Korea
Source: www.globalasia.org

Since the Great Recession of 2008-09, the political elite in the West has been wrestling with the profound implications of China's rise and the relative decline of the United States in the existing world order. To the dismay of many observers, US President Donald Trump has abdicated America's international leadership and attacked existing multilateral arrangements, while many mainstream political forces in Western Europe are being washed away by the tidal wave of radical anti-globalization movements on the left and anti-EU populist uprisings on the right. Into that leadership void, China has emerged paradoxically as a beacon of stability and predictability as well as a major source of impetus propelling the world economy and regional integration forward. The calamity brought about by the Covid-19 pandemic only heightened anxiety as the world witnessed how the Trump administration fumbled its task to mitigate the virus while China emerged as the supposed savior of the world, sending needed medical equipment and doctors to heavily impacted countries.

With the day when China will overtake the US as the world's largest economy on the horizon, many Western observers have experienced a deepening of their worries. First of all, they fear a corresponding disorder as the strategic competition between China and the US escalates. This has heightened ideological competition on the one hand, and an increasing resort to power politics on the other. A looming US-China economic Cold War might trigger deglobalization and a decoupling of the global economy. Some Western political leaders have also raised the concern that China has not only openly defied the game rules set by the erstwhile hegemon with greater frequency, but also begun to outline an alternative set of rules.1 They have been annoyed by the fact that China is initiating visionary policy initiatives to reconfigure the paths and rules of economic integration and globalization, advocating an ever more ambitious agenda through such platforms as BRICS and the G20 to reform the mechanisms of global governance, and building up new multilateral institutions that complement, supplement and could partially replace today's international institutions and rules of economic exchange and co-operation. They have been struck by China's strategic vision to accelerate economic integration of the vast Eurasian continent, establish new multilateral lending institutions (such as the BRICS Investment Bank and the Asian Infrastructure Investment Bank, or AIIB), and supply ever more regional and global public goods in the form of new policy co-ordination mechanisms, investment funds, digital infrastructure for cross-border e-commerce and mega infrastructure projects that could vastly improve intra-regional or cross-regional connectivity via trade, personnel exchanges, financial transactions, knowledge sharing, energy transmission and digital communication.

Many mainstream international relations scholars have warned that the relative decline of the US and the rise of China (and other countries) will accelerate the erosion of the post-Second World War liberal international order (LIO) and bring more conflict, disorder and chaos to the world. Under the most dramatic scenario, the LIO might fall into one of the following two traps: First, it is in danger because China is poised to topple the existing order with its ambitious and aggressive global agenda. A strategic showdown between the US and China, which will tear apart globalization and bring down multilateralism, seems inevitable. Second, the LIO is in danger because the US is abdicating its hegemonic responsibility while China is not ready or willing to bear the burden of international leadership. The chaos and disorder that come with a leadership vacuum could become inevitable.2

China as a Reformist, Not Revisionist, Global Power

Is China a revisionist power attempting to establish a comprehensive system as an antithesis to the Western-led world order? It depends on how one defines the essence of the post-Second World War order and whether you look at the multi-faceted implications of the rise of China from a "Western-centric" view or the view of the global community.

Western opinion leaders who feel threatened by China's rise usually trap themselves in one of the two Western-centric conceptions about the post-war liberal world order. First, they tend to conflate three liberal elements together: political liberalism (in opposition to authoritarianism), economic liberalism (in opposition to economic nationalism or mercantilism) and liberalism in the sense that international relations theorists use it (in opposition to realism and other theories of international relations).3 They assume that the three elements should always come together and thus fail to recognize the inherent tension and contradiction among the three. In reality, the neo-liberal turn of economic liberalism since the 1980s has brought about what Dani Rodrik termed "hyperglobalization," and as a consequence, it is undermining democracy, eroding national sovereignty and destroying social solidarity.4 Such theorists also fail to recognize that the neo-liberalism of the last three decades has created an unprecedented concentration of economic power in a handful of giant firms that are able to capture huge economic rents by wielding their monopolistic power and undue political influence.5 In addition, there is only flimsy historical evidence to suggest that Western liberal democracies are more credible supporters of an open, rules-based multilateral trading system or rules-based international relations more generally. If history is a guide, one should not forget which democracy triggered the escalation of protectionism and the total collapse of world trade during the 1930s. The Smoot-Hawley Tariff Act of 1930, which was signed by US President Herbert Hoover into law against the advice of more than 1,000 economists, plunged the world into the Great Depression.

