SlideShare ist ein Scribd-Unternehmen logo
1 von 10
Downloaden Sie, um offline zu lesen
1 
REFORM OF GLOBAL GOVERNANCE INSTITUTIONS 
Transforming Global Governance Institutions: Towards Public 
Interests? 
5th BRICS Academic Forum, Durban 
Michelle Pressend1 
11 & 12 March 2013 
Introduction 
The world faces a deepening multiple crises - planetary ecological, climate, food, 
energy, and finance crises 
In this current multiple crisis both the North and South continue to prioritise growth 
in their economies based on standard economic models – the North wants to 
maintain its high growth rate and the South wants to play “catch-up”. However, 
climate change, the oil peak, high oil prices, high food prices, an unfair international 
trade regime and inequities in the global political economy presents major 
challenges for emerging economies to achieve the “catch-up” they perceive they 
require to grow their economies. 
Government’s at global level seek to “solve” these crises through various for 
multilateral institutions such as the United Nations, World Bank, International 
Monetary Forum (IMF), the World Trade Organisation (WTO) and self-appointed or 
self-organised groups of the world’s most powerful countries such as the G8, G20 
and BRICS. 
So the question I pose is what is the “new” that BRICS can bring to change the 
current world order? 
1 Michelle Pressend is policy analyst on global political economy in the areas of trade and 
environment, climate change and sustainable development. She is currently working for the Economic 
Justice Network of FOCCISA (a policy think-tank for a the Christian Council of Churches in Southern 
Africa) as the Tax Justice Coordinator.
In the presentation of global governance reform, questions arose on the whether 
the BRICS “evolutionary or revolutionary”/“reformist or transformist”? It remains to 
be seen in how the BRICS navigates change in the global regime that could manifest 
in a global geopolitical power shift from a unipolar to multipolar world. 
2 
My presentation emphasises three aspects on transforming global governance: 
1. I argue that the structure and composition of institutions lags behind the 
changing political realities and question how the BRICS challenge this 
situation. 
2. The reform agenda of BRICS on international financial institutions is limited. 
3. A key issue that differentiates South Africa from the rest of the BRIC 
countries that may have implications on South Africa role and/or economic 
participation in the BRICS commitments. 
1. The structure and composition of institutions lags behind the changing political 
realities on how does the BRICS challenge this situation 
The weakening of the UN as the central global international governance institution is 
critical to address. 
For instance if we look at the composition of global institutions to regulate 
Multinational Corporations, they are non-existent, allowing MNCs to operate with 
impunity. Rasigan Maharajh in his presentation showed that many of the top MNCs 
surpasses the economies of countries.2 These corporations have found various ways 
to increase their profits in a poorly regulated global financial system. 
Between 1970 and 2008, illicit financial flows from Africa amounted to about 
US$854 billion (of which US$175 billion flowed out of southern Africa), which could 
have satisfied the continent’s external debt obligations and left a surplus of US$600 
2 http://www.tni.org/sites/www.tni.org/files/download/corporatepower-webbooklet.pdf
billion3 to reduce poverty and stimulate economic development (define as fair and 
redistributive, takes into ecological limits and improves the well-being of people NOT 
just based on GDP growth). The bulk of these illicit flows – an estimated 60-65 per 
cent of the global total - consists of paid or reduced taxes on profits that businesses, 
particularly MNCs, shift between tax jurisdictions in order to reduce their tax bills (to 
nil, in some cases).4 
This supply-side corruption thrives in globalised financial markets and urgently needs 
to be addressed. The financial secrecy index (FSI) reveals that 60 financial centres 
are categorised as secrecy jurisdictions, which encourage and enables illicit financial 
flows and tax havens. The FSI ranks the top five secrecy jurisdictions as those that 
have the greatest global impact; the ranking on the top is the USA (Delaware), 
Luxembourg, Switzerland, the Cayman Island and the City of London. 5 
Given the scale of illicit finance flows, what role will the BRICS play in transforming 
the global finance architecture and supporting greater global financial 
transparency? 
3 
The momentum is building across the globe for measures to tackle transfer mis – 
pricing and tax havens this issue was raised in G20 process in 2011. In addition, 
the Sanya Declaration of the BRICS Leaders Meeting6 calls for the strengthening of 
global economic governance, and amplifying the voice of developing and emerging 
countries in international affairs based on universally accepted principles of 
international law, collective-decision making and mutual respect. In addition “We 
support the [G20] in playing a bigger role in global economic governance as the 
premier forum of international cooperation. We expect new positive outcomes in 
the fields of economy, finance, trade and development from the G20 Cannes 
Summit in [November] 2011.” 
3 Commercial tax evasion (most of which is trade mispricing practices) constituted between 60% and 
65% of illicit outflows in the world as at 2008. See Baker, R. Illicit Financial Flows from Africa: 
Hidden Resources for Development (Washington DC: Global Financial Integrity, 2001), at page 1. 
4 Ibid. 
5 http://www.taxjusticeafrica.net/content/tax-us-if-you-canwhy-africa-should-stand-tax-justice 
6 Sanya Declaration of the BRICS Leaders Meeting, Sanya, Hainan, China, 14 April 2011
4 
But progress has been slow and we are yet to see any strong measure on re-regulation 
of global financial markets. 
It is important to recognize that in the age of neoliberal globalization, within the UN 
itself, a strategy began for awarding corporations an increasingly high power quota.7 
This began in 1993, with the elimination of UN bodies that represented at the time 
an attempt to establish social control over TNC activities. 
One of the organs created by ECOSOC (UN Economic and Social Council) in 
Resolution 1913 in December 1974 to investigate the activities in TNC’s and 
elaborate on their code of conduct, the Centre of Transnational Corporations was 
created in 1974. 8 
In 1993, the US government requested to turn the Centre of Transnational 
Corporations into the Transnational and International Investment within UNCTAD. 
Upon this decision the Commission for Transnational Corporations would become 
UNCTAD. Abandoning the attempts to control TNCS instead to the “contribution of 
transnational to growth and development”.9 
The UN in the year, 2000 established the Global Compact to incorporate “social 
actors” in which 44 TNCs participated, among them Nike, Shell, Rio Tinto.10 A 
proposal to “end the impunity of transnational corporations” stressed, this alliance 
creates dangerous confusion and tension between a public international institution 
like the UN and the private interest of the TNCs. 
7 http://www.tni.org/article/united-nations-and-transnational-corporations-deadly-association 
8 Contrbutiions by Hector Moncayo, Juan Hernandez, Alejandro Teitelbaum, Sebastian Valdomir and 
Francesco Martone, (2013). Unpublished document, “Proposal for the Elaboration of a People’s Treaty 
on Transnational Corporations (TNCs)” 
9 Ibid. 
10 http://www.tni.org/article/rio20-and-greenwashing-global-economy
On Climate change 
Solutions to deal with this ecological crisis facing our planet are largely trade-led and 
market-driven, with technological advancements at the forefront. 
5 
When the Kyoto Protocol was introduced, carbon-trading mechanisms in essence 
was the beginning of those largely responsible for climate change to obviate their 
responsibilities. 
Following COP 17, the financial resources required by developing countries to adapt 
to the impacts of climate change and mitigate carbon emissions towards a transition 
away from a fossil- based economy remains a major point of contention at the these 
negotiations. Regrettably the BASIC (Brazil, South Africa, Indian and China) countries 
made significant comprises on genuine climate finance when they agreed to 
Copenhagen Accord during COP 15. These comprises included a “pledge and review” 
system, where developed countries are committed to mobilise US$100 million by 
2020 through various means, which include carbon trading (of which the real 
benefits to the environment are as yet unproven), private equities, and investments 
in cleaner development mechanisms as well as the establishment of the Global 
Climate Fund. A major concern related the sources of funding are that it is 
