaying) trans-Atlantic economies: “It’s long been obvious the BRICs [sic] are coming,” Halligan wrote. “The total annual output of these four economies has spiralled in recent years, to an astonishing $29.6 trillion (£17.3 trillion) last year on a PPP-basis adjusted for living costs. That’s within spitting distance of the $34.2 trillion generated by the U.S. and European Union combined.”

It is high time that Australia join the concert of nations pushing for an alternative to the current bankrupt global financial system, by moving to jettison the G20 agenda for bail-in as a means of saving that dying system, and push for a Glass-Steagall separation of commercial from investment banks. As host of the November G20, which will include all BRICS nations, plus many more in support of their agenda, Australia’s support could be instrumental in shifting the world to a more just economic system.

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