It is presumptuous to assume that countries that are governed under non-Western political systems are necessarily less able to be responsible stakeholders of multilateralism. Many Western politicians have overlooked the simple fact that the prerequisites for being a responsible global stakeholder do not entail being a Western-style liberal democratic state. Instead, the most essential requirements are threefold: first, a functioning modern state that can make credible international commitments within the framework of multilateral arrangements and has all the necessary administrative, monitoring, regulatory, fiscal and coercive capability to fulfill multiple obligations and burden-sharing responsibilities in a highly interdependent global society; second, a resilient and legitimate political system that is buttressed by an institutional and/or cultural foundation that can help it effectively cope with domestic conflict over economic (re)distribution and withstand the stress of external economic shocks; and third, robust domestic political and economic institutions capable of coping with the socio-economic consequences of intensified economic competition and structural adjustment that inevitably come with economic globalization and regional integration. Such institutions work to sustain broad-based social support for economic openness and the imperative of being an integral part of an open and rules-based international system. Whether Western-style representative democracy is necessarily better equipped than the Chinese-style socialist one-party state in terms of fulfilling these requirements is increasingly questionable as time goes by.

Second, they tend to conflate the existing hierarchical order with its liberal norms and rules. If one presupposes that the LIO can last only with the US and Western Europe constituting its core and preserving their coveted status and privileges under existing arrangements, then the entry of a rising superpower as gigantic and non-Western as China into this core will necessarily be viewed as a revisionist threat. This reasoning applies to any other significant emerging power that does not conform to the model of the Western liberal state but aspires nonetheless to be a core member of this privileged club and have an equal voice. The reasoning goes as follows: as the core becomes less "Western" the international order becomes less "liberal," or vice versa. Apparently, Christian Lagarde, the former managing director of the International Monetary Fund (IMF), had a better sense of how to separate the two. She reminded an audience in July 2017 that there is a built-in mechanism for orderly succession and that, "the International Monetary Fund could be based in Beijing in a decade if growth trends for China and other big emerging markets continue and these are reflected in the Fund's voting structure."6

These two kinds of Western-centric conceptualizations — conflating political liberalism with economic liberalism and insisting that the current hierarchical order is necessary to maintain a rules-based system — are very much Pro- European and make many Western European political leaders uncritical defenders of the status quo and, at the same time, give them an undue sense of self-righteousness. They fail to see the imperative of finding ways to construct and maintain open and norms-based international relations among sovereign states that are all intimately enmeshed with the rest of the world but are governed under various political systems. They are travelling down different paths to nation-state building, and are endowed with diverse cultural and religious heritages. In today's world, this Western-centric way of conceptualizing the liberal international order is a sure recipe for a clash of civilizations. Furthermore, these two conceptualizations are increasingly anachronistic. Since the 2008-2009 global financial crisis, China and other emerging economies have been the locomotive of the world economy, accounting for more than 70 percent of world GDP growth. According to a recent research paper from PriceWaterhouseCoopers, in terms of purchasing-power adjusted GDP, the Emerging Seven (E7) — China, India, Russia, Brazil, Mexico, Turkey and Indonesia — were half the size of the G7 in 1995, around the same size in 2015 and could be double its size in 2040.7 So, if this trend continues, the "core" will be inevitably diluted and reconstituted.

If we move beyond Western-centric conceptualizations and strip the post-Second World War liberal world order from its historical specificity, one can convincingly argue that China is a rising global power with a reformist agenda.8 It is reformist (rather than revisionist) in the sense that China's emerging global role might help strengthen and refurbish many important principles that undergird the existing liberal international order.

