GMF - The German Marshall Fund of the United States - Strengthening Transatlantic Cooperation

This essay was originally posted on GT2030.com. It can be read here in its original form.

One of the dangers on the road to a polycentric world is the emergence of parallel institutions of global governance. The planned BRICS Development Bank is the most prominent example. The problem is: a development bank of this kind already exists. It is called the World Bank. The expressed purpose of a BRICS’ alternative lender is to be an alternative lender. It couldn’t be more “in your face”.

Originally, the term BRIC was proposed by then-Goldman Sachs Chief economist Jim O’Neill in 2001 to describe the main common characteristic of Brazil, Russia, India, and China: high growth rates. Expanded by an “S” for South Africa, an analytical concept turned into a political reality: since 2009 the BRICS leaders convene regular summits. There is nothing wrong with these meetings because they allow strategic rivals like Russia and China or China and India to operate in a cooperative environment.

But as opposed to the G-7 and G-8, these summits are not mere prep meetings for the G-20; and, over time, they have added their own infrastructure. A number of think tanks like Rio de Janeiro’s BRICS Policy Center have been founded. They build scholarly networks throughout the BRICS world, analyze the meetings and help to set their agenda. They get together during parallel “think tank summits” and thus they form the institutional underbelly of an otherwise odd combination of countries.

Some aid-weary Western policymakers have seen a development bank led and entirely funded by emerging economies as a dream come true and as a sign of growing stakeholdership of the BRICS. But they misread the founders’ intentions and underestimate the implications. At a minimum the new bank will undermine the rules and norms for development that the OECD has nurtured over decades — because all of the BRICS have different standards of what constitutes aid. More realistically, what so far has been a soft institutionalization will turn into a systemic challenge to the liberal world order. The idea of globally accepted institutions will evaporate if their monopoly is challenged.

British analyst Martin Wolf has noted that “there’s no reason whatsoever to expect [the BRICS] to agree on anything substantive in the world, except that the existing dominating powers should cede some of their influence and power.” It is true: the BRICS do not agree on climate policy, trade policy, UN Security Council reform, global rebalancing, or much else.

However, as Mark Leonard observes, “post-colonial superpowers” like Brazil and India see globalization as a process that is “creating sovereignty on a scale seen never before.” A logical consequence is to want to sit at the table of power or, alternatively, to build their own table of power. That these countries do not agree on the specifics may be a temporary phenomenon.

Nothing suggests so far that the BRICS have alternative ideas about order. They don’t even seem to look for them. Some of them, China in particular but also increasingly India, have chosen to join some existing sets of international norms. But what they all crave and grow impatient about is shared leadership. The Western powers better learn fast how to do that.