predominately from private sources. The implications of the Copenhagen Accord 
has been widely criticized as the “death of multi-lateral environment agreements”, 
especially the Kyoto Protocol.11 
With BRICS varying positions in the their different sub-groups, particularly the 
invidious role it played during the COP 15. It remains to be seen how they regroup 
their positions and make up for the lost ground to strengthen the UN multi-lateral 
environment agreements in the build up to 2020 as well how BRICS collectively 
seizes the opportunity in the transition to a low carbon economy and at the same 
time meet the socio-economic needs of the majority of poor and marginalized 
11 Saliem Fakier, http://sacsis.org.za/site/article/408.1 
Michelle Pressend, http://sacsis.org.za/site/article/410.1
6 
people. 
2. Reform Agenda of BRICS in the international financial institutions 
We see that change is expensive both in diplomatic currency as well as in financial 
resources and is very incremental. So while the change in the voting structure and 
composition of the international financial institutions is a laudable goal, there is a 
more immediate policy priority facing us at present. As a consequences flowing 
from the global financial crisis that started in the rich countries what we see both at 
the ideological academic and practical level is a commitment to austerity policies. 
The neoclassical and neoliberal economics premised on cutting spending has largely 
undermined employment and living standards within nations. 
This is mostly the case, even in advanced countries like what is happening with Spain 
Greece Portugal and Italy under austerity. While the international monetary fund 
has made special arrangements to deal with the problem of certain countries, the 
overall approach is still that of austerity informed by neoclassical economics. 
At another level it can be seen that poor countries particularly in Africa have 
received the poor man's credit card may be the “blue” or the “black” one whereas 
the IMF created a “platinum” card when the crisis hit the countries in Europe. So 
what we see is evidence of policy flexibility, a number of solutions that can be used 
to deal with the crisis and particularly the crisis in Africa, including allowing countries 
to settle their debts in their local currency. 
These flexibilities both in the post-war period to do with currency imbalances 
between countries are included but not used, because of the commitments to 
austerity policies. The key problem with austerity policies is that when countries are 
in trouble, the IMF helps to kick them when they are down. 
The most immediate priority for reform of the international financial institutions is
7 
to remove the limitations they place on countries policy space that reduces their 
ability to effectively deal with unemployment. What is needed are policies that 
allow for employment promotion and increases in standards of living and not just 
increases in GDP and enclave development or growth without distribution to the 
lower members or vulnerable members of society. 
2.1 Financial reform and BRICS Development Bank 
Currency battles emerging from the BRICS and the threat to the universal reserve 
currency, indicates the potential of the BRICS to shift the global financial system 
dominated by the US dollar. At the 2012 BRICS summit the partners called for intra- 
BRICS trade in “non-Third currency”. The Chinese Reserve Bank has also called for a 
new reserve currency as opposed to the dollar (or that Rinminbi be added to pot of 
currencies in the Special Drawing Rights). 12 
The dollar’s potential displacement shows us a battle for a new world order-taking 
place today. With the dollar as the world’s currency, the US is the only country in 
the world that can expand its buying power simply by printing its currency. Any 
other country doing so (as Zimbabwe did) in a world of global trade would simply 
cause rampant inflation and currency collapse. At the same time, any act of 
devaluing its currency immediately lowers its foreign debt (because this is also in 
dollars) and lowers everyone else’s reserves (which are also in dollars). 13 
The BRICS Bank is another point of contention; particularly the nature and the form 
the Bank would take as well as finance for the Bank. BRICS should consider 
establishing a new development bank along the lines of the Banco del Sur (Bank of 
the South) in South America, which was established in 2009 with countries with an 
initial capital of 20 billion US dollars. In a clear departure from the undemocratic 
and paternalistic governance structure of the World Bank, no single country will own 
the bank, or have the sole right to make appointments. Although not fully defined, 
12 Leonard Gentle’s Presentation, (2012). SA and BRICS: Understanding SA’s ambitions in a new 
world order 
13 Leonard Gentle, “South Africa and BRICS: It’s all about dollar” in Workers World News: 
Alternatives to Globalisation, Issue 75, February 2013, ILRIG
voting power will be based on financial need rather than monetary contribution or 
political weight. Questions remain, what will the nature of the BRICS Bank be? Will it 
be a clear departure from the WB and IMF? 
8 
It is better to have a weakened multi-polar world than a strong “world policeman” 
dominating the world militarily and in currency terms. In that sense the BRICS 
represents both a decline of the US and the space to do something different in the 
world because no new power is replacing the US as the imperial hegemon. 
3. A key Issue that Differentiates of SA from BRICS 
When looking at the BRICS it is clear that there is one feature and possibly there are 
others but this is the priority, that differentiate South Africa from the other 
members. All the other members of the BRIC have clear development policies that 
are financed through state institutions, rather than complete reliance on the 
commercial banking sector. This perhaps reflects on South Africa's development 
policy and approach but also its orientation in terms of how it sees the role of the 
state in the economy. However what is clear is that the international economic 
order does not distribute benefit as claimed by neoclassical theory and that state 
intervention is required to ensure adequate distribution of benefits. 
Countries that run persistent and chronic deficits have different characteristics and 
policy options available to them as compared to countries that run surpluses or are 
in a position of holding sufficient control over the market and exercise control in a 
way that does not dilute policy space. 
The issue of development, and by this I mean a fair and equitable distribution of 
benefits from economic activities as well as the important element of technological 
upgrading, needs to be considered especially in the dire African situation. Even with 
the global economic crisis the response of government’s policy tools to address the 
productive structure is lacking in a number of respects. Levels of industrialisation are 
low. Levels of productivity are low. Stimulus measures in such a context would 
merely inflate the demand for imports and there are limits to the amount of gold
9 
and bananas the world can consume. 
In this vein it is important that South Africa has initiated the process of inviting other 
African countries to the BRICS Summit. The inclusive and participatory processes that 
are sure to follow are important in that it establishes relations between countries. 
These relations need to be fostered. 
The African continent is particularly unique from the regions of the BRIC countries as 
it embraced the total neoliberal package and has followed the path for instance on 
economic integration of signing binding treaties and making binding declarations 
that are often not followed up or countries lack the capacity of financial resources 
for enforcement. Dot Keet in her views on alternatives regionalism, emphasized 
arrangements based on cooperation in a number of social sectors, coordination of 
developing technical systems and infrastructure and harmonization – of rules, 
regulations, norms and standards governing common systems and cross-border 
relations. 14 
With BRICS on the horizon, it is clear that there are changes in the political reality 
and that new relationships need to be fostered and these need not only be legal and 
treaty-based but can also be on a softer level so that a more pragmatic approach to 
cooperation can be taken between regions. 
As Chris Paterson, the Conservative MP from the United Kingdom and last British 
governor of Hong Kong said, “one of the key things that allows Western countries to 
operate as they do is their club ability.” 
END 
14 Dot Keet, (2008). “Strengthening Regionalism” in Dilemmas of Poverty and Development: A 
proposed framework for the Southern African Development Community, eds Michelle Pressend and 
Michele Ruiters, Institute for Global Dialogue.
10