First of all, China subscribes to a norms-based, not power-based, world order. It upholds the institutions of the UN's collective security system, which privileges the five permanent members on the Security Council and delegitimizes aggression and war as means of pursuing state interests. China signed up to all major international regimes on non-proliferation and has been instrumental in their enforcement, including its active involvement in brokering the Iranian nuclear deal and its critical role in defusing a simmering nuclear crisis on the Korean Peninsula, something Donald Trump openly acknowledges.

China embraces a free and open trading system under the principles of inclusion, nondiscrimination, reciprocity and transparency. It favors open regionalism and endorses multilateral approaches to trade liberalization. It upholds the norm of providing special assistance to, and preferential treatment for, less-developed countries under the World Trade Organization or through multilateral development-assistance agencies. It is now widely regarded as a champion of regional integration and globalization with the larger aim of preserving peace, promoting inclusive growth and enhancing social sustainability. It contributes its fair share to the protection of the global commons through multilateral agreements and global collaborative efforts. It has shown ever stronger willingness to take up greater responsibility in either existing multilateral institutions, such as the UN, the IMF and the World Bank, or by tackling emerging global challenges through reforming the mechanisms of global governance. To a large extent, many Western countries should congratulate themselves for successfully socializing China into a liberal world order based on multilateralism.

Furthermore, Chinese leaders recognize that the country's emerging global role needs to be built on the foundation of post-Second World War multilateral arrangements. This foundation is now teetering, however, so it needs to be refurbished, upgraded and/or reformed to be more in tune with a rapidly changing world. China views today's system of global governance as imperfect and inadequate. It agrees with most of its liberal characteristics, but not always with its implicit or explicit frozen hierarchy, much less the frequent transgressions by its creator. China has moved to forge common ground among major developing countries on a reform agenda under the central theme of "multi-polarization and the democratization of international relations," in particular pushing for a more representative governance structure that gives more voice and responsibility to emerging economies and strengthens the principle of equality, not just in the norms and rules but also in their implementation. China also proposes to upgrade the function or scope of existing institutions so that they can take up new challenges brought about by climate change, global economic imbalances, the monopolistic power of dominant multinational firms, the explosion in the world's population and technological revolution.

China seeks to fully utilize two key policy-co-ordination platforms to advance its reform agenda for global governance. Under the auspices of the BRICS Plus, which was launched at the 2017 Xiamen Summit to engage other significant emerging economies such as Mexico and Indonesia, China seeks to forge common ground among emerging economies and articulate the collective interests of the Global South. China values the G20 as the key platform for dialogue, negotiation and co-ordination between two major de facto caucuses in this global grouping of elite members, the G7 (representing the developed world) and BRICS Plus (representing the developing world).

China has also shown its resolve to build up new multilateral institutions or arrangements, such as the BRICS New Development Bank and the AIIB, to address the inadequacies of existing global and regional multilateral institutions. In doing so, China is able to exert greater pressure on existing multilateral institutions to reform and upgrade in a timely fashion. For instance, by establishing multilateral contingent currency swap arrangements, such as the Chiang Mai Agreement and the BRICS Contingent Reserve Fund, participating countries can collectively prevent predatory hedge funds from instigating currency crises and igniting a contagious regional financial crisis; at the same time, these new arrangements can compel the IMF to revisit its draconian conditionality and adopt new institutional views on the need to regulate international capital flows.9

China is pushing for cautious reform of the global order, however, not a rupture. Many believe the China-led BRICS grouping shows no signs of seeking to overthrow or destabilize the international order. The BRICS Xiamen Declarations (like previous declarations) reaffirm support for the status quo, without any intention to weaken existing institutions or arrangements.10 In its declaration at its 2017 Summit, BRICS leaders affirmed that "we will stand firm in upholding a fair and equitable international order based on the central role of the United Nations, the purposes and principles enshrined in the Charter of the United Nations and respect for international laws, promoting democracy and rule of law in international relations." BRICS leaders also pledged that "valuing the G20's continued role as the premier forum for international economic co-operation, we reiterate our commitments to the implementation of the outcomes of G20 summits, including the Hamburg Summit and the Hangzhou Summit."

