Territorial Alliances and Emerging-Market Development Banking: A View from Subimperial South Africa

26 August 2014 by Patrick Bond

Forthcoming in I.Wallerstein, C.Chase-Dunn and C.Suter (Ed),
Overcoming Global Inequalities: Political Economy of the World-System Annuals,
New York, Paradigm Publishers, 2014.

A new “seat at the world table” is demanded by major emerging market powers, especially the BRICS (Brazil, Russia, India, China, and South Africa) bloc. The idea of establishing both a US$50 billion BRICS Bank headquartered in Shanghai and a $100 billion Contingent Reserve Arrangement was articulated and endorsed at the March 2012 New Delhi and 2013 Durban summits of BRICS leaders, as well as at the September 2013 G20 G20 The Group of Twenty (G20 or G-20) is a group made up of nineteen countries and the European Union whose ministers, central-bank directors and heads of state meet regularly. It was created in 1999 after the series of financial crises in the 1990s. Its aim is to encourage international consultation on the principle of broadening dialogue in keeping with the growing economic importance of a certain number of countries. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, Italy, India, Indonesia, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, USA, UK and the European Union (represented by the presidents of the Council and of the European Central Bank). meeting in St. Petersburg. At the latter, BRICS finance ministers expressed dissatisfaction about the International Monetary Fund IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

’s (IMF’s) governance, notwithstanding having collectively spent $75 billion in the IMF’s recapitalization Recapitalization Reconstituting or increasing a company’s share capital to reinforce its equity after losses. When the banks were bailed out by the European States, they were most often recapitalized with no conditions attached and without the States having the decision-making power their participation in the banks’ capital should have given them. the year before. Yet flaws in the global financial architecture remain vividly apparent and another world crisis is looming. The BRICS strategy—especially in relation to the expedited extraction of Africa’s minerals, petroleum, gas, and cash crops—raises questions about how different the BRICS’ pro-corporate economic growth model is from the West’s, and whether their role in world capitalism is limited to assimilation rather than what is needed: a rupture from existing orthodox models, such as a radically new approach to development finance.

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Patrick Bond

is professor at the University of the Western Cape School of Government in Cape Town, and co-editor of BRICS and Resistance in Africa (published by Zed Books, 2019).



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