Más contenido relacionado

Was ist angesagt?

Unit 5 Globalization
Unit 5  GlobalizationUnit 5  Globalization
Unit 5 GlobalizationRocío G.
 
The organizations formed to assist the international business
The organizations formed to assist the international businessThe organizations formed to assist the international business
The organizations formed to assist the international businessjakiun johora mustafa
 
Global Economic Issues
Global Economic IssuesGlobal Economic Issues
Global Economic IssuesKaleemSarwar2
 
Aid Vs. Internal Resource Mobilization
Aid Vs. Internal Resource MobilizationAid Vs. Internal Resource Mobilization
Aid Vs. Internal Resource MobilizationIsrael Laizer
 
The total global world
The total global world  The total global world
The total global world Hossein Davani
 
A2 CAMBRIDGE GEOGRAPHY: GLOBAL INTERDEPENDENCE - THE DEVELOPMENT OF INTERNATI...
A2 CAMBRIDGE GEOGRAPHY: GLOBAL INTERDEPENDENCE - THE DEVELOPMENT OF INTERNATI...A2 CAMBRIDGE GEOGRAPHY: GLOBAL INTERDEPENDENCE - THE DEVELOPMENT OF INTERNATI...
A2 CAMBRIDGE GEOGRAPHY: GLOBAL INTERDEPENDENCE - THE DEVELOPMENT OF INTERNATI...George Dumitrache
 
The future-of-the-imf-wolf
The future-of-the-imf-wolfThe future-of-the-imf-wolf
The future-of-the-imf-wolfstratmen
 
De ocampo presentation 3rd singapore global dialogue sep 12 (2)
De ocampo presentation 3rd singapore global dialogue sep 12 (2)De ocampo presentation 3rd singapore global dialogue sep 12 (2)
De ocampo presentation 3rd singapore global dialogue sep 12 (2)Manu Bhaskaran
 
International Aid
International AidInternational Aid
International Aidkitbeau
 
Non-Changing Patterns with the COVID-19 Epidemic: Re-Examining the Relationsh...
Non-Changing Patterns with the COVID-19 Epidemic: Re-Examining the Relationsh...Non-Changing Patterns with the COVID-19 Epidemic: Re-Examining the Relationsh...
Non-Changing Patterns with the COVID-19 Epidemic: Re-Examining the Relationsh...Vedat Akman
 
Globalization in HRP
Globalization in HRPGlobalization in HRP
Globalization in HRPGLewis16
 

Was ist angesagt? (19)

Globalization
GlobalizationGlobalization
Globalization
 
Enormous debt
Enormous debtEnormous debt
Enormous debt
 
Daniels01 im
Daniels01 imDaniels01 im
Daniels01 im
 
Unit 5 Globalization
Unit 5  GlobalizationUnit 5  Globalization
Unit 5 Globalization
 
The organizations formed to assist the international business
The organizations formed to assist the international businessThe organizations formed to assist the international business
The organizations formed to assist the international business
 
Global Economic Issues
Global Economic IssuesGlobal Economic Issues
Global Economic Issues
 
Globalization
GlobalizationGlobalization
Globalization
 
May 2009
May 2009May 2009
May 2009
 
Aid Vs. Internal Resource Mobilization
Aid Vs. Internal Resource MobilizationAid Vs. Internal Resource Mobilization
Aid Vs. Internal Resource Mobilization
 
The total global world
The total global world  The total global world
The total global world
 
A2 CAMBRIDGE GEOGRAPHY: GLOBAL INTERDEPENDENCE - THE DEVELOPMENT OF INTERNATI...
A2 CAMBRIDGE GEOGRAPHY: GLOBAL INTERDEPENDENCE - THE DEVELOPMENT OF INTERNATI...A2 CAMBRIDGE GEOGRAPHY: GLOBAL INTERDEPENDENCE - THE DEVELOPMENT OF INTERNATI...
A2 CAMBRIDGE GEOGRAPHY: GLOBAL INTERDEPENDENCE - THE DEVELOPMENT OF INTERNATI...
 
The future-of-the-imf-wolf
The future-of-the-imf-wolfThe future-of-the-imf-wolf
The future-of-the-imf-wolf
 
De ocampo presentation 3rd singapore global dialogue sep 12 (2)
De ocampo presentation 3rd singapore global dialogue sep 12 (2)De ocampo presentation 3rd singapore global dialogue sep 12 (2)
De ocampo presentation 3rd singapore global dialogue sep 12 (2)
 
G8 Summit - 2o13
G8 Summit - 2o13G8 Summit - 2o13
G8 Summit - 2o13
 
Globalization
GlobalizationGlobalization
Globalization
 
A world-to-gain-en-1(2)
A world-to-gain-en-1(2)A world-to-gain-en-1(2)
A world-to-gain-en-1(2)
 
International Aid
International AidInternational Aid
International Aid
 
Non-Changing Patterns with the COVID-19 Epidemic: Re-Examining the Relationsh...
Non-Changing Patterns with the COVID-19 Epidemic: Re-Examining the Relationsh...Non-Changing Patterns with the COVID-19 Epidemic: Re-Examining the Relationsh...
Non-Changing Patterns with the COVID-19 Epidemic: Re-Examining the Relationsh...
 