The Chinese Model of Development

What also makes most Western leaders anxious is the fact that China is becoming more confident about its own development model and has shown a stronger desire to share its experiences with other developing countries. Indeed, the growing popularity of the Chinese model is challenging the universalism of many Western values and institutional fixtures, which have been enshrined by the West as the only game in town for establishing a legitimate political order or pursuing economic modernization. The Chinese model contests the superiority of Western liberal democracy or the free-market system over delivering responsive government and socio-economic modernization. Its political system prioritizes social empowerment and economic development over political rights, and gives priority to effective governance and social stability before individual freedom.

In addition, China favors an alternative path to deepening economic partnership and regional integration. It gives the state, multilateral policy co-ordination mechanisms, multilateral lending institutions and state-owned enterprises a much bigger role in fostering economic development and regional co-operation than US-led donor organizations are willing to endorse under their neo-liberal policy guidelines. Unlike the EU model or the trans-Atlantic partnership, the Chinese approach to regionalism and economic partnership does not take security alliances and democratic solidarity as prerequisites for deepening economic integration. This formula, however, was not invented by China. The Association of Southeast Asian Nations (ASEAN) and other non-Western regions have practiced it for decades.

It is unlikely, however, that China will persuade the developing world to adopt its model of development uncritically or on a wholesale basis because this predisposition runs counter to its own longstanding policy mottos and accumulated experiences. Out of its own experience, China opposes the one-size-fits-all approach under the so-called Washington Consensus and does not believe in the teleological convergence under the End-of-History thesis. Chinese leaders have consistently emphasized that an important lesson of the Chinese model is that there is no standard textbook that can provide the complete answer to addressing an individual country's socio-economic challenges. Chinese leaders also often emphasize that "the socialist market economy with Chinese characteristics" might not be readily transportable to other socio-cultural contexts. After all, China's trajectory has been rather unique, moving through an anti-imperialist struggle into nation-state building, not to mention its massive size, distinctive historical memory and cultural heritage. Also, there is little evidence to suggest that China's foreign assistance programs are tied to specific ideological requirements, although the allocation of China's soft loans and assistance might well be motivated by geopolitical considerations and other foreign-policy priorities.

A large majority of developing countries welcome China's willingness to shoulder greater responsibility within the existing multilateral framework. Given its weight, China will inevitably play a bigger role in co-managing the global economy through the G20 and other multilateral institutions and policy-co-ordination platforms. China has already significantly increased its fiscal and in-kind contributions to the UN, the Security Council's peace-keeping missions and a wide range of specialized UN agencies, just as the US is reducing its annual contributions to the UN budget and has pulled itself out of UNESCO (and, most lately, the WHO).

China was also an indispensable player during the treacherous and protracted multilateral bargaining leading to the UN Climate Change Agreement. At the 21st Conference of the Parties (COP 21), China gingerly used its double-edged leverage — that is, being the single largest source of greenhouse gas emissions on the planet and putting on the table the single most significant and credible pledge to fulfill its 2030 Nationally Determined Contribution (NDC) — and emerged as one of the key interlocutors that helped seal the Paris Agreement in 2015.11

Filling the 'Real' Void

The growing apprehension toward China's emerging global role is hardly justifiable. To a great extent, it reflects a parochial way of making sense of the complex and multi-faceted implications of China's growing influence over the global agenda and its ever more ambitious global strategy.

Many realist-minded analysts in the West raise the concern that China is eager to fill the strategic vacuum left behind by the US retreat. This is a typical pseudo issue, because it does not resonate with the way Chinese leaders perceive the world and their country's proper role in it. First of all, China has little desire or predisposition to create another hegemony by exerting its military, political, economic and ideological predominance around the globe, stretching its security needs to the farthest reach conceivable, and fending off any potential challenger over the horizon. In a post-hegemonic world, much of the so-called strategic vacuum may not be a "vacuum" at all. As America's hegemonic presence recedes, it is simply a return to "normalcy" — which is to say the prevailing historical conditions with diminishing influence from American military, political, economic and ideological hegemony.

