September, 2016

BPC Policy Brief - V. 6 N. 3

Quarterly Brief

BRICS and the

New Development
Bank
Paulo Esteves, Geovana Zoccal Gomes e Gabriel Torres

BRICS Policy Center Centro de Estudos e Pesquisas - BRICS

About the BRICS Policy Center
The BRICS Policy Center is dedicated to the study of
the BRICS countries (Brazil, Russia, India, China and
South Africa) and other middle powers, and is adminis-
tered by the International Relations Institute of PUC-Rio
(IRI/PUC-Rio), in collaboration with the Instituto Pereira
Passos (IPP).

All papers are submited to external evaluation before

published. The opinions expressed herein are the sole
responsability of the author and does not necessarily
reflect the position of the institutions involved.

Socioenvironmental Platform

BRICS Policy Center/Centro de Estudos e COORDINATOR

Pesquisas BRICS Paulo Esteves
Rua Dona Mariana, 63 - Botafogo - Rio de Janeiro/RJ
Phone: +55 21 2535-0447 / ZIP CODE: 22280-020 RESEARCHERS
www.bricspolicycenter.org / [email protected]
Maureen Santos
Alice Amorim
BPC Team Ana Toni
Geovana Zoccal Gomes
GENERAL SUPERVISOR Sérgio Veloso dos Santos Júnior
Paulo Esteves Beatriz Mattos
Júlia Rosa
ADMINISTRATIVE COORDINATOR Gabriel Torres
Lia Frota e Lopes Fernanda Lacerda
Francisco Veras
ADMINISTRATIVE ASSISTANT
Bruna Risieri

PROJECTS ANALYST
BPC Policy Brief. V. 6. N. 03 - august - september/2016.
Felippe De Rosa
Rio de Janeiro. PUC. BRICS Policy Center
IISSN: 2318-1818
COMMUNICATIONS ANALYST
Vinicius Kede 18p ; 29,7 cm

1. New Development Bank; 2. BRICS; 3. Multilateral

Development Bank; 4. Socio-environmental Policy;
5. Sustainability.

BRICS Policy Center Centro de Estudos e Pesquisas - BRICS

BRICS and the New Development Bank

Acronyms
AAAA Addis Abeba Action Plan

AOD Official Development Assistance

BAD Asian Development Bank

BAfD African Development Bank

BAII Asian Infrastructure Investment Bank

BCIE Central American Bank for Economic Integration

BEI European Investment Bank

BERD European Bank for Reconstruction and Development

BID Inter-American Development Bank

BIsD Islamic Development Bank

BM World Bank

BMD Multilateral Development Banks

BNDES Brazilian Development Bank

BOAD West Africa Development Bank (Banque Ouest Africaine de Développement)

BRICS Brazil, Russia, India, China and South Africa

CAF Development Bank of Latin America (formerly known as Corporación Andina de

Fomento)

CALS Centre for Applied Legal Studies (South África)

CDB China Development Bank

CO2eq CO2 Equivalent

DBSA Development Bank of Southern Africa

EADB East African Development Bank

G-20 Group of 20

GEE Greenhouse gases

IDA International Development Association

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BRICS and the New Development Bank

IFI International Financial Institutions

LMICs Low-middle income countries

NBD New Development Bank

ODS Sustainable Development Goals

ONU United Nations

PTA Eastern and Southern African Trade and Development Bank, or the Preferential Trade
Area Bank

VEB Vnesheconombank - Bank for Development and Foreign Economic Affairs

4
Summary

Introduction ............................................................................................. 7

The BRICS and the New Development Bank ................................ 8

The Multilateral Development Banks ............................................. 9

The New Development Bank ............................................................. 11

References ................................................................................................ 15
Executive Summary

The creation of the New Development Bank was a response to the stalemate in
the process of reforming International Financial Institutions, and, at the same
time, it represented an expression of the strengthened cooperation among the
BRICS. The institution was created at a moment when Multilateral Development
Banks had gained relevance due to (i) their lack of conditionalities, (ii) their agility
in conducting operations and (iii) their ability to finance infrastructure projects in
middle-income countries. Despite the successful launch, the process of approval
of the first projects and the release of a socio-environmental policy cast doubt
upon the understanding of sustainability guiding the bank’s actions and its
policies of transparency and accountability. This Quarterly Brief discusses the
process of the New Development Bank’s creation, its meaning for development
financing and, finally, its effects.

