NDB :: Overview of the first year

In its first meeting since the start o operations, lack of transparency and participation reduced optimism with the New Bank of the BRICS

Chinese Vice Premier Zhang Gaoli at the opening of the meeting in Shanghai

The first annual meeting of the New Development Bank of the BRICS (the economic block formed by Brazil, Russia, India, China and South Africa) ended on Thursday, July 21, in Shanghai, China. The meeting was held after the bank made its first series of loans, of around US$800 million, to finance projects in the area of renewable energy. During the meeting, which was attended by government authorities, businesspeople, academics and civil society, the bank announced its intention to hold consultations with civil society on its operations, including its policies and projects.

The news was welcomed by organizations that monitor the environmental and human rights impacts caused by large infrastructure projects, and they viewed the initiative as a sign of opening up to social participation in the definition of the loans.

“We hope that the bank delivers on this commitment and that social participation will be able to influence the bank’s decisions,” said Caio Borges, a lawyer for the Business and Human Rights program at Conectas who was present at the meeting. “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,” he added.

Criticisms

For the first time, civil society representatives were invited to participate actively in the discussions, albeit in a limited fashion. The meeting lasted two days but was only open to academics and activists on the second day. Human rights organizations used the event to challenge the absence of transparency at the institution, which has still not released its environmental and social safeguards and freedom of information policies.

Another criticism of the organizations was the lack of definition of what the bank considers to be “sustainable development” – a concept that underpins all its actions. According to Borges, “without a clear meaning, the term could be used to justify almost any project, even ones that are controversial from the standpoint of sustainability, such as hydroelectric dams”.

The organizations also questioned the decision of the NDB to use the domestic legislation of the member countries as a standard for approving loans. This could be problematic, they claim, in the event that domestic environmental and social regulations are relaxed. This is currently the case in Brazil, where Congress is poised to approve a constitutional amendment (Amendment 65/12) that will practically do away with the environmental licensing process for large-scale projects.

Doing things differently

The New Development Bank was created in 2014 and started operating in April with its headquarters in the Chinese city of Shanghai. According to bank spokespeople, the main differences between the NDB and other multilateral development banks like the World Bank are its focus on sustainable development, its lean structure and its speed of approving loans – at the World Bank, it takes an average of 18 months to approve a loan whereas at the NDB the goal is 6 months. It is also the first international financial institution funded and managed by emerging countries.