http://upload.wikimedia.org/wikipedia/commons/a/a9/BRICS_leaders_in_Brazil.jpeg

http://upload.wikimedia.org/wikipedia/commons/a/a9/BRICS_leaders_in_Brazil.jpeg

The top news from this year’s BRICS summit was the announcement of a New Development Bank. Headquartered in Shanghai, the bank will become operational in 2016 with an initial capital of US$50 billion. Its core mandate is to finance infrastructure projects in the developing world.

The bank, announced at the summit in Fortaleza, Brazil, will also have a monetary twin to provide short-term emergency loans, the Contingency Reserve Arrangement. While the bank will be open to all UN members, the reserve will lend only to the contributing BRICS countries in times of crisis.

This combination of timing, actors, and institutions is noteworthy. It was in July 1944 that the Allied nations gathered at Bretton Woods to form two of the most vital institutions of the post-war era: the International Monetary Fund and what would become the World Bank. Now, 70 years later and only a few years on from the global financial crisis, the leading developing nations of our time have joined forces to forge new institutions of international economic cooperation with mandates identical to the World Bank and the IMF.

This move is born out of a belief that the Bretton Woods twins, despite numerous governance reform initiatives over the past decade, remain set to reflect the policy preferences of their original creators. In creating complementary institutions, the BRICS will be hoping to use these alternative platforms of international economic governance and as leverage to accelerate the reform of existing arrangements.

Game-changing potential

The New Development Bank is currently the more interesting of the “Fortaleza twins”, for it is designed as a freestanding organisation that’s open to all. Yet it has not received a warm welcome in business columns. While the political symbolism of the new institution is widely acknowledged, its immediate economic utility has been challenged – why do the BRICS need a development bank of their own when infrastructure projects are already easily financed through private as well as official channels, especially through the World Bank?

This is a narrow criticism. In the long run, the New Development Bank has the potential to become a game-changer in development financing. In fact, if its evolution even remotely parallels that of the World Bank, it might end up having a formative impact on economic policy-making and overall development strategy in the Global South.

To begin, while there is no shortage of national and regional development banks as well as private financiers of infrastructure projects, there is still a massive gap in development finance, estimated to be as high as US$1 trillion per year. Many developing countries encountered significant financing problems during the global crisis of the late 2000s. This shortfall necessitated a surge in World Bank commitments, from an annual US$25 billion in 2007 to about US$60 billion in 2010.

But commitments declined just as swiftly over the past few years, and as of 2013 stood at about $30 billion. Given these figures, the New Development Bank’s readily available $10 billion in paid-up capital and the extra $40 billion available upon request are not exactly pocket money for development financing.

Yet just as the World Bank was never simply a money lender, so too will the new bank represent far more than a mere pool of funds. The existing geostrategic and policy inclinations of its founding stakeholders imply a bigger role to play for the institution. In the process, it is bound to offer a formidable challenge to the World Bank’s financial prominence and so influence policy in the developing world.

Client-side

The new bank has been long in the making. It is the culmination of nearly two decades of intense South-South cooperation and engagement. In recent years especially, the BRICS and other emerging nations have become donors and investors in both their immediate regions and in less developed areas of the world – with Chinese and Brazilian involvement in sub-Saharan Africa and parts of Latin America representing the prime examples.

They have made an effort to establish more equal relationships with their lower-income developing peers and emphasised an attractive narrative of partnership, non-intervention and knowledge transfer, instead of smug, superior Western notions of top-down aid and restrictive conditionality. To the extent that it could keep its rates competitive, the New Development Bank is unlikely to suffer from a dearth of clients from among its fellow developing nations.

Paradoxically, BRICS and other large middle-income countries still remain the most valuable clients of the World Bank. Since the financial crisis, India has been the largest borrower of the World Bank, and has been closely followed by Brazil, China and a few other near-BRICS such as Indonesia, Turkey and Mexico. But, once the new bank fully kicks off, it is possible the World Bank will lose a lot more business from this traditionally lucrative market of large middle-income borrowers who now have a serious alternative.

Political implications

A reduced loan portfolio will ultimately translate into declining policy influence for the World Bank, which has held near-monopoly of development wisdom over the past 70 years. Perhaps in recognition of their waning power, there has already been a slight but steady decline in World Bank loans that emphasise policy and institutional reforms.

Also, a larger portion of the Bank’s resources have been allocated to conventional development projects, such as environment and natural resource management, private sector development, human development, and social protection. These are precisely the types of projects the Bank will encounter fierce competition from the new BRICS-led bank.

Knowledge and power

Consider also that the World Bank has labelled itself as a “knowledge bank” in recent years. Employing thousands of policy specialists, it doubles as one of the biggest think tanks in the world. Yet if it loses considerable financial ground to initiatives such as the New Development Bank, this threatens a decline in the power it has through knowledge.

Crucially, none of the BRICS adhere to the Bank’s standard policy prescriptions, nor do they advocate a different common strategy either. Brazil’s social democratic neo-developmentalism is quite different from China’s state neoliberalism, which in turn differs from established policy paths in others in the group. The only common denominator is a substantially broader role given to the state. But beyond this there is much flexibility and experimentation and little in the way of templates and blueprints like there is with the Western institutions. This policy diversity itself dismisses any idea of superiority of knowledge and expertise.

