Since GATT (General Agreement on Tariffs & Trade) morphed into the WTO (World Trade Organization) in 1995, there has been a plethora of trade organizations emerging that are representing various regions, globally. GATT was founded in 1948 and was a compact between post WW2 industrial nations to promote trade that was sanctioned by the U.N. With that, we are experiencing an alphabet soup of trade organizations that represents over 75% of the global population, considering the graphic. Being a member state in such an agreement provides multilateral economic and political muscle in those times that support needs to be drawn from similar like-minded actors.
We can see the struggle that Canada had adopting Free Trade (1989) and then expanding that to NAFTA (North American Free Trade Agreement) in 1994. The liberalization of tariffs has made Canadian goods more attractive for importers to justify spending dollars out of their budgets on Canadian products. Yet, has membership in a trade organization lost some of its eminence. Evidently, BRICS members (Brazil, Russia, India, China, and South Africa) feel stronger united, and, with a burgeoning response to reliance on the World Bank, politically invigorated.
The new BRICS bank with authorized capital of 100 billion, and a separate contingency reserve of another 100 billion, promises to detract from Western leaders influence in domestic affairs, as we have seen in the aftermath of the situation in the Ukraine with regards to Russian President Vladimir Putin. Current sanctions will have a deleterious effect on Russian trade (a shift toward greener energy may weaken demand for Russian oil and gas,) though, in a prolonged standoff with the West, Russia can tap some reserve cash to smooth over some difficulties.
As a catalyst for its members, the new bank acts as a gateway for membership unto BRICS and thus,expand the group. Hence, members become privy to economic stability or political malfeasance from any of its members. President Putin relishes the moment as the strength of BRICS offers a ballast to the prospect of losing Ukraine to membership in NATO. The “new cold war” is fought over abbreviations, not on the ground (some Crimean’s may disagree.)
The UN Security Council is in a decades long stalemate that requires little leverage against the P5 (five permanent members) who need only to vote against proposed sanctions to veto a bill. Expansion of the P5 is another inglorious matter considering the short-shrift the UN received from the US over invading Iraq in 2003.
The new bank will provide developing members, such as India, the financial means to invest in and promote new infrastructure projects, while abstaining from political dialogue related to ideological differences; the World Bank is quite hesitant to loan funds to developing nations that rely on coal generation for their energy needs (see China & India.)
Though, China, with its economic might, hardly requires a slush fund in the event of recessionary times or a blunt cold shoulder from the World Bank. However, should domestic matters become untenable in the wake of internal dissension (up to 100,000 incidents per year of civil disobedience,) China has a strong support group to fall back on for another day. Neocolonialism appears to be the undercurrent for the motivation of BRICS. South Africa, which boasts 11 official languages and is a disparate population, faces no imminent threats within its borders, although income inequality remains a problem.
For BRICS, neocolonialism and economic pragmatism are forces that should propel this group towards greater economic stability, provide them with a counterweight against western nation-states that question their internal policies, while allowing them time to modernize their legal system and democratize.
As of 2013, the five BRICS countries represent almost 3 billion people with a combined nominal GDP of US$16.039 trillion and an estimated US$4 trillion in combined foreign reserves.
As of 2014, the BRICS nations represented 18 percent of the world economy. 1.
“World Economic Outlook”. IMF. April 2013 data. Retrieved 17 April 2013. 4.
“Amid BRICS’ rise and ‘Arab Spring’, a new global order forms”. Christian Science Monitor. 18 October 2011. Retrieved 20 October 2011. 5.yahoo.com: “BRICS to launch bank, tighten Latin America ties” 11 Jul 2014