BRICS Conference Plots a Challenge to Western Economic Domination

Russian President Vladimir Putin, Indian Prime Minister Narendra Modi, Brazilian President Dilma Rousseff, Chinese President Xi Jinping and South African President Jacob Zuma pose during a group photo session at the 6th BRICS summit in Fortaleza July 15, 2014. REUTERS/Nacho Doce

A new monetary organization that aims to be a rival to the World Bank and the IMF was launched today by leaders of the BRICS group at their annual summit. Leaders of Brazil, Russia, India, China, and South Africa, banded together as a set of emerging nations, announced the long-awaited bank and contingency fund, a clear move away from the dominance of the West in global economics and the dire consequences of an unstable dollar.

Speaking in Fortaleza, Brazil, Brazilian President Dilma Rousseff said the $100 billion contingency fund would be available as a "safety net" to prevent "volatility faced by various economies when the United States exits its expansionary monetary policy," the AFP reports.

The group has been critical of the World Bank for not giving enough voting rights to developing nations, despite the fact that combined, the population of the group's member states consist of more than 40 percent of the world's total number of people, and 20 percent of global GDP.

China will provide the largest contribution to the bank at $41 billion, and right now Shanghai is the frontrunner for host city, although there is continuing dispute over this. Another $18 billion each will be given by Brazil, India, and Russia, and $5 billion will come from South Africa. The bank will initially have $50 billion in capital that will be split evenly between the five countries, according to the BBC.

Rousseff also said the BRICS would take a stance on Ukraine, but that hasn't yet been decided upon. Language presented in the Fortaleza Declaration is vague, saying only: "We express our deep concern with the situation in Ukraine. We call 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, in full compliance with the UN Charter and universally recognized human rights and fundamental freedoms."

While the economic alliance of the five nations has been solidified with the bank's creation, Russian President Vladimir Putin says it won't extend to a political or military union. "The international monetary system itself depends a lot on the U.S. dollar, or, to be precise, on the monetary and financial policy of the U.S. authorities. The BRICS countries want to change this," Putin said in an interview with Russian news agency ITAR-TASS.

Strengthening international law and the role of the U.N. is also high on the group's agenda, although a self-congratulatory Putin said that without Russia and China's "principled position on Russia in the Security Council the events in that country would have followed the Libyan and Iraqi scenario." The South China Morning Post notes that the other countries "refused to participate in efforts to isolate Russia," illustrating a solidarity similar to that of Western nations uniting against Russia over the ongoing conflict in Ukraine.

But some remain skeptical over just how successful the BRICS bloc can really be. Bloomberg Businessweek's Carol Matlack thinks the countries are "too splintered to function as a bloc," and since 2001, when the acronym was first coined, "their paths have diverged sharply."