None of this suggests that the World Bank, as the dominant, Northern-led development agency, is now on an ineluctable path of decline. Cumbersome as they may appear, large organisations often accumulate considerable resilience and adaptive capacity over generations. Yet the World Bank does have a serious contender in the New Development Bank.

While it may not overtake the World Bank in financial prowess and policy influence any time soon, at a minimum it should be able to exert significant pressure over the World Bank to respond more sincerely and effectively to the new balance of power in the global economy.

Ali Guven is a Lecturer in International Relations and International Political Economy at Birkbeck, University of London.

This article was originally published in The Conversation

This post was written by Katie Welsford and Emma Pearson

It was originally published on http://www.huffingtonpost.co.uk/katie-welsford/muslim-brotherhood_b_5544238.html

Since their removal from power this time last year, the Muslim Brotherhood has constantly been the focus of Egyptian headlines. But when, in early April, Downing Street ordered an inquiry into the group’s ‘philosophy, origins and activities’, it entered the UK domestic political scene too. With the date now passed for submitting evidence, we now wait to hear the results of the review from Cameron himself – expected before July recess.

Emerging on the heels of the Egyptian regime’s branding of the group as a ‘terrorist’ organisation following the Mansoura bomb (an attack actually claimed by Sinai-based militant group Ansar Bayt al-Maqdis), the review has sparked considerable concern amongst politicians, academics and activists in the UK. Central to this is not just the fact that the British ambassador to Saudi Arabia – Sir John Jenkins – is authoring the review (worrying given Saudi Arabia’s virulent opposition to the Brotherhood), but that, with Cameron stating that the aim of the review is to determine “what its beliefs are in terms of both extremism and violent extremism”, it is illustrative of a trend towards the blanket condemnation of Islamist groups despite their diversity.

Condemned by the likes of al-Zawahiri for taking Muslims away from the path of jihad and towards the path of politics, the Muslim Brotherhood is far from being part and parcel with the likes of al-Qaeda. Whilst it is true that many radical jihadists began life in the group, and one of its thinkers – Sayyid Qutb – provided the basis for the cult of violent jihad, the Brotherhood has long rejected violence and emphasised its commitment to the democratic process. For decades it has opted for involvement in student unions, trade unions and syndicates, participating in elections in coalitions or as independents, whilst other Islamist groups took up arms against the state. Even as it was clamped down on by authorities, it took every opportunity to engage politically rather than violently, attracting young, educated recruits who were frustrated with the social and political stagnation within the country.

It is undoubtedly true that, as Cameron said, the more we know about the nature of the group, the better we will be able to form policy about it – and indeed the Brotherhood is cooperating fully with the review. But an overt emphasis on extremism in the Brotherhood (where it does not exist) is questionable, detracting attention from the myriad of legitimate concerns stemming from Egypt today. Prominent among these is the deteriorating human rights situation in the country – over which the UK government has remained relatively silent.

With over 3,000 killed since last July, thousands of Brotherhood members are facing lengthy sentences whilst hundreds of others have been condemned to death by hanging, following farcical mass trials. And it is not just the Brotherhood which is being targeted – the military regime is carefully working to suppress all forms of opposition. “The situation is turning into a witch hunt,” says Dr Barbara Zollner, lecturer and Brotherhood expert at Birkbeck College, London. As of November 2013, freedom of assembly has been restricted, with prominent activists such as Alaa Abdel Fattah, Ahmed Maher, Ahmed Douma and Mohamed Adel imprisoned for supposedly violating the new law. Freedom of speech has also been curbed – with several TV stations shut down, journalists arrested and detained, individuals seized from the streets for holding banners with anti-military slogans, and academics arrested for tweeting their opinions.

Remaining silent on this crackdown serves simply to condone al-Sisi’s autocratic behaviour, sending a message that democracy will never work and feeding straight into the rhetoric of extremist groups such as al-Qaeda. “Just rolling in with the troops like that…it leaves the youth disillusioned, convinced that democracy doesn’t work and that violence is the only answer,” says Dr Zollner. At a high level meeting discussing the Syrian crisis last week, a member of the group affiliated with the Syrian opposition commented on this very issue, stressing his fears that events in Egypt had persuaded ordinary Syrians that negotiations and politics could never solve the crisis, pushing them towards gun-wielding militants. In an unstable region where radicalisation is all too possible – and in many places, already all too real – we need to work to stop the word ‘democracy’ falling on deaf ears.

With the moderate ideological makeup of today’s Muslim Brotherhood agreed on by academics and experts throughout the world, we should be very wary of feeding the false narrative championed by Egyptian and Saudi elites. As ISIS marches across Iraq with breath-taking speed, al Shebaab orchestrates attacks in Kenya and Boko Haram wages war on the Nigerian state, it is crucial that we learn to acknowledge the pluralism within the Islamist scene, and recognise those groups with whom we can ‘do business’. Treating Islamism as a homogenous category and remaining silent about the Egyptian government’s increasingly autocratic tendencies will have dangerous side effects. Not only do we betray our own democratic values, but we play straight into the hands of radical elements, quashing those who provide a bulwark against them.

 

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