Globalization in HRP
Globalization in HRPGlobalization in HRP
Globalization in HRP
 

Andere mochten auch

Women and-financial-inclusion-results fromfindex-wb-gatesfndn
Women and-financial-inclusion-results fromfindex-wb-gatesfndnWomen and-financial-inclusion-results fromfindex-wb-gatesfndn
Women and-financial-inclusion-results fromfindex-wb-gatesfndnDr Lendy Spires
 
Undp strategic plan-14-17_v9_web
Undp strategic plan-14-17_v9_webUndp strategic plan-14-17_v9_web
Undp strategic plan-14-17_v9_webDr Lendy Spires
 
Harnessing Emotional Connections to Improve Financial Decisions
Harnessing Emotional Connections to Improve Financial DecisionsHarnessing Emotional Connections to Improve Financial Decisions
Harnessing Emotional Connections to Improve Financial DecisionsDr Lendy Spires
 
Food waste and_spoilage_assessment_02
Food waste and_spoilage_assessment_02Food waste and_spoilage_assessment_02
Food waste and_spoilage_assessment_02Dr Lendy Spires
 
Atlas of pressures and threats to indigenous lands in the brazilian amazon
Atlas of pressures and threats to indigenous lands in the brazilian amazonAtlas of pressures and threats to indigenous lands in the brazilian amazon
Atlas of pressures and threats to indigenous lands in the brazilian amazonDr Lendy Spires
 
Eb provisional agenda-dp2014-l.1_en
Eb provisional agenda-dp2014-l.1_enEb provisional agenda-dp2014-l.1_en
Eb provisional agenda-dp2014-l.1_enDr Lendy Spires
 
Wef gac poverty_sustainabledevelopment_globaldevelopmentfinance_paper_2014
Wef gac poverty_sustainabledevelopment_globaldevelopmentfinance_paper_2014Wef gac poverty_sustainabledevelopment_globaldevelopmentfinance_paper_2014
Wef gac poverty_sustainabledevelopment_globaldevelopmentfinance_paper_2014Dr Lendy Spires
 
Nv viet nam strategy retreat 2014
Nv viet nam strategy retreat 2014Nv viet nam strategy retreat 2014
Nv viet nam strategy retreat 2014Dr Lendy Spires
 
Report access-to-finance-promotion-practices-global
Report access-to-finance-promotion-practices-globalReport access-to-finance-promotion-practices-global
Report access-to-finance-promotion-practices-globalDr Lendy Spires
 

Andere mochten auch (15)

Women and-financial-inclusion-results fromfindex-wb-gatesfndn
Women and-financial-inclusion-results fromfindex-wb-gatesfndnWomen and-financial-inclusion-results fromfindex-wb-gatesfndn
Women and-financial-inclusion-results fromfindex-wb-gatesfndn
 
Strategic framework en
Strategic framework enStrategic framework en
Strategic framework en
 
Undp strategic plan-14-17_v9_web
Undp strategic plan-14-17_v9_webUndp strategic plan-14-17_v9_web
Undp strategic plan-14-17_v9_web
 
4ce23d472
4ce23d4724ce23d472
4ce23d472
 
Harnessing Emotional Connections to Improve Financial Decisions
Harnessing Emotional Connections to Improve Financial DecisionsHarnessing Emotional Connections to Improve Financial Decisions
Harnessing Emotional Connections to Improve Financial Decisions
 
Food waste and_spoilage_assessment_02
Food waste and_spoilage_assessment_02Food waste and_spoilage_assessment_02
Food waste and_spoilage_assessment_02
 
Atlas of pressures and threats to indigenous lands in the brazilian amazon
Atlas of pressures and threats to indigenous lands in the brazilian amazonAtlas of pressures and threats to indigenous lands in the brazilian amazon
Atlas of pressures and threats to indigenous lands in the brazilian amazon
 
Eb provisional agenda-dp2014-l.1_en
Eb provisional agenda-dp2014-l.1_enEb provisional agenda-dp2014-l.1_en
Eb provisional agenda-dp2014-l.1_en
 
04 srhr fund
04 srhr fund04 srhr fund
04 srhr fund
 
Duplica dkkje
Duplica dkkjeDuplica dkkje
Duplica dkkje
 
Wef gac poverty_sustainabledevelopment_globaldevelopmentfinance_paper_2014
Wef gac poverty_sustainabledevelopment_globaldevelopmentfinance_paper_2014Wef gac poverty_sustainabledevelopment_globaldevelopmentfinance_paper_2014
Wef gac poverty_sustainabledevelopment_globaldevelopmentfinance_paper_2014
 
Nv viet nam strategy retreat 2014
Nv viet nam strategy retreat 2014Nv viet nam strategy retreat 2014
Nv viet nam strategy retreat 2014
 
Pub35
Pub35Pub35
Pub35
 
Report access-to-finance-promotion-practices-global
Report access-to-finance-promotion-practices-globalReport access-to-finance-promotion-practices-global
Report access-to-finance-promotion-practices-global
 
Baseline study en
Baseline study enBaseline study en
Baseline study en
 

Ähnlich wie BRICS 5th Academic Forum - Global Gov Reform

The Impact Of Economic Globalization
The Impact Of Economic GlobalizationThe Impact Of Economic Globalization
The Impact Of Economic GlobalizationJamie Boyd
 
The Economic Aspects Associated With Globalization
The Economic Aspects Associated With GlobalizationThe Economic Aspects Associated With Globalization
The Economic Aspects Associated With GlobalizationHeather Dionne
 
UCSP-Group-7 (1).pptx
UCSP-Group-7 (1).pptxUCSP-Group-7 (1).pptx
UCSP-Group-7 (1).pptxEvaMaeTugbong
 
The Proposed Bill, Currency Exchange Rate Oversight Reform...
The Proposed Bill, Currency Exchange Rate Oversight Reform...The Proposed Bill, Currency Exchange Rate Oversight Reform...
The Proposed Bill, Currency Exchange Rate Oversight Reform...Lynn Weber
 
International Economics And The Field Of International...
International Economics And The Field Of International...International Economics And The Field Of International...
International Economics And The Field Of International...Crystal Williams
 
GEC3-Contemporary World.pptx
GEC3-Contemporary World.pptxGEC3-Contemporary World.pptx
GEC3-Contemporary World.pptxJ M
 
CONTEMPORARY WORLD
CONTEMPORARY WORLDCONTEMPORARY WORLD
CONTEMPORARY WORLDmaellen20
 
Disadvantages Of International Economic Help
Disadvantages Of International Economic HelpDisadvantages Of International Economic Help
Disadvantages Of International Economic HelpJennifer Wright
 
Economic Globalization And The Global Economy
Economic Globalization And The Global EconomyEconomic Globalization And The Global Economy
Economic Globalization And The Global EconomyTammy Lacy
 
Correlation Between Government Corruption And Poverty In...
Correlation Between Government Corruption And Poverty In...Correlation Between Government Corruption And Poverty In...
Correlation Between Government Corruption And Poverty In...Natalie Parnell
 
Effects Of Oil Prices On Global Economy
Effects Of Oil Prices On Global EconomyEffects Of Oil Prices On Global Economy
Effects Of Oil Prices On Global EconomyThesis Paper Help UK
 
Auditors' responsibilities on globalization!
Auditors' responsibilities on globalization!Auditors' responsibilities on globalization!
Auditors' responsibilities on globalization!Daya Dayarayan Canada
 