Key-words
New Development Bank; BRICS; Multilateral Development Bank; Socio-
environmental Policy; Sustainability.

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BPC Policy Brief V.6 N.3

BRICS and the New Development Bank

Paulo Esteves, Geovana Zoccal e Gabriel Torres

1. Introduction

Since 2011, on the margins of G20 meetings and the BRICS Summit in Sanya, Nicholas Stern & Joseph Stiglitz
suggested the possibility of creating a development bank aimed at financing infrastructure projects with developing
countries as the initial shareholders (de Renzio, Gomes & Assunção, 2013). The subject was part of the G20’s
agenda at successive summits in Russia (2013), Australia (2014) and Turkey (2015). Within the BRICS group, the
proposal to create a new development bank was initially launched by the New Delhi Action Plan during the IV BRICS
Summit of 2012. The proposal was a response to the stalemate in the process of reforming International Financial
Institutions as well as to the scarcity of resources for infrastructure financing in developing countries. The creation
of a development bank was also at the center of the next summit’s discussions in Durban, where the talks included
the bank’s priorities and the contributions of each founding member. The bank was effectively created during the VI
BRICS Summit of 2014 in Fortaleza, Brazil. Representatives of the group’s five governments signed the Agreement
on the New Development Bank – with the agreement’s actual implementation to be announced during the VII
Summit in July 2015 in Ufa, Russia, thus establishing the beginning of the bank’s operations (Schablitzki, 2014).

The Bank’s headquarters were established in Shanghai, China, and the opening of an office was announced in
Johannesburg, South Africa. In January 2016, the five founding members provided the first capital contribution to
the Bank’s social capital in the amount of US$ 750 million. Thus, in February 2016, the Bank was fully functional. It
is noteworthy that, according to the Agreement on the New Development Bank, the total social capital in the first
phase of the NDB’s incorporation was intended to amount to US$ 10 billion, paid in seven parts, in an equal quota
system among the group’s members. In addition to national contributions, “green bonds” were issued in the value of
3 billion yuan (in local Chinese currency)1. Finally, since its launching, the NDB has signed cooperation agreements
with several other development banks, including the Brazilian Development Bank (BNDES), Vnesheconombank
– Russian Bank for Development and Foreign Economic Affairs (VEB), India Eximbank, China Development Bank
(CDB), Development Bank of Southern Africa (DBSA) and, recently, the World Bank Group2. However, the most
significant step was the announcement, last April, of the first set of projects to be financed by the Bank, which
were valued at US$ 911 million. This Quarterly Brief discusses the process of the NDB’s creation, its meaning for
development financing and, finally, its effects. One year after its implementation, the Bank has approved seven
projects, and, in August 2016, it published a set of socio-environmental policies. However, it is still a target of much
criticism by civil society, which demands greater transparency and more inclusive processes.

(1) “Green bonds” are a type of bond that are exempt from taxes and that are issued for projects with positive environmental impacts, including
those aimed at promoting energy efficiency and pollution prevention. For more, see Sputnik (2016) and Cebds (2016).
(2) Although the BRICS countries’ initiative in establishing a development bank that was intended to be attentive to the specific investment
needs of Southern countries initially positioned it as an alternative to the financial institutions established by the Bretton Woods regime, a
Memorandum of Understanding between the New Development Bank and the World Bank that was signed in September 9, 2016, speci-
fies zones of cooperation between the two institutions. The agreement indicates areas of common interest and the possibility of co-financing
projects. For more details about the MoU, see http://ndb.int/World-Bank-Group-New-Development-Bank-Lay-Groundwork-for-Cooperation.
php#parentHorizontalTab2.

