BRICS Bank Is First Step towards New International Economic Order [NIEO]
BRICS, 21 Jul 2014
When NIEO was conceptualized in 1973 in Algiers NAM conference and Action Plan on the establishment of NIEO in the sixth session of UN General Assembly in April 1974 was adopted followed by adoption of Charter of economic rights and duties of states in December 1974 by UN General Assembly, the goals of equitable behavior in financial fields appeared a distant dreams. It was never thought during that phase of US domination that in years to come BRICS like institutional arrangements will emerge and a day will dawn when BRICS bank will take shape. NIEO had many relevant demands as to modify the Bretton woods system, to reduce the debt burdens on developing and LDC countries and to distribute the global resources in equitable terms , unfortunately no serious steps were taken by advanced countries of North.
Things started to change with the emergence of emerging economies. China is now an important country for USA in financial terms. India has big market potential with huge middle class which holds purchasing power equal to European people. Russia is a country with potential to control the EU affairs in its sphere of influence. Brazil is instrumental in promoting the socialist model with influence on adjoining countries. South Africa has vast natural resources with impact upon the whole continent.
Their strength crystallized in the form of BRICS though US knowingly remained oblivious of changing international economic order, consequently IMF, World Bank etc. continued to follow old US dictated economic policies. Now all is set to change. With the establishment of BRICS bank, the first substantial effort has been undertaken.
Developing and LDC countries have lost their growth due to asymmetric global economic order. They have lagged due to technology deficiency, exploitation of their resources by developed countries and ever increasing debt burdens .They have fallen under dependency. US allowed it to happen albeit it was leader in deciding the economic fate of these countries. It brought Washington consensus like concepts which ultimately adversely impacted LDC nations. The protection granted to LDC is of no relevance as they are not even in position to produce the basic commodities with potential to be sold in the global market.
Emergence of BRICS is noteworthy in this respect .It will act as counter balance to western world. It has also succeeded in introducing the first real and relevant institutional arrangement in dealing the problems associated with the developing and LDC countries.
Still a lot is to be done and there are many problems which need immediate attention in order to save the world from collapsing into financial chaos.The developed countries need to pay attention to these issues otherwise the financial disorder and financial cold war may ensue.
The major points for immediate concerns are:
To wipe out all the debts on developing and LDC countries which have been accumulated upon due to exploitative behavior of global financial institutions.
In this respect Daudi N. Mwakawago of Tanzania, Chairman of the Group of 77 for 1997 gave a lecture on External Debt Crisis and Development in UNO in 1997 which has contemporary relevance . He said ‘external debts continue to have an adverse impact on the economies of developing nations. The development efforts of developing countries, in particular, the provision of essential services, including health, education and housing are severely hampered by the imperative need to set aside a substantial portion of their national budgets for servicing of external debt, which is in the magnitude of more than 30% and more than 20% of their export earnings. Since mid-1980s, a series of international debt strategies and initiatives had been launched: Paris Club rescheduling agreements, Toronto terms of 1988, London terms of 1991, Naples terms of 1994 and Highly Indebted Poor Countries (HIPC) Initiative of 1996. Apparently, all of these initiatives have not gone far enough in alleviating the serious debt burden and debt servicing problems of developing countries clearly, the international community has not yet succeeded in putting in place an effective international debt strategy and action. What is needed is an effective, equitable, development-oriented and durable solution to the external debt and debt servicing problems of developing countries,” This is core issue of NIEO and global institutions need to nullify the debts of these nations. Developed countries need to understand that developing countries will part with them if reforms of real nature are not effected by them. BRICS bank is just beginning.
Voting rights issue in the world financial institution needs to be resolved immediately. Non discriminatory approach is need of the hour.
Aid with the strings like concepts need to be abrogated by the World bank etc. while providing aid to developing countries. The structural reforms according to Washington consensus may always not bring immediate benefits to the vast population which is under poverty and faced to survival issue. Hence state intervention is mandatory.
Developing countries must have more power in decision making in world financial institutions. The policy making is largely influenced by the developed countries. This requires a serious change.
Technology transfer to developing countries must be made and speeded up by developed countries without any condition. If they are advanced in technology then developing and LDC countries provide them resources and consumers which help to grow advanced country towards affluence. Hence both are complementary.
As thought earlier, the developed countries must give in aid to poor countries at least 0.7% of their GNP without any string.
Exploitative and financial and natural resource siphoning off strategy of MNCs should be contained.
World is changing. US domination will decline in financial sphere if it does not change its strategy of exploiting and suppressing the poor countries in the name of globalization, free trade and proclaiming irrelevance of demands of developing and Least Developed Countries. Strength of NIEO has been expressed and is likely to continue.
Dr. Vivek Kumar Srivastava is presently Assistant Professor, CSJM Kanpur University[affiliated college],Vice Chairman CSSP, email: email@example.com
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