ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Fortaleza Twins

Will the Fortaleza twins be adversaries of the Bretton Woods institutions?

The sixth summit of the BRICS countries – Brazil, Russia, India, China and South Africa – in the Brazilian city of Fortaleza on 14-16 July attracted a lot of attention for two reasons – the agreement on the New Development Bank (NDB) and the treaty for the establishment of a BRICS Contingency Reserve Arrangement (CRA). A number of commentators have held that the establishment of the NDB and the CRA is an attempt to replicate the World Bank and the International Monetary Fund (IMF), with China now in the lead at Fortaleza in July 2014 just as the United States (US) was at Bretton Woods (New Hampshire) 70 years ago in July 1944.

The Brazilian President Dilma Rousseff denied that this was the case: “I don’t believe the format ... will promote a new hegemony.” Guido Mantega, the Brazilian finance minister, added that the NDB was based on the principle of equality between the BRICS member-countries and, moreover, the BRICS bank’s presidency will be rotated among the five member countries. This is, of course, most unlike the IMF and the World Bank, where, in the case of the former, the president is chosen by the Europeans, and in the latter, the US chooses who is to occupy the post. The question, however, is whether the relationship between the Fortaleza twins and the Bretton Woods twins will be one of complementarity or one of tension.

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