Analyzing The Distinctive Sorts Of Management Structures
Analyzing The Distinctive Sorts Of Management StructuresAnalyzing The Distinctive Sorts Of Management Structures
Analyzing The Distinctive Sorts Of Management StructuresLeslie Sanchez
 
International business management essay globalization
International business management essay globalizationInternational business management essay globalization
International business management essay globalizationBobby Darmawan
 
South African Americans Before European Integration
South African Americans Before European IntegrationSouth African Americans Before European Integration
South African Americans Before European IntegrationChristy Davis
 
Extractive Sectors and Illicit Financial Flows: What Role for Revenue Governa...
Extractive Sectors and Illicit Financial Flows: What Role for Revenue Governa...Extractive Sectors and Illicit Financial Flows: What Role for Revenue Governa...
Extractive Sectors and Illicit Financial Flows: What Role for Revenue Governa...Dr Lendy Spires
 

Ähnlich wie BRICS 5th Academic Forum - Global Gov Reform (20)

The Impact Of Economic Globalization
The Impact Of Economic GlobalizationThe Impact Of Economic Globalization
The Impact Of Economic Globalization
 
The Economic Aspects Associated With Globalization
The Economic Aspects Associated With GlobalizationThe Economic Aspects Associated With Globalization
The Economic Aspects Associated With Globalization
 
UCSP-Group-7 (1).pptx
UCSP-Group-7 (1).pptxUCSP-Group-7 (1).pptx
UCSP-Group-7 (1).pptx
 
The Proposed Bill, Currency Exchange Rate Oversight Reform...
The Proposed Bill, Currency Exchange Rate Oversight Reform...The Proposed Bill, Currency Exchange Rate Oversight Reform...
The Proposed Bill, Currency Exchange Rate Oversight Reform...
 
International Economics And The Field Of International...
International Economics And The Field Of International...International Economics And The Field Of International...
International Economics And The Field Of International...
 
GEC3-Contemporary World.pptx
GEC3-Contemporary World.pptxGEC3-Contemporary World.pptx
GEC3-Contemporary World.pptx
 
CONTEMPORARY WORLD
CONTEMPORARY WORLDCONTEMPORARY WORLD
CONTEMPORARY WORLD
 
Global Economics Term Paper
Global Economics Term PaperGlobal Economics Term Paper
Global Economics Term Paper
 
Disadvantages Of International Economic Help
Disadvantages Of International Economic HelpDisadvantages Of International Economic Help
Disadvantages Of International Economic Help
 
Economic Globalization And The Global Economy
Economic Globalization And The Global EconomyEconomic Globalization And The Global Economy
Economic Globalization And The Global Economy
 
Correlation Between Government Corruption And Poverty In...
Correlation Between Government Corruption And Poverty In...Correlation Between Government Corruption And Poverty In...
Correlation Between Government Corruption And Poverty In...
 
2010 vol x_no_1_ijgfm
2010 vol x_no_1_ijgfm2010 vol x_no_1_ijgfm
2010 vol x_no_1_ijgfm
 
Imf And World Bank Group
Imf And World Bank GroupImf And World Bank Group
Imf And World Bank Group
 
Effects Of Oil Prices On Global Economy
Effects Of Oil Prices On Global EconomyEffects Of Oil Prices On Global Economy
Effects Of Oil Prices On Global Economy
 
Auditors' responsibilities on globalization!
Auditors' responsibilities on globalization!Auditors' responsibilities on globalization!
Auditors' responsibilities on globalization!
 
Analyzing The Distinctive Sorts Of Management Structures
Analyzing The Distinctive Sorts Of Management StructuresAnalyzing The Distinctive Sorts Of Management Structures
Analyzing The Distinctive Sorts Of Management Structures
 
International business management essay globalization
International business management essay globalizationInternational business management essay globalization
International business management essay globalization
 
South African Americans Before European Integration
South African Americans Before European IntegrationSouth African Americans Before European Integration
South African Americans Before European Integration
 
Global Crises Brewing Up Of Storm
Global Crises Brewing Up Of StormGlobal Crises Brewing Up Of Storm
Global Crises Brewing Up Of Storm
 
Extractive Sectors and Illicit Financial Flows: What Role for Revenue Governa...
Extractive Sectors and Illicit Financial Flows: What Role for Revenue Governa...Extractive Sectors and Illicit Financial Flows: What Role for Revenue Governa...
Extractive Sectors and Illicit Financial Flows: What Role for Revenue Governa...
 

Último

Donation for Education is very important
Donation for Education is very importantDonation for Education is very important
Donation for Education is very importantSERUDS INDIA
 
CCFW_Launch slides by Nicostrato Perez, IFPRI
CCFW_Launch slides by Nicostrato Perez, IFPRICCFW_Launch slides by Nicostrato Perez, IFPRI
CCFW_Launch slides by Nicostrato Perez, IFPRIAhmed Ali
 
SPONSORED CONTENT - DV Solutions - Building Relationships With The Federal Fo...
SPONSORED CONTENT - DV Solutions - Building Relationships With The Federal Fo...SPONSORED CONTENT - DV Solutions - Building Relationships With The Federal Fo...
SPONSORED CONTENT - DV Solutions - Building Relationships With The Federal Fo...JSchaus & Associates
 
2024: The FAR, Federal Acquisition Regulations - Part 15
2024: The FAR, Federal Acquisition Regulations - Part 152024: The FAR, Federal Acquisition Regulations - Part 15
2024: The FAR, Federal Acquisition Regulations - Part 15JSchaus & Associates
 
CIA Annual Global Threat Assessment 2024
CIA Annual Global Threat Assessment 2024CIA Annual Global Threat Assessment 2024
CIA Annual Global Threat Assessment 2024Energy for One World
 
Millions of Homeless Children's in world
Millions of Homeless Children's in worldMillions of Homeless Children's in world
Millions of Homeless Children's in worldSERUDS INDIA
 
Hadley Wood Newsletter - February 2024 Edition
Hadley Wood Newsletter - February 2024 EditionHadley Wood Newsletter - February 2024 Edition
Hadley Wood Newsletter - February 2024 EditionHadleyWood Association
 
Canadian Immigration Tracker - January 2024.pdf
Canadian Immigration Tracker - January 2024.pdfCanadian Immigration Tracker - January 2024.pdf
Canadian Immigration Tracker - January 2024.pdfAndrew Griffith
 
Flagship Projects Mpempe Continental Royal Kingdom
Flagship Projects Mpempe Continental Royal KingdomFlagship Projects Mpempe Continental Royal Kingdom
Flagship Projects Mpempe Continental Royal KingdomSUNWayResearchandInn
 
CeraWeek 2024 - Executive conference agenda
CeraWeek 2024 - Executive conference agendaCeraWeek 2024 - Executive conference agenda
CeraWeek 2024 - Executive conference agendaEnergy for One World
 
