The Brics and mortar of the new world order

On July 9, the Brics economies – Brazil, Russia, India, China, South Africa – launch their own development bank, and if you believe the hype, it is the beginning of the end of the world as we know it. The move is supposed to signal the imminent dismantling of the western-dominated financial system, the International Monetary Fund and the World Bank.

Symbolically, yes. It demonstrates deadly serious intent towards institution-building just six years after four of the five Brics (South Africa was not a founding member) held their first summit. Together, the Brics account for roughly 25 per cent of global GDP and 40 per cent of the world’s population but just 11 per cent of the votes in the IMF. It makes sense to refashion the world economic order – if that is what they ultimately come to do.

Will they? There’s economics and then there’s politics. Consider the New Development Bank’s (NDB Brics) silence on a matter that should theoretically be tailor-made for its launch week as an alternative, non-western lender of last resort: Greece. The long-running drama over the Greek people’s growing penury and suffering and the enormous debt their country owes international creditors, came somewhat to a head 72 hours before today’s NDB Brics launch in the Russian city of Ufa. The Greek referendum result rejected the international creditors’ terms for debt-restructuring and continued financial assistance. Greece’s far-left Syriza government has repeatedly indicated it is in favour of trying something that is a little less like the traditional economic nostrums proffered by the western-dominated creditors. This is to say the so-called conditionalities imposed on borrower countries, which focus on trade liberalisation, domestic austerity and the privatisation of nationalised industries.

Yet all through this week, while Greek desperation mounted, the Brics finance ministers sat in Moscow at inaugural meetings of their new bank and said nothing ... about Greece.

Other than Russia’s on-off promises earlier this year of “economic cooperation” with Athens and its vague, unauthorised commitment about inviting Greece to join NDB Brics, the club has remained silent about throwing a lifeline to the economic shipwreck in the Aegean Sea. The reasons make good economic and political sense. They are also why the Brics can’t – and won’t – substantially challenge the old world economic order any time soon.

First, a development bank will only ever be as good as the loans it gives. Its credit rating will depend on the soundness of the projects it supports and Greece’s situation – debt exceeding 175 per cent of GDP and no real sustainable plan to grow again – would make it a parlous loan for NDB Brics even if it had already been properly up and running.

Second, and more important, the emerging economies’ do-it-yourself job on international economic architecture does not really seem preset to a developing-world-versus-the-West dynamic. The symbolic alternative instruments of power are undoubtedly being put in place, but they are firmly based on national interests, not some brave idealism that enshrines glorious universal principles of growth and development.

Except for Russia, which is bitter about the sanctions imposed after its Ukrainian incursion and itching to take on – lunges, sideswipes, the lot – the European Union, the Brics don’t really want confrontation with the West. Brazil, mired in stagflation (low growth and inflation), is investing hope in trade deals and has stepped up efforts to negotiate a big one with the EU. India, right now, just wants to get along and get on. South Africa, whose economy is also in trouble, has no particular reason to pick fights with the EU, its biggest investor, or indeed with the US.

Beijing’s own line illustrates most of the Brics’ no-confrontation position perfectly. It may occasionally talk tough about US hegemony and the need to empower the developing world in a multipolar, egalitarian new order, but it remains aware of American centrality and, in economic terms, of the EU, which is China’s largest trading partner.

Economist Joseph Stiglitz, a cheerleader for the new Brics bank, has urged China to use its $3 trillion foreign exchange reserves to better “social” purpose than buying US Treasury bills because “(that’s) like putting meat in a refrigerator and then pulling out the plug ... the real value of the money put in US Treasury bills is declining”. But there’s little sign the Chinese are driven by extravagant notions they can save the world. Pragmatic in the present and ambitious about the future, they are trying to throw multiple criss-crossing girdles around the globe to tighten their hold and heighten their importance but these fit into a long-term, big bold vision not a series of scrappy exchanges with the West in the short-term.

The Shanghai-headquartered new Brics bank and the Asia Infrastructure Investment Bank (AIIB) launched in Beijing just days ago, are part of this. As are the other Chinese initiatives – One Belt One Road, the New Silk Road and the Maritime Silk Road. But they are not a sign of spoiling for a fight with the West right now. If anything, they may cause problems within Brics itself as the New Silk Road is meant to snake through Russia’s traditional sphere of influence.