On the other hand, there remain some serious "real vacuums" across a wide range of global issues as the US retreats. First, there is an urgent need to refurbish the domestic social foundations for sustaining economic openness and multilateralism.12 Meanwhile, the functional demands for global rules and norms have kept expanding in new and ever more complex domains, such as financial accountability, genetic engineering, cyber security, artificial intelligence and crypto currencies. It has also become clear that the LIO must go beyond trade and economics and needs to generate solutions to market failures such as the concentration of monopolistic power in a few rent-seeking high-tech titans and market externalities such as financial crises, climate change, global pandemics, enduring pockets of poverty, and the over-exploitation of outer space and maritime resources.

Notes
1 For instance, former German Foreign Minister Sigmar Gabriel, who fired a parting shot at China during the 2018 Munich Security Conference, slammed China's Belt and Road Initiative with the allegation that China is developing a comprehensive system that is an alternative to the Western one.

2 Joseph Nye, "The Kindleberger Trap," Project Syndicate, Jan. 9, 2017.

3 Hans Kundnani, "What is the Liberal International Order?" German Marshall Fund of United Nations, Policy Brief, March 3, 2017.

4 Dani Rodrik, The Globalization Paradox: Democracy and the Future of the World Economy (W.W. Norton, 2012).

5 Richard Kozul-Wright and Stephanie Blankenburg, "The Rentiers Are Here: Rise of Global Rentier Capitalism," Project Syndicate (Sept. 25, 2017).

6 Lagarde made the remarks at a Center for Global Development event in Washington on July 24, 2017. www.reuters.com/article/us-imf-china-lagarde-idUSKBN1A922L

7 PriceWaterhouseCoopers, The World in 2050: The long view: how will the global economic order change by 2050? (2017). www.pwc.com/gx/en/issues/economy/the-world-in-2050.html

8 From a somewhat different angle, Michael Mazarr argues that broadly speaking China should be viewed not as an opponent or saboteur of the postwar international order but as a conditional supporter. See Summary of Building a Sustainable International Order Project (Rand Corporation, 2018): page 14.

9 Indeed, the IMF has revisited its past practice of emergency lending and adopted new institutional views on regulating international capital flows. For instance, "Capital Flows: Review of Experience with the Institutional View," IMF Policy Paper (November 2016). www.imf.org/en/Publications/Policy-Papers/Issues/2017/01/13/PP5081- Capital-Flows-Review-of-Experience-with-the-Institutional-View

10 Oliver Stuenkel, "The BRICS Leaders Xiamen Declaration: An Analysis," postwesternworld.com (Sept. 7, 2017).

11 Liang Dong, "Bound to lead? Rethinking China's role after Paris in UNFCCC negotiations," Chinese Journal of Population Resources and Environment (Vol. 15 No. 1, 2017): 32-38.

12 David Lake, "International Legitimacy Lost? Rule and Resistance When America Is First," Perspective on Politics. Published online: Jan. 12, 2018, pp. 6-21.

Russia
Source: www.mid.ru

On July 2, Deputy Foreign Minister Sergey Ryabkov will chair the next meeting of BRICS Sherpas/Sous-Sherpas.

The participants in the meeting, which is to be held via videoconference, will discuss the trends in five-sided cooperation, the schedule of events and BRICS's priorities this year during the global crisis provoked by the coronavirus pandemic.

Russia
Source: www.mid.ru

On July 2, Deputy Foreign Minister and Russian Sherpa in BRICS Sergey Ryabkov chaired the meeting of BRICS Sherpas/Sous-Sherpas via videoconference.

The participants discussed topical issues of five-sided cooperation during the global crisis provoked by the coronavirus pandemic as well as the organisation's priorities this year in all three areas of BRICS's strategic partnership: policy and security, the economy and finance, and cultural and educational contacts.

China
Source: www.ndb.int

The Board of Directors (BoD) of the New Development Bank (NDB) held its 27^th Meeting in a virtual format on June 29, 2020.

At the Meeting, the Board Members reflected on the progress achieved by the Bank and expressed their appreciation to Mr. K.V. Kamath, the first NDB President for his outstanding service and contribution to the Bank's development. The Board Members also thanked Mr. Sarquis J. B. Sarquis, Vice President and Chief Risk Officer of the Bank, for his excellent contribution.

The Board approved two infrastructure and sustainable development projects in Brazil and Russia.