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BRICS and the New Development Bank

2. BRICS and the New Development Bank

In 2006, on the margins of the UN General Assembly, the first informal meeting between the foreign ministers
of the BRICs countries took place. This meeting was regularly repeated until, in 2008, the ministers gathered in
Ekaterinbur, and following an initiative by the Russian presidency, the first BRIC Summit was held in that city
in 2009. Both meetings occurred under the shadow of the financial crisis and the Russian military intervention
in Georgia, which took place in 2008. In this context, the meetings emphasized the necessity of adjusting
international institutions to an allegedly new distribution of power in the international system. Indeed, while the
Foreign Ministers’ communiqué mentioned a “more democratic international system based on international law
and multilateral diplomacy”, (BRICs Foreign Affairs Ministers` Meeting, 2008), the head-of-states` joint statement
emphasized the necessity of “a more democratic and just multi-polar world order based on the rule of international
law, equality, mutual respect, cooperation, coordinated action and collective decision-making of all states” (Joint
Statement of the BRIC Countries Leaders, 2009). At the time of its creation, the BRICs group thus presented itself
as a coordination mechanism that affirmed the necessity of recognizing the end of the unipolar period and the
emergence of a multipolar system. In 2011, with the addition of South Africa as an integral member, the group was
rebranded the BRICS.

From this basis, the group advanced a reformist agenda with regard to two the failure of
main issues: the strengthening of the G20 as a global governance instrument
and, above all, the reform of International Financial Institutions (IFIs). In the initiatives to
addition to the group’s reformist demands, however, it also presented itself reform IFIs and the
as a platform for intergovernmental cooperation. The process of creating the strengthening of
BRICS Development Bank, or the New Development Bank, was a product of the
intersection of these two dimensions of coordination and cooperation. Indeed, cooperation among
the failure of the BRICS group’s initiatives to reform IFIs and the strengthening the BRICS created
of channels of intergovernmental cooperation created the conditions for the the conditions for the
announcement of the formation of a multilateral development bank at the New
Delhi Summit in 2012. formation of the NDB

We consider the possibility of establishing a New Development Bank oriented towards the mobilization of
resources for infrastructure and sustainable development projects (New Delhi Declaration, §13).

After the New Delhi Summit, the process of negotiating the terms of the agreement that would create the
Bank took two years to conclude. The following year, the Durban Summit reiterated the group’s commitment to
the initiative and affirmed the Bank’s place in the mechanisms for development financing by noting the lack of
instruments for infrastructure financing in developing countries.

We would like to see a concentrated global effort towards infrastructure investment (Durban Declaration, §14).

TThis gap was expected to be filled, among other actors, by the New Development Bank, whose founding
agreement was signed at the Fortaleza Summit. The Bank was thus announced as an initiative that

Should mobilize resources for infrastructure and sustainable development projects in the BRICS countries and
other developing countries, complementing existing efforts of multilateral and regional financial institutions for
global growth and development (Agreement, Art. 1).

The structure and mechanisms for decision making in the new Bank contrast with those adopted by the World
Bank. Indeed, the NDB has adopted a quota structure that primarily ensures that the institution is controlled by
the group’s members and secondarily isonomy between members in the decision-making process. The NDB’s
creation also carries the promise of simplified procedures for the approval of credit operations for development
projects in the field of infrastructure. According to Leslie Maasdorp, South African economist and the NDB’s vice-
president, “we try to be more nimble, enhance the speed of execution, be more agile, and use those organizational
features to deliver a more effective infrastructure business” (Santos, 2016).

8
BRICS and the New Development Bank

3. The Multilateral Development Banks

The creation of IFIs for the purpose of providing lines of credit for the financing of development projects – the
so-called Multilateral Development Banks (MDBs) – is not a new phenomenon, even among developing countries.
Since the World Bank’s creation in 1948, 13 such institutions3 have been launched, the great majority of which have
a regional character and that mostly assemble developing countries. Although created by sovereign states, the
MDBs seek most of their resources for financing credit operations in the financial markets. Only three Banks have
a credit rating below “A”, demonstrating their adequacy with regard to financial markets’ standards and justifying
the low costs that make their operations viable. Table 01 shows the group of MDBs created since 1948.

Table 01: The Multilateral Development Banks (post-1948)

Year
Bank Headquarters Mandate Rating Instruments
Established

European “Contribute to the develop-

Luxembourg, Loans, Guarantees,
Investment Bank 1958 ment of the internal market AAA
Luxembourg Equity
(EIB) of the European Union”

“Promote the economic and

Interamerican Grants, Loans,
Washington D.C., social development of the
Development Bank 1959 AAA Technical assistance,
USA developing member states,
(IaDB) Guarantees, Equity
individually and collectively”