Cyclone Idai Exhibition Final - Re-living Disaster in Manicaland
Cyclone Idai Exhibition Final - Re-living Disaster in ManicalandCyclone Idai Exhibition Final - Re-living Disaster in Manicaland
Cyclone Idai Exhibition Final - Re-living Disaster in ManicalandBervenMavhima1
 
Hadley Wood Newsletter - December 2023 Edition
Hadley Wood Newsletter - December 2023 EditionHadley Wood Newsletter - December 2023 Edition
Hadley Wood Newsletter - December 2023 EditionHadleyWood Association
 
100 Community Place Signage for the main Lobby
100 Community Place Signage for the main Lobby100 Community Place Signage for the main Lobby
100 Community Place Signage for the main Lobbyericdove88
 
2024: The FAR, Federal Acquisiton Regulations - Part 14
2024: The FAR, Federal Acquisiton Regulations - Part 142024: The FAR, Federal Acquisiton Regulations - Part 14
2024: The FAR, Federal Acquisiton Regulations - Part 14JSchaus & Associates
 
Behaviour_Change_Climate_Emergency_Papies_UKSBM_2024_slides.pptx
Behaviour_Change_Climate_Emergency_Papies_UKSBM_2024_slides.pptxBehaviour_Change_Climate_Emergency_Papies_UKSBM_2024_slides.pptx
Behaviour_Change_Climate_Emergency_Papies_UKSBM_2024_slides.pptxestherpapies
 
Livewell Oxygen System Tested by Texas Parks and Wildlife
Livewell Oxygen System Tested by Texas Parks and WildlifeLivewell Oxygen System Tested by Texas Parks and Wildlife
Livewell Oxygen System Tested by Texas Parks and WildlifeRandy Myers
 

Último (20)

Donation for Education is very important
Donation for Education is very importantDonation for Education is very important
Donation for Education is very important
 
CCFW_Launch slides by Nicostrato Perez, IFPRI
CCFW_Launch slides by Nicostrato Perez, IFPRICCFW_Launch slides by Nicostrato Perez, IFPRI
CCFW_Launch slides by Nicostrato Perez, IFPRI
 
SPONSORED CONTENT - DV Solutions - Building Relationships With The Federal Fo...
SPONSORED CONTENT - DV Solutions - Building Relationships With The Federal Fo...SPONSORED CONTENT - DV Solutions - Building Relationships With The Federal Fo...
SPONSORED CONTENT - DV Solutions - Building Relationships With The Federal Fo...
 
2024: The FAR, Federal Acquisition Regulations - Part 15
2024: The FAR, Federal Acquisition Regulations - Part 152024: The FAR, Federal Acquisition Regulations - Part 15
2024: The FAR, Federal Acquisition Regulations - Part 15
 
CIA Annual Global Threat Assessment 2024
CIA Annual Global Threat Assessment 2024CIA Annual Global Threat Assessment 2024
CIA Annual Global Threat Assessment 2024
 
Millions of Homeless Children's in world
Millions of Homeless Children's in worldMillions of Homeless Children's in world
Millions of Homeless Children's in world
 
Hadley Wood Newsletter - February 2024 Edition
Hadley Wood Newsletter - February 2024 EditionHadley Wood Newsletter - February 2024 Edition
Hadley Wood Newsletter - February 2024 Edition
 
PPT - SIGMA-GIZ Academies - Stage 1 - SIGMA opening.pdf
PPT - SIGMA-GIZ Academies - Stage 1 - SIGMA opening.pdfPPT - SIGMA-GIZ Academies - Stage 1 - SIGMA opening.pdf
PPT - SIGMA-GIZ Academies - Stage 1 - SIGMA opening.pdf
 
Canadian Immigration Tracker - January 2024.pdf
Canadian Immigration Tracker - January 2024.pdfCanadian Immigration Tracker - January 2024.pdf
Canadian Immigration Tracker - January 2024.pdf
 
Flagship Projects Mpempe Continental Royal Kingdom
Flagship Projects Mpempe Continental Royal KingdomFlagship Projects Mpempe Continental Royal Kingdom
Flagship Projects Mpempe Continental Royal Kingdom
 
CeraWeek 2024 - Executive conference agenda
CeraWeek 2024 - Executive conference agendaCeraWeek 2024 - Executive conference agenda
CeraWeek 2024 - Executive conference agenda
 
Cyclone Idai Exhibition Final - Re-living Disaster in Manicaland
Cyclone Idai Exhibition Final - Re-living Disaster in ManicalandCyclone Idai Exhibition Final - Re-living Disaster in Manicaland
Cyclone Idai Exhibition Final - Re-living Disaster in Manicaland
 
Hadley Wood Newsletter - December 2023 Edition
Hadley Wood Newsletter - December 2023 EditionHadley Wood Newsletter - December 2023 Edition
Hadley Wood Newsletter - December 2023 Edition
 
100 Community Place Signage for the main Lobby
100 Community Place Signage for the main Lobby100 Community Place Signage for the main Lobby
100 Community Place Signage for the main Lobby
 
2024: The FAR, Federal Acquisiton Regulations - Part 14
2024: The FAR, Federal Acquisiton Regulations - Part 142024: The FAR, Federal Acquisiton Regulations - Part 14
2024: The FAR, Federal Acquisiton Regulations - Part 14
 
Behaviour_Change_Climate_Emergency_Papies_UKSBM_2024_slides.pptx
Behaviour_Change_Climate_Emergency_Papies_UKSBM_2024_slides.pptxBehaviour_Change_Climate_Emergency_Papies_UKSBM_2024_slides.pptx
Behaviour_Change_Climate_Emergency_Papies_UKSBM_2024_slides.pptx
 
Livewell Oxygen System Tested by Texas Parks and Wildlife
Livewell Oxygen System Tested by Texas Parks and WildlifeLivewell Oxygen System Tested by Texas Parks and Wildlife
Livewell Oxygen System Tested by Texas Parks and Wildlife
 
No Elevators Day - Communications Guide 2024 - #UseTheStairs
No Elevators Day - Communications Guide 2024 - #UseTheStairsNo Elevators Day - Communications Guide 2024 - #UseTheStairs
No Elevators Day - Communications Guide 2024 - #UseTheStairs
 
No Elevators Day - Action Guide 2024 - #UseTheStairs
No Elevators Day - Action Guide 2024 - #UseTheStairsNo Elevators Day - Action Guide 2024 - #UseTheStairs
No Elevators Day - Action Guide 2024 - #UseTheStairs
 
PPT - SIGMA-GIZ Academies - Stage 1 - CAF in Ukraine.pdf
PPT - SIGMA-GIZ Academies - Stage 1 - CAF in Ukraine.pdfPPT - SIGMA-GIZ Academies - Stage 1 - CAF in Ukraine.pdf
PPT - SIGMA-GIZ Academies - Stage 1 - CAF in Ukraine.pdf
 