Wisely then, China has few illusions about the ricketiness of any platform that’s propped up by a fiercely competitive developing-world axis. Rickety, of course, because the Brics have little in common other than the acronym they were given because their economies were all growing strongly a decade ago. To sort out a development bank’s priorities requires more than a shared sense of ill-usage.

Perhaps in time the new Brics bank will become an international lender of high standing, graciously doling out money at peppercorn rates to countries that need it most. Perhaps, together with the AIIB, it will finance – without strings and lectures – the creation of a kinder, gentler world, something the IMF and World Bank have not managed in the 71 years since they were founded in the New Hampshire town of Bretton Woods. Maybe. But the smart money isn’t betting on it.

rroshanlall@thenational.ae

On Twitter: @rashmeerl

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Three ways to limit your social media use

Clinical psychologist, Dr Saliha Afridi at The Lighthouse Arabia suggests three easy things you can do every day to cut back on the time you spend online.

1. Put the social media app in a folder on the second or third screen of your phone so it has to remain a conscious decision to open, rather than something your fingers gravitate towards without consideration.

2. Schedule a time to use social media instead of consistently throughout the day. I recommend setting aside certain times of the day or week when you upload pictures or share information.

3. Take a mental snapshot rather than a photo on your phone. Instead of sharing it with your social world, try to absorb the moment, connect with your feeling, experience the moment with all five of your senses. You will have a memory of that moment more vividly and for far longer than if you take a picture of it.

Key facilities

Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
Premier League-standard football pitch
400m Olympic running track
NBA-spec basketball court with auditorium
600-seat auditorium
Spaces for historical and cultural exploration
An elevated football field that doubles as a helipad
Specialist robotics and science laboratories
AR and VR-enabled learning centres
Disruption Lab and Research Centre for developing entrepreneurial skills

Tonight's Chat on The National

Tonight's Chat is a series of online conversations on The National. The series features a diverse range of celebrities, politicians and business leaders from around the Arab world.

Tonight’s Chat host Ricardo Karam is a renowned author and broadcaster who has previously interviewed Bill Gates, Carlos Ghosn, Andre Agassi and the late Zaha Hadid, among others.

Intellectually curious and thought-provoking, Tonight’s Chat moves the conversation forward.

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While you're here

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Name: Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

Other workplace saving schemes

The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.

2025 Fifa Club World Cup groups

Group A: Palmeiras, Porto, Al Ahly, Inter Miami.

Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.

Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.

Group D: Flamengo, ES Tunis, Chelsea, Leon.

Group E: River Plate, Urawa, Monterrey, Inter Milan.

Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.

Group G: Manchester City, Wydad, Al Ain, Juventus.

Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.

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The alternatives

• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.

• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.

• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.

• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.

• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.

Living in...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.

The specs

Engine: 2.0-litre 4-cylinder turbo

Power: 240hp at 5,500rpm

Torque: 390Nm at 3,000rpm

Transmission: eight-speed auto

Price: from Dh122,745

On sale: now

Pharaoh's curse

British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.

Jigra

Director: Vasan Bala

Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh

Rated: 3.5/5

MATCH INFO

Scotland 59 (Tries: Hastings (2), G Horne (3), Turner, Seymour, Barclay, Kinghorn, McInally; Cons: Hastings 8)

Russia 0

The specs: 2018 Audi RS5

Price, base: Dh359,200

Engine: 2.9L twin-turbo V6

Transmission: Eight-speed automatic

Power: 450hp at 5,700rpm

Torque: 600Nm at 1,900rpm

Fuel economy, combined: 8.7L / 100km

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UAE tour of the Netherlands

UAE squad: Rohan Mustafa (captain), Shaiman Anwar, Ghulam Shabber, Mohammed Qasim, Rameez Shahzad, Mohammed Usman, Adnan Mufti, Chirag Suri, Ahmed Raza, Imran Haider, Mohammed Naveed, Amjad Javed, Zahoor Khan, Qadeer Ahmed
Fixtures:
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Wednesday, 2nd 50-over match
Thursday, 3rd 50-over match

The specs

Engine: 4.0-litre flat-six

Power: 510hp at 9,000rpm

Torque: 450Nm at 6,100rpm

Transmission: 7-speed PDK auto or 6-speed manual

Fuel economy, combined: 13.8L/100km

On sale: Available to order now

Price: From Dh801,800

Jawan

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