“Promote economic
Central American integration and balanced Loans, Lines of credit,
Tegucigalpa,
Bank for Economic 1960 economic and social A Technical assistance,
Honduras
Integration (CABEI) development in member Guarantees, Equity
states”
African “Promote sustainable Grants, Loans, Lines
Abidjan,
Development Bank 1963 economic growth and AAA of credit, Technical
Côte d’Ivoire
(AfDB) reduce poverty in Africa” assistance, Equity

Grants, Loans,
Asian Development Manila, “Eradicate poverty
1966 AAA Technical assistance,
Bank (ADB) Philippines in Asia Pacific”
Guarantees, Equity

East African “Promote sustainable

Kampala,
Development Bank 1967 socio-economic BB Loans and Equity
Uganda
(EADB) development in East Africa”

Development Bank “Promote sustainable Loans, Lines of Credit,

Caracas,
of Latin America 1970 development and regional AA- Technical assistance,
Venezuela
(CAF) integration” Guarantees, Equity

(3) We have not considered here the creation of the International Development Association (IDA) within the World Bank in 1960.

9
BRICS and the New Development Bank

Year
Bank Headquarters Mandate Rating Instruments
Established

“Promote economic
West Africa
development in member
Development Bank Lomé,
1973 states and economic BBB Loans and Equity
(BOAD, acronym in Togo
integration across
french)
West Africa”

“Foster economic
development and social
progress in member
Islamic Loans, Lines of credit,
Jeddah, countries and
Development Bank 1975 AAA Technical assistance,
Saudi Arabia Muslim communities,
(IsDB) Equity
individually as well as jointly,
in accordance with the
principles of the Shari’ah”

“Finance and foster trade,

socio-economic develop-
Preferential Trade Bujumbura, Loans, Lines of credit,
1985 ment and regional economic BB
Area Bank (PTA) Burundi Guarantees
integration across member
states”

“Foster the transition to-

wards open market-oriented
economies and private and
European Bank for
entrepreneurial initiatives in
Reconstruction London, Loans, Guarantees,
1991 central and eastern Euro- AAA
and Development United Kingdom Equity
pean countries committed to
(EBRD)
the principles of multiparty
democracy, pluralism and
market economics”

Asian Infrastructure
Investment Bank 2015 Beijing, China
(AIIB)

New Development
2015 Shanghai, China
Bank (NDB)

Source: Adapted from Faure, Prizzon & Rogerson, 2015.

Compared to traditional institutions such as the World Bank or the the new MDBs seek
Interamerican Development Bank, the new MDBs present at least three
significant differences that help explain their potential impact on development
to reduce the time
financing. First, even though their credit is often more costly, the new MDBs for approving credit
offer alternatives that generally do not impose conditionalities (Faure, Prizzon applications, managing
& Rogerson, 2015). The imposition of conditionalities has led middle-income
countries that could access concessional loans from traditional financial
to conclude them in half
institutions to prefer other types of financing – such as loans from export the time required by
credit agencies, sovereign bond markets, and the new MDBs (Humphrey et other institutions.
al, 2015).

10
BRICS and the New Development Bank

Second, the new Multilateral Development Banks seek to reduce the time for approving credit applications,
managing to conclude them in half the time required by bilateral agencies, national banks, and even the World
Bank. As noted by Faure, Prizzon & Rogerson (2015),

Most developing country governments have expressed a clear preference for speedily negotiated and
implemented projects. Multilateral and regional banks often attract criticism for delays in project negotiations and
implementation. Some reports indicate a lapse of between one and ten years, or 12 to 16 months at the World
Bank. The waiting period can be between seven and ten months at IADB and between three and six months at
CAF (although this can be reduced to one-and-a-half months if urgent). However, there are no publicly available
data on the time between the start of the project negotiations and the first disbursement of funds (Faure, Prizzon
& Rogerson, 2015, p. 2).

Leslie Maasdorp from the NDB and Lou Jiwei, China’s Minister of Finance, noted that both the New Development
Bank and the Asian Infrastructure Investment Bank seek agility in their procedures compared with other MDBs
(Santos, 2016; Shengdun, 2015). Commenting on the AIIB, Jiwei indicated that

In many international organizations, it often takes more than three to five years for a project to launch, which we
should avoid (…) AIIB would simplify the complicated governance structure that many international organizations
are using (Shengdun, 2015).

