The potential entry of Greece into the $100 billion New Development Bank (formerly, the BRICS Development Bank) signals that Russia is serious about building the economic structure for a multi-polar world.
Greece's Prime Minister Alexis Tsipras, right, is accompanied by officials during his visit at the Education Ministry in Athens, Tuesday, June 2, 2015. Photo: AP
As a result of burdensome Western sanctions stemming from the Ukraine conflict, Russia continues to accelerate the expansion of multilateral projects – most notably the Eurasian Economic Union (EEU) and Shanghai Cooperation Organization (SCO) - aimed at counterbalancing Western military and economic institutions. The latest measure by Russia to counter the West is an effort to integrate Greece into the $100 billion New Development Bank (formerly known as the BRICS Development Bank), a step that may happen as early as mid-June.
The move, while surprising, has been foreshadowed for months. Russian President Vladimir Putin has labored to exploit divisions in the European Union in an attempt to erode Western sanctions and to strengthen non-European partnerships, particularly in Asia. Now, the potential entry of Greece into the burgeoning financial sphere of the BRICS signals an attempt to form 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 in Moscow, 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. Additionally, Russia has 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 BRICS Development Bank (now known as the New 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 Russian city of Ufa on July 9-10.
These upcoming meetings build upon various political, economic, and military joint initiatives. Most recently, Russia celebrated Victory Day with Chinese leader Xi Jinping, 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 are ready to see if they possess shared vision and multilateral infrastructure capable enough to integrate a European nation at the economic level.
The potential entry of Greece into the $100 billion New Development Bank appears to bolster the claim that emerging powers have appeared 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 June 19-20.
Under dueling pressures from anti-austerity supporters and pro-unity EU creditors, Tsipras is facing 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 might propel Greece into the latest BRICS financial venture.
Looking forward, the New 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 could even attract additional European or Asian partners. Ultimately, the admission of Greece into the New Development Bank adds further credence to the theory of a gradual erosion of Western-dominated global order toward a multi-polar world.
The opinion of the author may not necessarily reflect the position of Russia Direct or its staff.