Teresina Educational Infrastructure Program

The Board of Directors approved a loan of USD 50 million to the Municipality of Teresina with a sovereign guarantee from the Federative Republic of Brazil for Teresina Educational Infrastructure Program.

The Program will contribute to improving the educational system in Teresina through building and upgrading educational infrastructure, with the focus on increasing the number of students attending full-time schools, enhancing the availability of nursery places in the municipality, and improving safety conditions.

The components of the Project include the construction of eight new full-time elementary schools in vulnerable neighborhoods of the municipality; retrofitting of existing small part-time elementary schools into kindergarten units; urban requalification of the surrounding areas of schools and kindergartens, to improve accessibility, safety and access to public transportation; construction of part-time schools; strengthening educational system, monitoring, evaluation and project management.

Small Historic Cities Development Project Phase II

The Board of Directors also approved a loan of EUR 205 million to the Russian Federation for Small Historic Cities Development Project Phase II, which is an extension of the Small Historic Cities Development Project Phase I currently being implemented under the Bank's financing.

The Small Historic Cities Development Project Phase II focuses on urban development through preservation and development of cultural heritage to drive tourism related revenues and improve the municipal economy of eight small cities located in the European part of Russia. The Project will foster economic growth, job creation and new businesses through urban infrastructure improvements while boosting the importance of cultural heritage sites. The Project's implementation period is 6 years.

During the Meeting, the Board of Directors was briefed on the Bank's robust and dynamic project pipeline as well as project implementation and loan disbursement.

The Board also discussed financing sub-national governments by the Bank without recourse to guarantee from the respective sovereign.

At the Meeting, the Board started the review of environmental and social country systems of the Bank's member countries.

The Board Members approved Treasury Strategy for FY2020 and took note of a Funding Update presented to the BoD.

Budget, Human Resources and Compensation Committee headed by Mr. Zhongjing Wang, NDB Director held its 11^th Meeting on June 29, 2020. The Committee discussed matters pertaining to the Bank's budget utilization, human resources and compensation.

Background information

The NDB was established by Brazil, Russia, India, China and South Africa to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development. The NDB received AA+ long-term issuer credit ratings from S&P and Fitch and AAA foreign currency long-term issuer rating from Japan Credit Rating Agency (JCR).

United Kingdom
Source: www.euromoney.com

The New Development Bank, born in Shanghai 2015 to help the five 'Brics' countries, has had a good pandemic, disbursing $4 billion in emergency funding and printing a maiden US dollar bond. Its future plans: more capital, more members and a better credit rating.

It has been a manic few months for the New Development Bank.

Between May 11 and June 20, the Shanghai-based multilateral disbursed two loans, each worth $1 billion, to help India and South Africa battle the pandemic, and launched its inaugural US dollar bond, a three-year print that raised $1.5 billion in the international capital markets.

Marcos Troyjo's NDB presidency begins on July 7 In between, its board found time to meet – virtually, of course, over Zoom – to appoint a new president. On July 7, the quietly spoken KV Kamath, who ran India's ICICI Bank before being tapped to head the new multilateral in 2015, will be replaced by Marcos Troyjo, a former deputy economy minister of Brazil.

The backdrop to these events is of course coronavirus. Scroll back to the start of the year. In that pre-Covid world, the NDB is a five-year-old international financial institution, originally called the 'Brics Development Bank' after the five countries that founded it – Brazil, Russia, India, China and South Africa. Easily overlooked and often forgotten, it's an international financial institution with an almost total lack of brand identity.

By contrast, its peers, from the IMF and World Bank down to regional players like the Asian Development Bank, have a defined geographic focus and name recognition. Even the Asian Infrastructure Investment Bank, which is about as old as the NDB, is a known quantity, with its Chinese roots and international shareholders.

But in a way, Covid has been helpful to the NDB. If it is possible to have a 'good' pandemic, it must surely be on the shortlist of global institutions to emerge from the bruising first half of the year with its reputation enhanced. The pandemic, notes the NDB's chief financial officer Leslie Maasdorp, has "changed the operating environment of the bank in fundamental ways". When rumours of a deadly new strain of coronavirus emerged in China in January, the bank was quick to click into gear. By the time the Lunar New Year rolled around in late January, most of the bank's staff in its four physical locations – Johannesburg and Shanghai, plus the Brazilian cities of São Paulo and Brasilia – was already working from home.