Third, as indicated above, the new MDBs provide an opportunity for financing in middle-income countries. This is a
field in which the new MDBs may acquire great relevance, particularly in relation to the so-called low middle-income
countries (LMICs). Such countries face a structural financing deficit, branded by some authors as the “missing
middle”. Indeed, in being graduated, the low middle-income countries have less access to Official Development
Assistance (ODA) flows and even to lines of non-concessional credit from traditional financial institutions. At the
same time, they are not capable of generating sufficient resources to finance their own development. Thus, low
middle-income countries usually need to rely on private market loans with high financial costs (Kharas, Prizzon &
Rogerson, 2014) and, ultimately, to the prospect of increasing debt. As such, the limitations of traditional financial
institutions with regard to middle-income countries’ financing represent a gap that can be filled by the new MDBs.

In terms of development financing, the MDBs play an increasingly significant role. The Addis Ababa Action Agenda
(AAAA) recommends that MDBs multiply their technical and financial assistance in order to significantly contribute
to the implementation of the Sustainable Development Goals (SDGs). According to AAAA, the development banks
must update and develop their policies in support of the post-2015 development agenda.

The Sustainable Development Goals (SDGs) are broader and more ambitious, encompassing areas where
multilaterals have extensive experience: infrastructure and energy, governance and institutions, domestic resource
mobilization, leverage of the private sector, improved business environments, and more. There is now a very high
degree of overlap between the SDGs and the agenda pursued by multilateral banks and the WBG (Kharas, 2015,
p.6).

Specialists recognize MDBs’ different comparative advantages vis-à-vis bilateral donors. According to Humphrey
et al. (2015), the MDBs are better at providing information and monitoring the use of funds, and negotiations
between recipients and multilateral agencies tend to be less politicized than with bilateral donors. Moreover, the
MDBs have a longer-term perspective toward development and make better use of the recipient countries’ national
systems, thus providing greater trust for fiscal compromises. The NDB was launched in this context, as discussed
below.

4. The New Development Bank

According to Leslie Maasdorp (Santos, 2016), among the main differentials of the Bank is its capacity to offer
agile financing, reducing the average duration of the process for a loan approval to approximately six months,
and its ability to focus on public and private projects in two main fields: “The Bank shall mobilize resources for
infrastructure and sustainable development projects in the BRICS and other emerging economies and developing
countries” (New Development Bank, 2016). Described as “green” (Ogier, 2016), the Bank also seeks to become
a platform for sharing practices and knowledge among developing countries in the fields of infrastructure and
sustainable development (PTI, 2016).

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BRICS and the New Development Bank

Within its structure, the Bank seeks to ensure isonomy among member countries. Based in Shanghai, China,
the Bank is managed by a Board of Directors and a Board of Governors, both composed of five seats, with each
occupied by a founding member. Currently occupied by Indian Director Kundapur Vaman Kamath, the Bank’s
Presidency is rotative, as it is periodically occupied by a representative from one of the BRICS countries, while the
remaining countries are represented in the Vice-presidency.

Presidency
K.V.
Kamath
India

Vice-Presidency
Leslie Paulo
Vladimir Xian
Maasdorp Nogueira
Klasbekov Zhu
Figure 1: NDB’s current management South Batista Jr.
Russia China
Africa Brazil
Source: Elaborated by the authors based on
the NDB’s website
(http://ndb.int/leadership.php) Board of Governors
Lou Pravin
Henrique Anton Arun
Jiwei Gordhan
Meirelles Siluanov Jaitley South
Brazil Russia India China Africa

Board of Directors
Luis Sergei Zhijun Tito
Dinesh K.V.
Antonio Mboweni
Storchak Sharma Kamath Cheng
Carneiro South
Brazil Russia India India China Africa

