History appeared to be in the making when the leaders of Brazil, Russia, India, China and South Africa, commonly known as BRICS, on 15th July, 2014 agreed in Fortaleza to create a Shanghai-based Development Bank and a Reserve Fund, seen as counterweights to Western-led multilateral financial institutions. The Development Bank will have an initial capital of dollar 50 billion that could rise to dollar 100 billion, funded equally by each nation. The first President of the Bank would be an Indian while the first Board Chair would hail from Brazil. According to the summit declaration, the bank will help emerging and developing nations mobilize resources for infrastructure and sustainable development projects. The Contingency Reserve Arrangement will have dollar 100 billion at its disposal and would help countries avoid "short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financing safety net and complement existing international arrangements." China was expected to make the biggest contribution of dollar 41 billion, followed by dollar 18 billion each from Brazil, India and Russia and dollar 5 billion from South Africa. The BRICS summit declaration also voiced deep concern over the situation in Ukraine and called for a comprehensive dialogue, the de-escalation of the conflict and restraint from all the actors involved with a view to finding a peaceful political solution. While Brazilian President Dilma Rousseff said that "these initiatives show that, despite our diversity, our countries are committed to a solid and productive association", Russian President Vladimir Putin hailed the agreement as "a very powerful way to prevent new economic difficulties."
One would be only profoundly naive to suggest that such a huge development was not expected. BRICS countries, which together represent 40 percent of the world population and a fifth of the global economy, have been growing at a very fast rate in the recent past and demanding restructuring of the old world economic order based on the Bretton Woods agreement of 1944 under which the World Bank and the IMF were established. The contention of BRICS was that an international finance regime based on the realities of some seven decades back must be comprehensively reformed to adequately reflect the changing economic weights in the world economy and be more responsive to future challenges. It has been argued that the IMF, in particular, is in a dire need of reviewing its distribution of quotas and voting power in order to reflect the unquestionable weight of emerging economies. However, the Western countries who dominated the existing multilateral financial institutions either turned a deaf ear to their pleas or were very slow to respond and that too in a way not appropriate to the evolving situation. Rousseff expressed the sentiments of BRICS countries when she said that "the distribution of quotas at the IMF neither reflects the power nor the correlation of economic strengths of countries operating within it. Our relationship with the IMF has gone from one of debtor to creditor and during the problems of the euro crisis we contributed a "firewall" to ensure things did not worsen still further." To ease the concerns of other countries somewhat, however, she hastened to add that "we have not the least interest in distancing ourselves from the IMF. On the contrary, we wish to democratize it and make it as representative as possible."
Whatever the statements of the BRICS leaders, the world seems to be heading towards a new global economic, financial and trade order until and unless western and some other countries dominating the IMF and the World Bank with their overwhelming quotas at present take urgent steps to accommodate the demands of BRICS countries and somehow persuade them to contain their ambitions, go easy on their current plans or reconsider them altogether. The chances for such a drastic shift in policy at this stage are, however, either very slim or nil because this is a development, which has been long in the making because of great asymmetry of views between the BRICS and western countries on the subject. Anyhow, it is very difficult at this juncture to say something conclusively about the impact of the latest development because structural details of the new institutions have still to be decided/announced but Fortaleza of 2014 could turn out to be the Bretton Woods of 1944 for the global economy. The proposed Development Bank could rival the Washington-based World Bank to finance infrastructure projects while the Contingency Reserve Arrangement could be seen as a "mini IMF" to head off future economic crises. However, much would depend on whether new members are allowed to join in the new arrangement and on what terms. It needs to be seen whether or not the BRICS countries would be allowed to wield veto power. The ultimate size of the capital, conditions governing loan facilities and the relationship of the new institutions with the old established institutions are some other key issues for a serious thought. All in all, what happened at Fortaleza was momentous and in a way historic. We are sure that all the countries would watch the future developments on this score with the intensity of gaze that this great event deserves.