Yellow BRIC road



Among the more poorly thought out foreign policy initiatives of the Indian government, one of the mitigated disasters has been the proposed BRICS bank. The New Delhi foreign policy establishment has taken to blaming the Indian finance ministry for the idea, but the external affairs ministry had to have gone along with the idea.

What’s wrong with the BRICS bank? Answer: if it is to become large enough to serve a useful purpose, it will become a means by which India subsidizes the soft power of China.

Development banks have their uses, but it is important to realize they are largely extensions of the international economic policies of great powers. The World Bank and the IMF reflect the influence of the US and the European Union. The Asian Development Bank has traditionally been part of Japan’s soft power.

The next country in line for developing such an institution for its own power and glory should logically be China. So far though, Beijing has preferred to simply dole out loans in a bilateral fashion. But the BRICS banks may be its first move into the development bank space.

Any BRICS bank, if it follows the multilateral financial institution norm, will apportion votes on its board according to the amount of money they give to its capital. China, wealthier than all the other BRICS countries combined, would inevitably be able to take control of the board.

The messy solution to keeping Beijing at bay has been to devise a capital structure by which each of the BRICS countries contributes an equal amount of money. But this will limit the bank to the contribution capacity of South Africa, the poorest BRICS member. Far from being a rival to the World Bank, as some third world types have proposed, the BRICS bank will be destined to be a runt of a development bank.

It is not yet clear as to why India first came up with the idea — or why it has since begun going slow on the bank for fear of paying for an extension of Sinic influence with Indian funds.

One theory is that the Indian finance ministry, fretting at the fact India will soon be ineligible for World Bank loans because it is on the verge of being declared a middle-income state, jumped at the idea of another development bank in the game. And one where India would have a decisive say in the rules.

If so, it was short-sighted move. But the BRICS is here to stay, though it is not clear if it will ever be more than a shallow organisation waiting for the proper moment of history to become something more. Or, at the very least, there is sufficient political trust between the major members — seriously lacking right now — to have them agree on a real agenda.

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  • Vox Populi

    Inept foreign policy as well as economic policy. Outside of call rooms and BPOs there is much to show for our illiteracy and cramming.

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    Babu Khan Reply:

    Shut up hey ****

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  • s subramanyan

    We
    should strive to get the headquarters of the Brics Bank to India. Mumbai could
    be an ideal candidate. We have here one of the globally acclaimed central bank
    which had given us several experts in development banking functions too. Let us
    proudly tell the global nations of our stellar
    achievement viz. we score over China, we have a parliamentary democracy,
    conducted periodical elections in the
    last 60 years not with a small population,
    but with huge one covering different religions and communities and classes;
    our experienced institutions like the Election Commission, Lok Sabha and Rajya
    Sabha can help African nations to imbibe truly effective democratic processes
    and institutions like conducting fair and free elections and operate ; we have far
    excelled even Britain which claims to have the mother of parliament. Recall
    what Thomas Pakenham wrote in his monumental work of 1992 the Scramble for Africa: “…Britain launched a crash programme in nation-building. Constitutions
    were borrowed from elsewhere, hammered out overnight, parliaments were thrown
    up like theatre-props(designed to the westminster model including the Speaker’s wig), elections held, prime ministers lectured
    on the intricacies of British democracy.” We had under difficult and widely differing conditions
    in every facet, religion,caste and class etc -such as those obtaining in many
    African nations, conducted fair and free elections and built
    our own parliament with two houses and legislative assemblies in our states
    an experience which is nearer African environment. Lastly, our PM has had vast experience
    in this field. He is eminently qualified to pursue and achieve this goal of
    getting Brics bank to India and thus hep us serve Bric nations.

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  • vip- mop mop sweep sweeps

    I am just assuming if it sfact on foreigners then citizens of INDIA should thank Foreigners can at end of day can think, All you have been doing over decades afeter the independence in SOUTH EAST CONTINENT is bully bicker, act lazy and act nothing but fight and mud sling oneach other. Most of the politicians have failed in performing or delivering on right moral duties to serve citizens. Corruption, lack of vision how to run show, align priorties how to mange right population control and take robust moves to educate warn and alert people on their obligations towards the state and force feed in their conditioned braions by Babas that rights come with full responsibilty under citizens charter. Takers kahin ke and all in the name of Bhagwan by divering foolish ignorant mans attentions from all the right tasks.

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  • KP

    As usual,a very interesting view on BRICS bank by Mr.Pramit.The Soft power trumpcard could prove to be a game changer for both India and china

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  • Reader

    What a horrible, unsubstantiated piece of opinion. The argument is so shallow.

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  • balaji

    india should go forward more and more in all financial sectors of world like world bank/bricks banks , as it is unavoidable for progress/devlopment of country/world in future world …..

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