BRICS 5th Academic Forum - Global Gov Reform

  • 1. 1 REFORM OF GLOBAL GOVERNANCE INSTITUTIONS Transforming Global Governance Institutions: Towards Public Interests? 5th BRICS Academic Forum, Durban Michelle Pressend1 11 & 12 March 2013 Introduction The world faces a deepening multiple crises - planetary ecological, climate, food, energy, and finance crises In this current multiple crisis both the North and South continue to prioritise growth in their economies based on standard economic models – the North wants to maintain its high growth rate and the South wants to play “catch-up”. However, climate change, the oil peak, high oil prices, high food prices, an unfair international trade regime and inequities in the global political economy presents major challenges for emerging economies to achieve the “catch-up” they perceive they require to grow their economies. Government’s at global level seek to “solve” these crises through various for multilateral institutions such as the United Nations, World Bank, International Monetary Forum (IMF), the World Trade Organisation (WTO) and self-appointed or self-organised groups of the world’s most powerful countries such as the G8, G20 and BRICS. So the question I pose is what is the “new” that BRICS can bring to change the current world order? 1 Michelle Pressend is policy analyst on global political economy in the areas of trade and environment, climate change and sustainable development. She is currently working for the Economic Justice Network of FOCCISA (a policy think-tank for a the Christian Council of Churches in Southern Africa) as the Tax Justice Coordinator.
  • 2. In the presentation of global governance reform, questions arose on the whether the BRICS “evolutionary or revolutionary”/“reformist or transformist”? It remains to be seen in how the BRICS navigates change in the global regime that could manifest in a global geopolitical power shift from a unipolar to multipolar world. 2 My presentation emphasises three aspects on transforming global governance: 1. I argue that the structure and composition of institutions lags behind the changing political realities and question how the BRICS challenge this situation. 2. The reform agenda of BRICS on international financial institutions is limited. 3. A key issue that differentiates South Africa from the rest of the BRIC countries that may have implications on South Africa role and/or economic participation in the BRICS commitments. 1. The structure and composition of institutions lags behind the changing political realities on how does the BRICS challenge this situation The weakening of the UN as the central global international governance institution is critical to address. For instance if we look at the composition of global institutions to regulate Multinational Corporations, they are non-existent, allowing MNCs to operate with impunity. Rasigan Maharajh in his presentation showed that many of the top MNCs surpasses the economies of countries.2 These corporations have found various ways to increase their profits in a poorly regulated global financial system. Between 1970 and 2008, illicit financial flows from Africa amounted to about US$854 billion (of which US$175 billion flowed out of southern Africa), which could have satisfied the continent’s external debt obligations and left a surplus of US$600 2 http://www.tni.org/sites/www.tni.org/files/download/corporatepower-webbooklet.pdf
  • 3. billion3 to reduce poverty and stimulate economic development (define as fair and redistributive, takes into ecological limits and improves the well-being of people NOT just based on GDP growth). The bulk of these illicit flows – an estimated 60-65 per cent of the global total - consists of paid or reduced taxes on profits that businesses, particularly MNCs, shift between tax jurisdictions in order to reduce their tax bills (to nil, in some cases).4 This supply-side corruption thrives in globalised financial markets and urgently needs to be addressed. The financial secrecy index (FSI) reveals that 60 financial centres are categorised as secrecy jurisdictions, which encourage and enables illicit financial flows and tax havens. The FSI ranks the top five secrecy jurisdictions as those that have the greatest global impact; the ranking on the top is the USA (Delaware), Luxembourg, Switzerland, the Cayman Island and the City of London. 5 Given the scale of illicit finance flows, what role will the BRICS play in transforming the global finance architecture and supporting greater global financial transparency? 3 The momentum is building across the globe for measures to tackle transfer mis – pricing and tax havens this issue was raised in G20 process in 2011. In addition, the Sanya Declaration of the BRICS Leaders Meeting6 calls for the strengthening of global economic governance, and amplifying the voice of developing and emerging countries in international affairs based on universally accepted principles of international law, collective-decision making and mutual respect. In addition “We support the [G20] in playing a bigger role in global economic governance as the premier forum of international cooperation. We expect new positive outcomes in the fields of economy, finance, trade and development from the G20 Cannes Summit in [November] 2011.” 3 Commercial tax evasion (most of which is trade mispricing practices) constituted between 60% and 65% of illicit outflows in the world as at 2008. See Baker, R. Illicit Financial Flows from Africa: Hidden Resources for Development (Washington DC: Global Financial Integrity, 2001), at page 1. 4 Ibid. 5 http://www.taxjusticeafrica.net/content/tax-us-if-you-canwhy-africa-should-stand-tax-justice 6 Sanya Declaration of the BRICS Leaders Meeting, Sanya, Hainan, China, 14 April 2011
  • 4. 4 But progress has been slow and we are yet to see any strong measure on re-regulation of global financial markets. It is important to recognize that in the age of neoliberal globalization, within the UN itself, a strategy began for awarding corporations an increasingly high power quota.7 This began in 1993, with the elimination of UN bodies that represented at the time an attempt to establish social control over TNC activities. One of the organs created by ECOSOC (UN Economic and Social Council) in Resolution 1913 in December 1974 to investigate the activities in TNC’s and elaborate on their code of conduct, the Centre of Transnational Corporations was created in 1974. 8 In 1993, the US government requested to turn the Centre of Transnational Corporations into the Transnational and International Investment within UNCTAD. Upon this decision the Commission for Transnational Corporations would become UNCTAD. Abandoning the attempts to control TNCS instead to the “contribution of transnational to growth and development”.9 The UN in the year, 2000 established the Global Compact to incorporate “social actors” in which 44 TNCs participated, among them Nike, Shell, Rio Tinto.10 A proposal to “end the impunity of transnational corporations” stressed, this alliance creates dangerous confusion and tension between a public international institution like the UN and the private interest of the TNCs. 7 http://www.tni.org/article/united-nations-and-transnational-corporations-deadly-association 8 Contrbutiions by Hector Moncayo, Juan Hernandez, Alejandro Teitelbaum, Sebastian Valdomir and Francesco Martone, (2013). Unpublished document, “Proposal for the Elaboration of a People’s Treaty on Transnational Corporations (TNCs)” 9 Ibid. 10 http://www.tni.org/article/rio20-and-greenwashing-global-economy
  • 5. On Climate change Solutions to deal with this ecological crisis facing our planet are largely trade-led and market-driven, with technological advancements at the forefront. 5 When the Kyoto Protocol was introduced, carbon-trading mechanisms in essence was the beginning of those largely responsible for climate change to obviate their responsibilities. Following COP 17, the financial resources required by developing countries to adapt to the impacts of climate change and mitigate carbon emissions towards a transition away from a fossil- based economy remains a major point of contention at the these negotiations. Regrettably the BASIC (Brazil, South Africa, Indian and China) countries made significant comprises on genuine climate finance when they agreed to Copenhagen Accord during COP 15. These comprises included a “pledge and review” system, where developed countries are committed to mobilise US$100 million by 2020 through various means, which include carbon trading (of which the real benefits to the environment are as yet unproven), private equities, and investments in cleaner development mechanisms as well as the establishment of the Global Climate Fund. A major concern related the sources of funding are that it is predominately from private sources. The implications of the Copenhagen Accord has been widely criticized as the “death of multi-lateral environment agreements”, especially the Kyoto Protocol.11 With BRICS varying positions in the their different sub-groups, particularly the invidious role it played during the COP 15. It remains to be seen how they regroup their positions and make up for the lost ground to strengthen the UN multi-lateral environment agreements in the build up to 2020 as well how BRICS collectively seizes the opportunity in the transition to a low carbon economy and at the same time meet the socio-economic needs of the majority of poor and marginalized 11 Saliem Fakier, http://sacsis.org.za/site/article/408.1 Michelle Pressend, http://sacsis.org.za/site/article/410.1
