Leaders smile for the cameras at the previous BRICS summit in 2013

Will a $100bn development bank make BRICS more than just an acronym?

For the cameras it's all handshakes, smiles and America-bashing, but in reality the BRICS are very different beasts.

by Rachel Savage
Last Updated: 17 Jul 2014

As the leaders of the BRICS countries (Brazil, Russia, India, China and South Africa) clasped hands and smiled for the cameras in the Brazilian city of Fortaleza yesterday, the symbolically-minded may well have noted it down as a pivotal moment in the dismantling of the US-dominated global economic order. More realistically, it’s a victory for our urge to find shorthand for absolutely everything.

The five presidents announced the creation of a new development bank, with $100bn capital made up of equal contributions from the countries, at what was the sixth BRICS summit. It will be headquartered in Shanghai and the first rotating presidency has gone to India.

The idea, clearly, is to compete with the World Bank and IMF, institutions set up at the end of World War Two as the US shaped the world order to its liking. No doubt it’ll bolster the BRICS’ global clout to be able to offer countries an alternative bailout option. But the fact they have had to go their own way rather than forcing reform of existing  bodies shows the US is, at least for the moment, still on top economically.

The dollar is still the reserve currency, the US is still the world’s largest economy and Americans are far richer per capita than any developing nations’ citizens. Meanwhile, the BRICS all have their own, very different issues.

Brazil suffered enormous protests ahead of the World Cup and people will probably take to the streets when the scale of spending on the 2016 Olympics becomes clear. Russia is riddled with corruption, weighed down by resource dependency and a shrinking population and not making any friends over Ukraine.

India’s new president Narendra Modi has a mammoth task to make his country competitive, the Chinese government is spending like there’s no tomorrow to prop up economic growth and South Africa has sky-high unemployment and inequality, coupled with protesting miners that won’t be placated. They aren’t all uniformly fast-growing either.

People will continue to use the BRICS acronym (coined by Goldman Sachs economist Jim O’Neill in 2001 - and what a marketing win that was), because humans are basically extremely lazy. But for now it is likely to remain just that - shorthand.

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