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BRICS Forms Seed-Crystal of New Financial System

July 16, 2014 (EIRNS)—The heads of State of the BRICS nations (Brazil, Russia, India, China, and South Africa), meeting July 15 in Fortaleza, Brazil, for the VI BRICS Summit, issued a lengthy 72-point Fortaleza Declaration which includes the historic announcement that they agreed to form the New Development Bank (NDB) to fund infrastructure and other development projects in BRICS and other developing economies, and that it would be headquartered in Shanghai, China, with the first (rotating) Presidency held by India. The NDB will be initially capitalized to $50 billion, with equal contributions from each of the five countries.

The Fortaleza Declaration also announced the establishment of the BRICS Contingent Reserve Arrangement (CRA), with an initial size of $100 billion, to “help countries forestall short-term liquidity pressures.”

Although couched in language that emphasizes the complementarity of these new institutions with the IMF, World Bank, and other current financial bodies, the NDB clearly is a seed-crystal of an entirely new international financial system, centered on development and national sovereignty. As Brazilian President Dilma Rousseff stated: “The bank represents an alternative for the infrastructure financing needs of developing countries, understanding and compensating for the insufficiency of credit from the principle international financial institutions.”

Underscoring the qualitative difference between these new bodies and the orientation of the current international financial institutions is the fact that the series of bilateral meetings held around the Summit featured a host of nuclear energy deals. These include deals between Russia and Argentina, and Brazil and Russia. In the run-up to the Summit, BRICS member South Africa also reaffirmed its commitment to going nuclear. The trans-Atlantic world, on the contrary, is rapidly abandoning this high-technology energy source.