EDB: BRICS+ may become a new format for global economic integration
Moscow, 20 July 2017. “With the currently low growth rates, global economy needs a new impetus, a new driver for development,” Yaroslav Lissovolik, Chief Economist at EDB, told the audience of the Valdai International Discussion Club. The meeting took place in Moscow on 19 July 2017.
In his paper BRICS-Plus: Alternative Globalisation in the Making? Yaroslav Lissovolik emphasised that the BRICS grouping, being present in all the key regions of the developing world and uniting the largest developing economies, could serve as the platform for strengthening ties and consolidating the developing world. “The BRICS+ mechanism, envisioning a comprehensive and multilevel approach – a network of economic alliances, factoring in all the diversity of the modern world – would be especially useful in these conditions,” the expert explained.
He also said that, “Rather than expanding the core set of BRICS members, the BRICS+ initiative seeks to create a new platform for forging regional and bilateral alliances across continents and aims at bringing together regional integration blocs, in which BRICS economies play a leading role. Accordingly, the main regional integration blocs that could form the BRICS+ platform include Mercosur, the South African Customs Union (SACU), the Eurasian Economic Union (EAEU), the South Asian Association for Regional Cooperation (SAARC), and the China-ASEAN Free Trade Area (FTA).”
The author of the report believes that closer cooperation between regional blocs and development banks in the BRICS+ circle is already taking place. In particular, Mercosur signed a preferential trade agreement with SACU. In terms of cooperation between the development banks of BRICS countries, in 2016 Eurasian Development Bank (EDB), in collaboration with the New Development Bank, Nord Hydro and the International Investment Bank (IIB), reached an agreement on construction of small hydropower plants in the Republic of Karelia (Russia). NDB will fund the construction of the plants in Karelia with a total amount of US $100 million, making its first investment in the Russian Federation. The NDB will provide the IIB and EDB with targeted financing of US $50 million each for opening a credit line for Nord Hydro in Russian roubles. The maturity of the loan is 12 years, with the IIB and EDB covering associated project risks. In addition, in April 2017, EDB signed a memorandum on cooperation with the NDB.
Therefore, the BRICS+ framework provides opportunities for greater trade and investment integration as well as a supportive institutional framework for coordination among regional development banks and development of financial systems. However, the key principle in this process is to allow for substantial flexibility in the multilateralisation of alliances to include trade and/or investment, as well as the possibility of regional and/or bilateral alliances.
Additional Information:
The main objectives of the Valdai International Discussion Club are to promote open dialogue between experts, politicians, public figures and journalists, as well as unbiased discussion of international relations, politics, economy, security, energy and other issues, and to forecast key world tendencies and processes in the 21st century. The club has been working since 2004.
Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. EDB's charter capital totals US $7 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.
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