In June 2023, The Guardian published an article about the Solomon Islands seeking funding for infrastructure projects from Australia and China. The Pacific Games will take place there this November and money for security and policing is in short supply. But by far the bigger issue is who Prime Minister Sogavare requested funding from. Western powers and institutions such as the World Bank seemed to not merit consideration.
We'll explore the issues surrounding this funding request in just a moment. Right now, we need to point out that this matter exemplifies the debate surrounding BRICS and its growing influence around the world. Other global powers' reactions are very telling; we can sum them up with 'do everything possible to cut China off at the pass!'. We need to know:
- Why do Western nations leap so swiftly into opposition?
- Is there any room in the world for BRICS?
- What's different between BRICS and current global governance models?
- Are there ways these institutions could cooperate?
Global Governance and the Solomon Islands
Back to the Solomon Islands, now. Looking at Prime Minister Sogavare's record, you might conclude that he is a well-respected and popular leader. He's been elected to that position four times, though there is controversy over the election that saw him retake power in 2019. And people rioted in the streets when his government switched allegiance from Taiwan to China in 2019.
Now, he's deferred elections for a year, presumably because the national budget can't afford the Games and a voting extravaganza. Despite some dissent, Parliament voted to postpone that political exercise. In the meantime, he signed an agreement with China to train and supply the Islands' police force and render security assistance, as needed.
None of this sits well with governments in Australia, New Zealand or the United States. The US, which had closed its Solomon Islands embassy when the Cold War ended in 1993, hastily reopened it. The US State Department, the branch of government that oversees foreign relations, issued this notice:
The United States needs a permanent diplomatic presence in Honiara to effectively provide a counterweight to growing [Chinese] influence and deepen our engagement with the region commensurate with its importance.
US State Department memo, Jan 2023
You'd be right to think that's quite a reversal. After all, nobody seemed to have a problem with China funding million-dollar infrastructure projects ahead of The Games. Or all around the South Pacific. But the US has indicated they intend to become more active in those regions, too.
We have to wonder whether this call to action is due to sudden remorse over leaving those nations unsupported for so long. Or does it have anything to do with the growing Chinese influence and economic support? Which leads us to a larger question: will current global institutions ever collaborate with BRICS nations?
Global Governance Institutions and the Global South
Developments in the Solomon Islands make it appear like it will be competition all the way, particularly In initiatives involving China. After all, nobody seemed to fret over Russia selling oil to India despite heavy sanctions against doing so. Both Russia and India are BRICS countries, along with China, South Africa and Brazil.
Historically, the global south has merited little consideration from global governance institutions. Over the past 40 years, the United Nations (UN) and the World Bank have identified a collection of Least-Developed Countries (LDCs), mostly all in the Southern Hemisphere. The UN and the World Bank, along with the World Trade Centre, have developed initiatives to 'graduate' these nations into the global economy.
These plans emphasise foreign investor and private sector involvement. The plan is not for global governance institutions to lend much financial aid, leadership or practical resources. Non-governmental organisations (NGOs) worry that these initiatives are more like capitalist, profit-seeking ventures. Most contend an effort to advance needy nations' interests and reduce worldwide inequality would work better.
The BRICS Development Bank could do a lot to help advance these nations' interests without private capital. According to that Bank's latest five-year General Strategy outline, their focus is on sustainable development and infrastructure. This Bank has already allocated funding for two-thirds of its planned projects. These developments provoke debate over what else BRICS could do; they also put the focus on BRICS' growing role in the global economy.
BRICS and Global Governance Institutions
There seems to be very little dialogue between BRICS and other global governance institutions. Those include the World Trade Organisation (WTO) to regulate commerce and the UN, with its various initiatives. The World Bank and the International Monetary Fund (IMF) are active around the world but they do not govern.
They vote on matters of global significance, though. They may oppose a funding initiative or withhold funding until certain conditions are met. A nation's non-compliance with any new mandate may see allocated funding revoked. For instance, the IMF may mandate a certain percentage of foreign investment before disbursing any more Bank funds.
There's no doubt that we need international cooperation, especially in finance and banking oversight and management. The 2008 global economic downturn proved that a lack of transparency and allowing institutions to operate unchecked leads to calamity. The Pandemic Recession and current inflationary crisis drive that point home.
Here, the BRICS model offers a solution. Unlike the World Bank - headquartered in the US, the BRICS Development Bank is decentralised. All five nations have a branch that they fund in equal measure and they operate on consensus. That means all five countries must approve a venture before they allocate funding, no matter where in the world the development will happen.
Furthermore, they propose (but have not yet developed) a universal trade currency. The current system of pinning global economic activity on a single country's currency gives that nation outsized power. By contrast, establishing a currency used just for international trade makes every trading partner an equal player. It would be a bit like adopting Esperanto as a universal language; it 'belongs' to no country and can be used by all.
Increasingly, researchers and economists have come to the conclusion that the current governance institutions instil a system of global apartheid. This term describes the global north's enforcement of policies and structures that disadvantage most nations in the southern hemisphere. To balance that power and representation, everyone must be represented and have power.
BRICS doesn't seem concerned with which hemisphere a petitioning nation rests on. Their aid is conditional like the World Bank's initiatives are. But the conditions seem less predatory. For instance, China's military base in Djibouti helps to reinforce security and deter pirates. In return, Chinese military personnel stationed there stimulate the local economy.
BRICS and Developing Countries
Before outlining possible BRICS and global government institution opportunities, let's point out that BRICS isn't a free-for-all. Member countries don't help every nation that petitions them. The most notable examples of such are China refusing to supply Russia's current war and refusing development aid to North Korea (China provides food and humanitarian aid).
Nor do they exercise authority over one another. For Western powers, this is a source of great frustration, especially towards China. This country has grown economically powerful and influential. The Western mindset dictates that China should wield that influence to serve 'common' interests.
But China sticks to its stated ideology that no country should exercise influence over another. And also, that all countries should respect others' sovereignty. This impasse makes it seem unlikely that China/BRICS and global institutions will find a path to cooperation. But maybe they don't need to work hand-in-hand; complementary initiatives will do.
Many of the LDCs the UN and World Bank marked as investor development opportunities for 'graduation' have expressed interest in joining BRICS. Bangladesh, Ethiopia, D. R. Congo, Guinea-Bissau, and Afghanistan are just a handful on a very long list that extends across the global south. Some of the countries already 'graduated' into global markets, such as Iran, have also applied to BRICS.
It isn't just poor nations that have applied for BRICS access, and not all applicant countries are in the global south. Wealthy lands like Egypt and Saudi Arabia have also applied, and France, Türkiye and Belarus have expressed an interest in joining. Perhaps these nations, thinking about joining 'the other' economic engine, will spur existing entities to reconsider their position vis-a-vis BRICS.
As more countries express their interest, it harms global governance institutions to persist in painting BRICS as a challenger. The BRICS alliance could plug gaps in existing systems without undermining them. For instance, BRICS could bridge the current lack of regional financing arrangements because they already operate on a decentralised model.
The last 20 years have proven that the global economic system needs to diversify its reserve currency. China has taken the lead in creating a digital currency and implementing blockchain technology; these systems are in the trial phase as we speak. But China doesn't propose switching from the dollar to the yuan; that would not solve existing problems. However, the BRICS global trade currency is an idea worth exploring.
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