Emergency assistance

In February, its board met to discuss the need to channel emergency funding to China. It formed an Emergency Assistance Programme (EAP), which soon grew in size to $10 billion.

On March 19, the NDB disbursed an Rmb7 billion ($990 million) loan to Beijing under the EAP, to fund new healthcare facilities in Hubei, Guangdong and Henan, three provinces hit hardest by the pandemic. Two weeks later, it sold an Rmb5 billion Covid-response bond into China's Interbank Bond Market. The NDB then turned its attention to the other countries that still own 100% of its issued equity. Curiously, the way the pandemic unfolded gave it time to plan ahead.

Over the next six months, less of our focus will be on public health, and far more on stimulating infrastructure and economic growth, and on strengthening social safety nets for vulnerable groups in society - Leslie Maasdorp, NDB India was the second country to secure emergency funding under the EAP in May, followed by South Africa in June, as the virus spread east and south. Brazil, still struggling to contain the virus, is the last to secure financial help.

Maasdorp told Euromoney on June 29 the bank was finalising a $1 billion loan to the Latin American country, matching its commitment to India and South Africa. But already it is looking beyond the primary effects of Covid, to the need to support member countries as they battle with the secondary fallout: flat-lining trade and shrinking economies. "Over the next six months, less of our focus will be on public health, and far more on stimulating infrastructure and economic growth, and on strengthening social safety nets for vulnerable groups in society," adds Maasdorp. This requires it to do two things simultaneously.

First, the NDB has to print more debt to generate the additional capital it needs to lend on to member countries. This, it is already doing – witness its maiden US dollar bond, issued in June 2020 following a virtual roadshow, with the bank's treasury team engaging with European and Asian sovereign wealth funds and central banks via Zoom and Webex.

Preparations

The bank has plenty of capital to draw on, both real and theoretical. In January 2019, it registered an Rmb10 billion bond programme, 80% of which has already been drawn upon. Speaking in late June, the bank's chief financial officer said the remaining Rmb2 billion would be issued "in a matter of weeks".

The NDB's chief financial officer Leslie Maasdorp It has also registered, but not yet activated, a R10 billion ($580 million) programme in South Africa, and a R100 billion ($1.42 billion) programme in Russia. In December 2019, it registered a $50 billion euro medium-term note (MTN) programme, which it will tap to fund sustainable infrastructure projects in multiple currencies, including dollars, euros and Indian rupees.

The bank is also preparing a new Rmb20 billion bond programme in China, to replace its current package. It will need to activate and draw on some of these programmes, and sooner rather than later. The bank has not been shy in funding projects it deems valuable to its member countries. As of June 19, the bank had approved 55 projects, worth a total of $18.3 billion.

India and China together make up just shy of 60% of the book, which is dominated by loans to the energy and transport sectors. Around two-thirds are denominated in dollars, with 23% priced in Chinese renminbi. Maasdorp said the multilateral is "on track to approve $10 billion in project loans in 2020".

Funding format

The second big shift to take place this year is the identity of the loan recipient.

Between the launch of the NDB and the end of 2019, about 80% of the NDB's loan book was sovereign-backed, with the funding channelled direct to infrastructure projects including ports, power stations, railways and airports.

For now, Covid has radically changed the way the bank lends. The $1 billion in emergency funding for India will be handed straight to the ministry of finance in a single lump sum. The same is true in Brazil, where the ministry of citizenship will oversee its $1 billion loan. That raises the amount the bank has disbursed from February's $10 billion EAP programme, to $4 billion and counting.

The bank says the EAP is merely an "additional format of financing" to be used first to support creaking healthcare systems, and later, to shore up tanking economies. Maasdorp insists that "for the medium to longer term, the core mandate of the bank remains to fund sustainable infrastructure in our member countries".