The Bank was created with authorized capital of US$ 100 billion and
initial capital of US$ 50 billion, with contributions distributed equally
among the five founding members (US$ 10 billion each) and paid in seven
installments. Although the founding document indicates an intention to the Bank distinguished
grant loans and allow the purchase of stock by other countries, 55%
of the shares must be controlled by the BRICS countries, while 25% itself as the first
of the shares are allocated to emerging countries, thus confirming the IFI to issue “green
bank’s orientation toward the needs of developing countries (Santos, bonds” in China,
2016).
directing the resources
In July 2016, the Bank distinguished itself as the first international to infrastructure
financial institution to issue “green bonds” in China, directing the and sustainable
resources to infrastructure and sustainable development projects (also
in accordance with the guiding principles published by the People’s development projects
Bank of China in December 2015) (Yiyao, 2016). The first set of bonds
was issued in Chinese local currency and amounted to 3 billion yuan
– although the Bank has already declared its intention to repeat the
model in Russia, India and South Africa. According to Maasdorp, China was chosen as the initial recipient of
green bonds because it constitutes the “world’s third-largest bond market”, it has sufficient liquidity, and it has
vast investor demand for financial instruments that are “green” and denominated in the local currency, leading to
reduced currency risk (Yiyao, 2016).

In its creation, the Bank declared its intention to develop mechanisms to monitor and minimize the impact of its
financed projects on the environment and local communities. However, it is noteworthy that the first loans were
approved before the release of the Bank’s socio-environmental policies, which generated criticism from many civil
society organizations (Borges, Quek & Roza, 2016; Borges & Waisbich, 2014; Borges, Krishnaswam & Roza, 2016;
Cals, Conectas & Vashuda Foundation, 2015).

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BRICS and the New Development Bank

In fact, in April 2016, the NDB announced its first package of loans, with 12 and 20 years maturity, for infrastructure
and renewable energy projects with the claimed potential to reduce annual greenhouse gas (GHG) emissions by
four million tons of CO2 eq. (Patranobis, 2016). The package amounted to US$811 million to be transferred to
national banks in Brazil, India, China and South Africa. A few months later, in July 2016, Russia received its first
loan for renewable energy projects in the amount of US$ 100 million.

Table 02: First projects financed by the NDB

Project Description /
Approval
Country Energy Generation Value of Loan Intermediary Bank
Date
Potential

Infrastructure for solar and wind

Brazil power (600 megawatts); US$ 300 million BNDES 16/04/2016
Transmission lines

Eurasian
US$ 50 million
Development Bank
Hydroelectric plants
Russia 20/07/2016
(50 megawatts)
International
US$ 50 million
Investment Bank

Renewable energy
US$ 250 million Canara Bank 16/04/2016
(500 megawatts)
India
Highway revitalization US$ 350 million Sovereign credit¹ 23/11/2016

Shangai Lingang
Solar panel production
US$ 81 million Hongbo New Energy 16/04/2016
(100 megawatts)
Development Company
China
Solar and wind power
US$ 81 million Sovereign credit² 23/11/2016
(250 megawatts)

Infrastructure for renewable ESKOM Holdings SOC

South Africa US$ 180 million 16/04/2016
energy (500 megawatts) Ltd.

Source: Elaborated by the authors based on Mattos & Rosa, 2016.

(1) Loan granted directly to the Government of India.
(2) Loan granted directly to the Government of the People’s Republic of China.

Although Articles 14 and 15 of its founding agreement declare a commitment to transparent activities and the
publicizing of periodical documents and reports, by the date of this Quarterly Brief’s release, little information had
been provided with regard to the seven approved projects, with no details about their socio-environmental impacts.
In the Brazilian case, US$ 300 million was transferred to BNDES for the construction of energy transmission
lines and infrastructure for solar and wind power, with the potential of generating 600 megawatts. In the Indian
case, the amount granted for the first project was US$ 250 million, which was transferred to Canara Bank for the
generation of 500 megawatts of renewable energy. For the second project, US$ 350 million was offered directly
to the government of India for major highway revitalization. US$ 180 billion was loaned to South African Eskom,
the largest energy provider in the country, also for renewable energy infrastructure (potential of 500 megawatts)
and transmission lines. For China, the NDB offered US$ 81 million to Shanghai Lingang Hongbo New Energy
Development Co. for the production of solar panels with the capacity to generate 100 megawatts, and US$ 290
million was loaned directly to the Chinese government with the potential of generating 250 megawatts through
solar and wind power. Finally, in the Russian case, US$ 100 million was divided between the Eurasian Development
Bank and the International Investment Bank for the construction of hydroelectric dams in the Republic of Karelia
with the potential of generating a total of 50 megawatts (Mattos & Rosa, 2016).