  • 6. 6 people. 2. Reform Agenda of BRICS in the international financial institutions We see that change is expensive both in diplomatic currency as well as in financial resources and is very incremental. So while the change in the voting structure and composition of the international financial institutions is a laudable goal, there is a more immediate policy priority facing us at present. As a consequences flowing from the global financial crisis that started in the rich countries what we see both at the ideological academic and practical level is a commitment to austerity policies. The neoclassical and neoliberal economics premised on cutting spending has largely undermined employment and living standards within nations. This is mostly the case, even in advanced countries like what is happening with Spain Greece Portugal and Italy under austerity. While the international monetary fund has made special arrangements to deal with the problem of certain countries, the overall approach is still that of austerity informed by neoclassical economics. At another level it can be seen that poor countries particularly in Africa have received the poor man's credit card may be the “blue” or the “black” one whereas the IMF created a “platinum” card when the crisis hit the countries in Europe. So what we see is evidence of policy flexibility, a number of solutions that can be used to deal with the crisis and particularly the crisis in Africa, including allowing countries to settle their debts in their local currency. These flexibilities both in the post-war period to do with currency imbalances between countries are included but not used, because of the commitments to austerity policies. The key problem with austerity policies is that when countries are in trouble, the IMF helps to kick them when they are down. The most immediate priority for reform of the international financial institutions is
  • 7. 7 to remove the limitations they place on countries policy space that reduces their ability to effectively deal with unemployment. What is needed are policies that allow for employment promotion and increases in standards of living and not just increases in GDP and enclave development or growth without distribution to the lower members or vulnerable members of society. 2.1 Financial reform and BRICS Development Bank Currency battles emerging from the BRICS and the threat to the universal reserve currency, indicates the potential of the BRICS to shift the global financial system dominated by the US dollar. At the 2012 BRICS summit the partners called for intra- BRICS trade in “non-Third currency”. The Chinese Reserve Bank has also called for a new reserve currency as opposed to the dollar (or that Rinminbi be added to pot of currencies in the Special Drawing Rights). 12 The dollar’s potential displacement shows us a battle for a new world order-taking place today. With the dollar as the world’s currency, the US is the only country in the world that can expand its buying power simply by printing its currency. Any other country doing so (as Zimbabwe did) in a world of global trade would simply cause rampant inflation and currency collapse. At the same time, any act of devaluing its currency immediately lowers its foreign debt (because this is also in dollars) and lowers everyone else’s reserves (which are also in dollars). 13 The BRICS Bank is another point of contention; particularly the nature and the form the Bank would take as well as finance for the Bank. BRICS should consider establishing a new development bank along the lines of the Banco del Sur (Bank of the South) in South America, which was established in 2009 with countries with an initial capital of 20 billion US dollars. In a clear departure from the undemocratic and paternalistic governance structure of the World Bank, no single country will own the bank, or have the sole right to make appointments. Although not fully defined, 12 Leonard Gentle’s Presentation, (2012). SA and BRICS: Understanding SA’s ambitions in a new world order 13 Leonard Gentle, “South Africa and BRICS: It’s all about dollar” in Workers World News: Alternatives to Globalisation, Issue 75, February 2013, ILRIG
  • 8. voting power will be based on financial need rather than monetary contribution or political weight. Questions remain, what will the nature of the BRICS Bank be? Will it be a clear departure from the WB and IMF? 8 It is better to have a weakened multi-polar world than a strong “world policeman” dominating the world militarily and in currency terms. In that sense the BRICS represents both a decline of the US and the space to do something different in the world because no new power is replacing the US as the imperial hegemon. 3. A key Issue that Differentiates of SA from BRICS When looking at the BRICS it is clear that there is one feature and possibly there are others but this is the priority, that differentiate South Africa from the other members. All the other members of the BRIC have clear development policies that are financed through state institutions, rather than complete reliance on the commercial banking sector. This perhaps reflects on South Africa's development policy and approach but also its orientation in terms of how it sees the role of the state in the economy. However what is clear is that the international economic order does not distribute benefit as claimed by neoclassical theory and that state intervention is required to ensure adequate distribution of benefits. Countries that run persistent and chronic deficits have different characteristics and policy options available to them as compared to countries that run surpluses or are in a position of holding sufficient control over the market and exercise control in a way that does not dilute policy space. The issue of development, and by this I mean a fair and equitable distribution of benefits from economic activities as well as the important element of technological upgrading, needs to be considered especially in the dire African situation. Even with the global economic crisis the response of government’s policy tools to address the productive structure is lacking in a number of respects. Levels of industrialisation are low. Levels of productivity are low. Stimulus measures in such a context would merely inflate the demand for imports and there are limits to the amount of gold
  • 9. 9 and bananas the world can consume. In this vein it is important that South Africa has initiated the process of inviting other African countries to the BRICS Summit. The inclusive and participatory processes that are sure to follow are important in that it establishes relations between countries. These relations need to be fostered. The African continent is particularly unique from the regions of the BRIC countries as it embraced the total neoliberal package and has followed the path for instance on economic integration of signing binding treaties and making binding declarations that are often not followed up or countries lack the capacity of financial resources for enforcement. Dot Keet in her views on alternatives regionalism, emphasized arrangements based on cooperation in a number of social sectors, coordination of developing technical systems and infrastructure and harmonization – of rules, regulations, norms and standards governing common systems and cross-border relations. 14 With BRICS on the horizon, it is clear that there are changes in the political reality and that new relationships need to be fostered and these need not only be legal and treaty-based but can also be on a softer level so that a more pragmatic approach to cooperation can be taken between regions. As Chris Paterson, the Conservative MP from the United Kingdom and last British governor of Hong Kong said, “one of the key things that allows Western countries to operate as they do is their club ability.” END 14 Dot Keet, (2008). “Strengthening Regionalism” in Dilemmas of Poverty and Development: A proposed framework for the Southern African Development Community, eds Michelle Pressend and Michele Ruiters, Institute for Global Dialogue.
  • 10. 10