16.12 ndian onom
(b) Their disenchantment with the Bretton The BRICS-sponsored development bank
Woods institutions has been growing is not an isolated and unique initiative. Similar
over the years. initiatives had sprung up in the past to blunt the
Two statements of the Fortaleza Declaration might of Bretton-Woods twin. Development Bank
make the situation more clear— of Latin America (created by Andean nations) in the
(i) “We are confronted with persistent 1960s, the Chiang Mai Initiative in early 2000s (of
political instability and conflict in various 10 ASEAN nations plus China, South Korea and
global hotspots and non-conventional Japan) to establish a network of bilateral currency
emerging threats. On the other hand, swap pacts in the wake of Asian currency crisis, and
international governance structures the establishment of the Bank of South by Latin
designed within a different power American countries in 2009 were the result of
configuration show increasingly evident escalating dissatisfaction with the US-dominated
signs of losing legitimacy and effectiveness, IMF and World Bank.
as transitional and ad hoc arrangements
become increasingly prevalent, often at aSIan InFraStruCture InveStMent
the expense of multilateralism.” Bank
(ii) “We believe the BRICS are an important
The AIIB (Asian Infrastructure Investment Bank)
force for incremental change and reform
was first proposed by the Chinese President Xi
of current institutions towards more
Jinping in October 2013. A year later, at its official
representative and equitable governance,
launch in Beijing, 21 Asian nations, including
capable of generating more inclusive
China, had signed up to be the foundation
global growth and fostering a stable,
members. Currently another 21 nations—
peaceful and prosperous world.”
including Australia, the United Kingdom, New
The BRICS bank development comes at a time Zealand, Germany and France—have expressed
when reforms at the Bretton Woods institutions a desire to join as well. An interesting applicant
fail to fructify for one reason or the other and with is Taiwan—which signed up just before the
the US and European nations still not reconciled April 1, 2015 deadline—although issues around
to concede BRICS nations a greater voice in its membership name may complicate the deal.
the governance structure of the Bretton-Woods Russia also left it to the last minute to fire in its
institutions. application. Chinese media reported that only 30
Whether the BRICS-sponsored NDB will of the 42 member applications have been accepted.
be a fitting alternative to the Bretton Woods twin The Chinese foreign ministry has said that the full
depends on a host of factors. Major ones of these list of countries approved as founding members
factors, among others, are its ability— would be released by mid-April 2015.
(i) to put in place a conflict resolution The AIIB is aimed at providing finance to
mechanism, infrastructure projects in the Asia region, as a
(ii) to devise a robust credit appraisal multilateral instituion. It is planned to operate
mechanism, and broadly in the same manner as existing multilateral
(iii) to put in place an effective supervisory development banks (MDBs) such as the World
regime. Bank and the Asian Development Bank (ADB).