Is the BRICS bank an al­ter­na­tive for Greece?

Financial Mirror (Cyprus) - - FRONT PAGE -

Over the past few weeks, spec­u­la­tion has been cir­cu­lat­ing over Greece’s po­ten­tial ac­ces­sion to the New De­vel­op­ment Bank es­tab­lished by the BRICS - Brazil, Rus­sia, In­dia, China and South Africa. Rus­sia’s in­vi­ta­tion to Greece to be­come a mem­ber of the BRICS bank comes at a del­i­cate point for the lat­ter, since its new left­ist Syriza-led gov­ern­ment is at­tempt­ing to strike a deal with its Euro­pean coun­ter­parts in or­der to avoid a po­ten­tial bank­ruptcy that would have tremen­dous im­pact on the coun­try and the Eu­ro­zone as a whole.

Is Rus­sia’s in­vi­ta­tion to Greece just a mere co­in­ci­dence? Have the BRICS de­cided to save Greece from col­laps­ing, en­hanc­ing Eu­ro­zone’s sus­tain­abil­ity? At a time like this, where West-Rus­sia re­la­tions bring back Cold War mem­o­ries, such an ex­pla­na­tion seems to be a truly su­per­fi­cial one.

In to­day’s in­ter­na­tional stage, it’s more than clear that the BRICS have es­tab­lished the New De­vel­op­ment Bank to chal­lenge the Western dom­i­nance in the global econ­omy. The United States, in the af­ter­math of its Sec­ond World War, cre­ated an eco­nomic, po­lit­i­cal, and ide­o­log­i­cal hege­mony on a global level. Fi­nan­cial in­sti­tu­tions such as the In­ter­na­tional Mon­e­tary Fund and the World Bank be­came the sym­bols of US global eco­nomic and po­lit­i­cal hege­mony. This seemed to be un­chal­lenge­able, es­pe­cially af­ter the demise of the Soviet Union, when the global econ­omy was grow­ing and stan­dards of liv­ing in most western coun­tries were steadily ris­ing. How­ever, de­vel­op­ments in the world econ­omy dur­ing the last decade and the emer­gence of other eco­nomic pow­ers such as BRICS, along with the global eco­nomic re­ces­sion of 2008, which hit Europe par­tic­u­larly hard, have cre­ated a new global eco­nomic en­vi­ron­ment; an en­vi­ron­ment that has left Western eco­nomic hege­mony more vul­ner­a­ble than ever be­fore. The ques­tion that arises, there­fore, is clear and sim­ple; who is go­ing to fill the void?

Based on their eco­nomic dy­namic and de­vel­op­ing economies, the BRICS are try­ing to chal­lenge the in­ter­na­tional eco­nomic and po­lit­i­cal sta­tus quo and through the es­tab­lish­ment of their own bank to in­crease their role in the global fi­nan­cial and po­lit­i­cal scene. The de­ci­sion by China, Rus­sia, In­dia, Brazil and South Africa to pro­vide higher funds to the New De­vel­op­ment Bank than the IMF and World Bank, high­lights the BRICS’s de­ter­mi­na­tion to hit the in­ter­na­tional fi­nan­cial es­tab­lish­ment at a time when it is es­pe­cially vul­ner­a­ble.

In this pe­riod of global an­tag­o­nism, the BRICS are aim­ing to take ad­van­tage of the West’s po­lit­i­cal de­fi­cien­cies. Greece has for years been the main con­cern in the ‘western’ eco­nomic camp and Eu­ro­zone’s weak link. The IMF, ECB and Euro­pean Com­mis­sion have not yet reached an agree­ment with the new Greek gov­ern­ment, which aims to end the con­tin­u­ous eco­nomic and so­cial de­pri­va­tion of the coun­try.

This gen­er­ates an un­prece­dented op­por­tu­nity for the BRICS, and of course Rus­sia, to break the western mo­nop­oly to the man­age­ment of global eco­nomic af­fairs. Rus­sia’s in­volve­ment in the heart of the ‘western camp’ - the Eu­ro­zone - to save one of its mem­bers, should be con­sid­ered as an at­tempt to play a more ac­tive role in the world econ­omy and to get in­volved in Euro­pean Union’s in­ter­nal af­fairs. Rus­sia, by lur­ing Greece through eco­nomic as­sis­tance, aims to take ad­van­tage of the western camp’s fragility, and, by fol­low­ing the ex­am­ple that the US has set for many decades, aims to use this eco­nomic as­sis­tance as a means of po­lit­i­cal in­flu­ence. The BRICS’ in­vi­ta­tion to Greece is Vladimir Putin’s next move in the chess­board be­tween Rus­sia and the West.

This might be the start point of a new bat­tle be­tween the west and Rus­sia in po­lit­i­cal, eco­nomic, but mostly in ide­o­log­i­cal terms.

Is the BRICS bank an al­ter­na­tive for Greece? The new Greek gov­ern­ment, in a des­per­ate eco­nomic and po­lit­i­cal sit­u­a­tion, in­ter­prets this in­vi­ta­tion as an al­ter­na­tive source of eco­nomic as­sis­tance to avoid bank­ruptcy or at least as lever­age to max­imise its chances for a gain­ful deal in the bar­gain with the EU and the IMF.

How­ever, the New De­vel­op­ment Bank has been es­tab­lished solely to fund projects within a coun­try, such as the cre­ation of new highways or hos­pi­tals, but, as the heads of the five states that com­pro­mise the bank have stated, cer­tainly not to fund a coun­try to the ex­tent that it avoids bank­ruptcy.

Not only is BRICS’ bank not an al­ter­na­tive for the coun­try as it can­not pro­vide that eco­nomic as­sis­tance that Greece needs to sur­vive, but also the lat­ter seems too weak in eco­nomic and po­lit­i­cal terms to ma­nip­u­late west-Rus­sia an­tag­o­nism for its own ben­e­fit. Such a strat­egy is per­ilous and its re­sults are highly un­pre­dictable.

Ex­cept these risks, Greece should con­sider the big pic­ture: how dif­fer­ent is a ‘western’ mech­a­nism of fi­nan­cial sup­port than a BRICS’ or a Rus­sian one? Are there any dif­fer­ences in be­ing at the mercy of the EU and IMF than be­ing a pawn of Rus­sia and the BRICS in the global chess­board? This is a vi­cious dilemma.

Greece should think twice be­fore get­ting in­volved in a very dan­ger­ous game, with ev­ery­thing to lose and noth­ing to gain.

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