Our focus in the 2020s will be to develop into a more global development bank with an emerging-market focus. We will take in countries from both the developed and emerging world - Leslie Maasdorp

While it is impossible to predict how long Covid's economic after-effects will last, and therefore unwise to assume that the EAP programme is capped at $10 billion, this is the right note to strike. From the outset, the NDB's primary objective was to finance sustainable projects that improve the infrastructure of member states. With the notable exception of China, the Brics countries, with their crumbling roads and cramped airports, suffer from infrastructure deficits that might charitably be described as 'yawning'. With that in mind, and given its growing capital needs, it would be good be able to call on the help of few new deep-pocketed investors.

At present, notes Maasdorp, the bank is a "borrower's club with a subscribed capital base of $50 billion". Each of the five sovereign owner-shareholders pledged in 2015 to stump up $2 billion in paid-in capital, with the final instalments to be handed to the NDB in January 2022. The remaining $40 billion is recognised as callable capital.

Pre-Covid plans

"All development banks have both borrowing and non-borrowing members," Maasdorp adds. "We don't have any non-borrowing members yet.We originally envisaged the first new member countries to join in 2020, but due to Covid, it is more likely to happen in 2021. Our focus in the 2020s will be to develop into a more global development bank with an emerging-market focus. "We will take in countries from both the developed and emerging world," he adds. "Adding countries from the developed world will help to preserve our AA+ credit rating, and potentially improve our overall credit quality."

KV Kamath, the NDB's outgoing president The board of governors approved the expansion plan in July 2019. If all goes to plan, by the end of the decade, 55% of the bank's issued equity will be owned equally by the five original member states. The remaining shares will be divided between developing nations, who will own no more than 25% of the total, and a mix of developed countries and non-borrowing members. "That leaves emerging markets controlling 80% of the equity of the bank," adds Maasdorp.

By any measure, the NDB has come a long way since its early days when, Maasdorp says, it was "little more than a startup, with temporary offices in Shanghai and no technology or systems. Now, all our IT systems are cloud-based, an investment that allowed us to function optimally from remote locations during Covid."

Looking to the future, the bank covets a triple-A rating from Fitch and Standard & Poor's. It wants to lend far less in dollars and much more in local currencies, with the aim of pricing at least 40% of its loan book in the five currencies of its founder-members: roubles, rand, real, rupee and renminbi. And while it wants to continue to complement existing multilateral development banks, it has far greater ambitions.

"In the longer-term," notes Maasdorp, "we want to become the world's emerging-market development bank".

Russia
Source: infobrics.org

In 2015 the BRICS STI Framework Programme (BRICS STI FP) has been endorsed aiming to support excellent research on priority areas which can best be addressed by a multinational approach. Since 2016 three coordinated calls for multilateral research projects have been successfully implemented under BRICS STI FP. A total of 93 projects have been supported as an outcome of three BRICS STI FP calls.

The COVID-19 pandemic caused by SARS-CoV-2 is one of the greatest global challenges and as such, warrants a global response. BRICS countries account for more than 25% of the world territory, more than 40% of the world population and play a vital role in the world economy. In response to the COVID-19 pandemic, the BRICS STI Framework Programme is planning to launch a call for multilateral basic, applied and innovation research projects facilitating cooperation among the researchers and institutions in the consortia which consist of partners from at least three BRICS countries.

The following thematic areas are currently planned for the BRICS STI FP call as response to COVID-19 pandemic:

1. Research and development of new technologies/tools for diagnosing COVID-19.

2. Research and development of COVID-19 vaccines and drugs, including repurposing of available drugs.

3. Genomic sequencing of SARS-CoV-2 and studies on the epidemiology and mathematical modeling of the COVID-19 pandemic.

4. AI, ICT and HPC* oriented research for COVID-19 drugs design, vaccine development, treatment, clinical trials and public health infrastructures and systems.

5. Epidemiological studies and clinical trials to evaluate the overlap of SARS-CoV-2 and comorbidities, especially tuberculosis.

(* - Artificial intelligence, Information and communications technology and High-performance computing)

The call details are expected to be published on http://brics-sti.org website on 1 July 2020 with deadline for proposals submission via BRICS Application Management System set on 18 August 2020. The national call publications will be released on the websites of respecting national funding agencies, the dates for submission of national components (applications) may vary but are expected to match the BRICS STI FP response to COVID-19 global pandemic Call application submission period.