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BRICS and the New Development Bank

As such, the absence of accessible information about the financed

projects and, importantly, the vagueness of the socio-environmental the absence of
policies adopted by the Bank for the identification and control of
projects’ risks have been widely criticized by numerous civil society
accessible information
organizations. Since July 2015, environmental and human rights NGOs about the projects and
such as Greenpeace, Conectas (Brasil), the Vashuda Foundation (India) the socio-environmental
and CALS (South Africa) have written letters to the Bank’s Presidency
recommending the adoption of policies consistent with international best
policies have been
practices with the aim of integrating socio-environmental concerns into widely criticized by civil
the process of project approval and implementation. The table below society organizations
indicates some of the main letters, with criticisms and recommendations,
addressed to the New Development Bank.

Table 03: Criticisms and recommendations from civil society to the NDB

Date Main topics / Signatory NGOs

Recommendation to adopt four principles for the NDB to avoid replicating

an “unsustainable model” of development:

1. Promoting inclusive development;

2. Being transparent and democratic;
3. Establishing rules and ensuring that they are respected;
4. Promoting sustainable development.
July, 2015

“If the NDB invests in a country where domestic law is different from the Bank’s policies,
the applicable standard should be that which offers the highest level of protection
for the environment and communities”.

Conectas; Friends of the Siberian Forests; CALS; Ecoa; CUTS International + 50¹;

Demand for the establishment of a “mechanism for transparent communication with the
public and meaningful engagement with civil society, especially those communities who
November 30, stand to be impacted by NDB-financed activities”.
2015
CALS; Conectas; Vasudha Foundation; Russian Social Ecological Union + 20²

(1) Conectas; Friends of the Siberian Forests; CALS; Ecoa; CUTS International; OT Watch; FENRAD; Jamaa Resource
Initiatives; ActionAid; Rivers without Boundaries; Vasudha Foundation; Global Initiative for Economic, Social and Culturla
Rights; GNGG; Dhesca; Friends of the Earth US; FOCONE; Asociación Ambiente y Sociedad; Foro Ciudadano de Participación
por la Justicia y los Derechos Humanos; Iepé; Social Justice Connection; COCAHICH; Fundar; ADEV; CIVICUS; People’s
Front Against IFIs; FAOR; MOCICC; International Rivers; FUNDEPS; Otros Mundos; HDCCSU; SMUG; AIDA; RCA; REMA;
Lumière Synergie pour le Développement; DAR; Centro Terra Viva; INSAF; Inclusive Development International; Fundación
Ambiente y Recursos Naturales; FIAN; Accountability Council; JUSTICIA ASBL; AJFPEF; Forest Peoples Programme; ANND;
International Accountability Project; Southern African Faith Communities’ Environment Institute; ONG HADASSA; Institute for
Economic Research on Innovation; Amnesty International; PPWU; REBRIP. Total: 55 organizations.

(2) CALS; Conectas; Vasudha Foundation; Russian Social Ecological Union; Asia Indigenous Peoples Pact; Zo Indigenous
Forum; FENRAD; Plotina; Naga Peoples Movement for Human Rights; OT Watch; REBRIP; Ecoa; SAFCEI; BPHRO; BITPDC;
IWED; Rivers Without Boundaries International Coalition; Indigenous Perspectives; CRAM; SERSI; Lumière Synergie pour le
Développement; FARN; CBS; RECODH. Total: 24 organizations.

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BRICS and the New Development Bank

Date Main topics / Signatory NGOs

“As civil society groups, we are definitely concerned, as so far, we have absolutely no
idea what the various policies of the Bank are regarding project selection and criteria. (...)
We do hope that the NDB operates in a more transparent and inclusive manner”.
Srinivas Krishnaswamy, Vasudha Foundation
April 12,
2016
“If the NDB wants to develop a new approach to environmental and social impact assessment,
it should do so by learning from past experiences of other multilateral development banks
and listening to different perspectives”. Caio Borges, Conectas

“While NDB staff state that a social and environmental policy exists,
it has not been disclosed, nor was civil society consulted in its development”.
Vladimir Chuprov, Greenpeace Russia
July 21, “As a public institution that operates with public funds, the NDB needs to be open to
2016 the voices of civil society and to abide by the highest standards of social accountability”.
Caio Borges, Conectas

Conectas; Greenpeace East Asia; FUNDEPS/Coalition for Human Rights in Development

