DEVELOPMENT AND CREDIT FOR BUILDING A NEW GLOBAL ORDER

Di PAOLO RAIMONDI This article recapitulates and summarises recent agreements and ongoing projects intended to build a new international monetary, financial and economic order to replace the moribund Bretton Woods System. At the heart of this transition, the fi ve BRICS member-countries have set up a network of new banks, funds and fi nancial facilities to support massive new infrastructural and industrial projects and revive international development with innovative technology and philosophies for integrated, sustainable growth. The paper highlights the need for Europe not to remain outside this global process and to breakout of American control at a time when a declining US still seeks to block any perceived challenge to its preponderanceThe growth of the BRICS (Brazil–Russia–India–China–South Africa) alliance and the diffi cult but inevitable consolidation of the European Union (EU) signal the gradual transition from a unipolar to a new multipolar world order. More than seventy years after its creation, the Bretton Woods system, built around the United States of America (US) and the dollar as the sole reserve unit, has reached the end of its historical cycle. The time has come to build a new, more just and balanced economic order. The Bretton Woods institutions are ever less representative of the world’s fi nancial architecture in which emerging economies have become the main engines of development. Such change to be effective in the political domain must be carried out through new agreements and arrangements in the commercial, fi nancial and monetary sectors, especially in the economic, infrastructural and social dimensions. It would be myopic to delay such change, as it would only further tensions and unmanageable confl ict. There are two possible ways to build a functional multipolar system respecting all participants’ legitimate aspirations to national sovereignty, cooperation and universal development. If the declining US agreed, a new Bretton Woods could be convened where, together with BRICS nations, emerging economies, Europe, Japan and others, new global assets could be defi ned. These would translate into a new international governance regime, new global institutions and a new monetary system based on a basket of important currencies. The continuing refusal of the US, reiterated at the G-20 summit in Brisbane in November 2014, to review the control percentages of the International Monetary Fund (IMF) in which BRICS do not have any agency, leaves no room for hope in consensualpositive change. Instead, sabotage has been repeated annually from 2010 onwards when the reform on IMF quotas was announced. Hence, the alternative is to work step-by-step concretely and diligently to build new international structures laying the foundations for new agreements and policies of real economic and social development.THE BRICS DEVELOPMENT BANKAt the July 2014 BRICS summit held in Fortaleza, Brazil, heads of govt. of the fi ve nations formalised the creation of the New Development Bank and the establishment of the Contingent Reserve Arrangement (CRA), a specific fund of monetary reserve. Proposals made in previous summits thus matured into an operational setup that enables BRICS nations to be “less dependent on the US dollar and better equipped to withstand the blows of future turmoil in financial markets”. Speaking at the summit, Russian President Vladimir Putin summed up the strategy. The Bretton Woods institutions are ever less representative of the world’s financial architecture in which emerging economies have become the main engines of development. Change to be effective in the political domainmust be carried out through new agreements and arrangements in the commercial, financial and monetary sectors. “The international monetary system depends a lot upon the dollar and to be precise on the monetary and fi nancial policies of the US authorities. The BRICS countries want to change this” (online at http://tass.ru). He also proposed setting up a BRICS rating agency independent from the “three rating sisters” of Standard and Poor’s, Moody’s and Fitch, which were at the centre of the great American fi nancial crisis of 2006–07 and hence of the economic destabilisation of the EU and emerging nations. The Fortaleza Declaration announced (online at http://brics6-itamaraty.gov.br): “The signing of an agreement establishing the New Development Bank with the purpose of mobilising resources for infrastructure and sustainable development projects in BRICS and other emerging and developing economies. … Based on sound banking principles, the New Development Bank will strengthen the cooperation among our countries and will supplement the efforts of multilateral and regional fi nancial institutions for global development, thus contributing to our collective commitments for achieving the goal of strong, sustainable and balanced growth”. To fulfi l its purpose, the bank will support publ