Potential Greece entry into new BRICS bank strengthens alternative to Western lenders

( Russia Sergey Katryrin, SA Patrice Motespe, India Onkar Kanwar ) Chairmen of the BRICS countries during the media briefing at the first meeting of the BRICS Business Council held at the Sandton Convention Centre, Johannesburg. 20/08/2013

Photo Credit: Government ZA

Under burdensome Western sanctions due to the Ukraine conflict, Russia continues to accelerate the expansion of multilateral projects aiming to counterbalance Western military and economic institutions, such as the Eurasian Economic Union (EEU), Shanghai Cooperation Organization (SCO), and the new BRICS development bank. Russian President Vladimir Putin has labored to exploit divisions in the European Union in an attempt to leverage Western sanctions relief and to strengthen non-European partnerships, particularly in Asia. Now, the potential entry of Greece into the burgeoning BRICS financial sphere signals the formation of a viable alternative to the two Western lenders most dominant in global financial governance, the World Bank and International Monetary Fund (IMF).

Over the last year, European Union (EU) policy amidst the Ukrainian crisis has exposed differences of opinion among EU members, which Russia adeptly exploited to woo Greece and other states into closer diplomatic integration. During a two-day meeting in April, Greek Prime Minister Alexis Tsipras, recently elected on an anti-austerity platform, became readily amenable to Putin’s economic overtures offering a much less painful path than the deep, unpopular budget cuts required under an EU bailout set to expire in June. Though the struggling Russian economy lacks the capacity to provide an alternative financial assistance package if bailout talks fail, Russia has started to lift an import ban on food suppliers in Greece, Hungary, and Cyprus meant to counter Western sanctions as well as moved forward on development of the Turkish Stream pipeline expected to deliver Russian gas to Europe through Greece by 2019. These moves provide a welcomed boost to Greek markets still reeling from the 2008 global recession, solidifying greater ties between the two Orthodox nations.

In May, Russia surprised the world by extending an invitation to Greece to join the new BRICS – Brazil, Russia, India, China, South Africa – development bank, a decision judged much less shocking after considering the advancing multilateral infrastructure amongst BRICS countries in recent years. In a much-anticipated showcase of expanding BRICS cooperation, Russia will host the 7th annual BRICS summit alongside the next SCO summit in the provincial city of Ufa on 9-10 July. These upcoming meetings build upon various political, economic, and military joint initiatives. Most recently, Russia celebrated Victory Day with the most prominent non-European heads of state, pivoted away from Europe toward Asia via massive energy deals, and arranged military exercises with China and India, notably in the Mediterranean Sea. The BRICS countries now possess shared vision and multilateral infrastructure capable enough to integrate a European nation chiefly at the economic level.

The potential entry of Greece into the new BRICS development bank appears to bolster the claim that emerging powers have thus emerged to challenge the dominance of Western financial institutions in global governance and further systemize a multi-polar world. A final decision on integrating a sixth member should be discussed during the St. Petersburg Economic Forum on 19-20 June. Under dueling pressures from anti-austerity supporters and pro-unity EU creditors, Greek Prime Minister Tsipras will face a tough call on whether to accept the Russian invitation to join the BRICS bank. But fear of another financial meltdown coupled with uncompromising EU bailout terms will likely propel Greece into the latest BRICS financial venture.

Looking forward, the BRICS development bank, particularly with the European pull of Greece, will both complement and compete with the World Bank and IMF to fund infrastructure projects and by extension assert geopolitical influence into developing countries. The growth of BRICS economic cooperation will likely attract additional European partners and possibly even dually transition into a military alliance posing an affront to the North Atlantic Treaty Organization (NATO). Ultimately, the admission of Greece into the new BRICS development bank adds further credence to the theory of a gradual erosion of Western-dominated global order toward a multi-polar world.

Peter J. Marzalik

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One thought on “Potential Greece entry into new BRICS bank strengthens alternative to Western lenders

  1. Pingback: 5/29 Weekly Roundup | The Elicitor

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