Source: Elaborated by authors

More than two decades after the creation of the latest Multilateral Development Bank, many civil society
organizations agreed about the necessity of rethinking development at the time of the NDB’s creation (Conectas
et al, 2015). As such, the creation of an alternative institution that was more aligned to the specific demands of
developing countries was considered to be a positive development. However, a year after the NDB’s implementation,
the lack of civil society engagement has reduced the initial optimism (Conectas, 2016). On the margins of the NDB’s
first annual meeting, which took place in Shanghai in July 2016, a representative from Conectas stressed that

Effective participation by interested parties is one of the basic principles of any development project that respects
human rights. Moreover, we cannot forget that these initiatives are paid for with public funds from the BRICS
countries and, therefore, that the Bank has a duty to abide by the highest standards of accountability (Conectas,
2016).

Thus, there remain demands for greater transparency and inclusive civil society participation. Civil society
organizations have brought attention to the need to monitor and evaluate the social and environmental impacts of
projects, both at the moment of elaboration and during their implementation.

Even after the release of the NBD’s socio-environmental policy in August 2016, the Bank has still been subject
to criticism. According to Juana Kweitel and Srinivas Krishnaswamy (2016), the Bank pays little attention to basic
principles of social responsibility, and contrary to demands, it has not involved civil society in the process of
formulating its socio-environmental policy. There are doubts regarding the effectiveness of the policy framework
in avoiding violations because it is based on abstract principles and it privileges the recipient countries’ national
systems.

5. References
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openness and commitment to sustainability. Coalition for Human Rights in Development. 21 jul. 2016. Available
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BORGES, Caio; WAISBICH, Laura Trajber. The BRICS’ New Development Bank and the integration of human
rights into development cooperation: a new era or more of the same? Heinrich Böll Stiftung North America.
29 out. 2014. Available at: https://us.boell.org/2014/10/29/brics-new-development-bank-and-integration-human-
rights-development-cooperation-new-era. Accessed on: 25 sept. 2016.

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17
About the Authors
Paulo Esteves Graduated in History at the Federal University of Minas Gerais (1993), has a Master degree (1995)
and PhD (2003) in Political Science at IUPERJ. In 2008 he conducted post-doctoral studies at the University of
Copenhagen. He is Associate Professor at the International Relations Institute of the Pontifical Catholic University
of Rio de Janeiro and General Coordinator of the BRICS Policy Center. Organized in 2004 the book “International
Institutions: security, trade and integration”; and in 2010 he published the book “The convergence between
Humanitarian Practices and International Security” – publisher Del Rey / FUNAG. During this period, he published a
series of articles and book chapters in the areas of international security, humanitarian protection, and international
development. Has experience as a consultant of the United Nations Program for Development and ECOSOC. He
was the International Relations coordinator of the State Government of Minas Gerais between 2004 and 2005. He
was CNPq and CAPES consultant on several occasions and is a member of the editorial board of publications such
as International Political Sociology and Contexto Internacional Journal. He is a founding member of the Brazilian
Association of International Relations (ABRI) of which he was director from 2005 to 2009 and president from 2011
to 2014. Currently conducts research in three areas: (i) convergence of international security fields, humanitarian
protection and development, (ii) international development with an emphasis on south-south cooperation and 2030
Agenda and (iii) emerging powers.

Geovana Zoccal Gomes is a PhD Candidate at the International Relations Institute of the Pontifical Catholic
University of Rio de Janeiro (PUC-Rio). Master is International Relations at the same institute. Graduated also in
International Relations at the Pontifical Catholic University of Minas Gerais (PUC-Minas). Currently teaches the
discipline of International Cooperation for Development Professional Practice, as part of the PhD programme.
She also works as researcher of the International Cooperation for Development Research Group of the BRICS
Policy Center. She was a researcher of the project “Brazilian South-South Cooperation and the BRICS: Changing
Strategies in Africa”. Her main research topics are international cooperation for development, with emphasis on
new alternatives presented by the Global South, as South-South Cooperation or the New Multilateral Development
Banks

Gabriel Torres is an undergraduate student of International Relations at the International Relations Institute of the
Pontifical Catholic University of Rio de Janeiro (PUC-Rio). He is an intern at the Socio-Environmental Platform of
the BRICS Policy Center, researching about the New Development Bank.

BRICS Policy Center Centro de Estudos e Pesquisas - BRICS

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