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BRICKS Development Bank invites Greece as a member state

11 May 15 | Sergei Storchak
Sergei Storchak

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Deputy Finance Minister of Russia and representative of the new development bank of BRICS Sergei Storchak invited Greece to participate as member to the under construction new bank created by the BRICS countries (China, Russia, Brazil, India and North Africa), in an exclusive interview to Greek Media.

 

In a period that the financing problem of the country is acute and constitutes one of the main problems of the negotiations between Greece and the institutions, Greece's participation in the new development bank of the BRICS, according to the Russian Minister's statement will offer Greece the opportunity to fund a series of development projects.

Referring to the Greek-Russian relations, Storchak noted that they can develop in a number of sectors with the use of the Russian currency for the payment of goods and services.

The new official name of bank is New Development Bank but usually is called BRICS bank. The most important is that it will be the second such institution that will not only refer to development plans in Brazil, India, Russia, North Africa and China but also to most countries of the world, said Storchak.

Referring to the Bank's governing system, the Russian Minister said that there will be three governance levels. The governors board, the managing directors board, the president and the staff. In this institution where the president and the vice president will be appointed on a merit basis, we decided that the president will change every five years and will be from the five founding member-states.

In reality, " in existing institutions, it is often declared that the appointment of the board, the chairman is based on the merit base but in practice in world bank is normally represented by the United States, in IMF is represented by Europeans, for this reason we decided to change this approach and each country to be allowed to be the leader of the bank for five years" explained Storchak.

Another important fact is the voting, every country has the same portion of voters, the same number of shares, and we agreed that in many occasions would be wiser to rely on the majority of voters. So, summing up, the role of this institution will be worldwide in big construction projects. We know for many many years that the role of the World Bank, their role in the infrastructional projects, is decreasing not increasing, so we five founding members agreed that development projects would constitute the cornerstone of the bank's activities, the bank will not be running for the profit.

At a question if Greece can be benefited from the bank, the Russian Minister said "This new Development Bank is open to all United Nation members. We have agreed that all 50 percent of the authorized capital of the bank, meaning 50 billion dollars a year will be distributed between founding members, the other 50 billion can be subscribed to newcomers. The effect is that with this very flexible system, after the process of the ratification of the agreement in all nations, newcomers would apply and the board of governors will decide. After this there will be no need the issue to be submitted to the national parliament in order to change the articles of the agreement and this is very important. So I will not be surprised if Greece is the first to apply as full membership. Greek authorities can buy as much portion of shares they want. It does not matter if they are small or moderate shares, when Greece joins the bank it would be able to borrow from the bank for different purposes or for national development plans".

Asked on whether any potential financial aid from bank may cause problems in Greece's relations with its EU partners, Storchak opined "The possibility of problems with the European Union because Greece will become member of the Brics institution is very low because many European members have decided to join another development institution, I speak about a Chinese proposal for the Asian institute for infrastructure and investment (Asian Infrastructure Investment Bank -AIIB). Twenty five percent of the Asian bank's capital will be allocated to non-Asian countries. UK, Germany, Italy, France, all members of the European Union has decided to work with other nations for the Asian institute. So, no problem, no critics, the references I managed to read are quite positive" adding that "the world economy is facing a number of challenges, one of the challenges is lack of long-term capital for infrastructure projects so the Asian Bank will be oriented to infrastructure development. In the near future the issue of lack of modern infrastructure will not be only technical. The issue will be set on the table for deep, comprehensive improvement and the countries will feel the benefit of these two new institutions in terms of stimulating and motivating economic transactions not only in terms of trade but also in terms of project finance.

On the issue of Greek-Russian relations and how they can further develop, the Russian minister made a proposal "As far as I work mostly in international finance, I think that both nations can work in stipulating the use of national currency, at least in case of Russia, Russian rubles can be used in payment for goods and services. For example, I can imagine if the two countries find it mutually beneficial to use rubles in tourism. Russian people who want to come to Greece especially in spring or early summer are sensitive in changing rubles to other currency, so if at some stage we manage to make such transactions it would be quite helpful. Of course, when we overcome the financial difficulties I am sure that based on the political environment which exist in our countries, I believe more Russians and private companies will be eager to invest in Greece. It is very important for you, for us, we are all looking for direct foreign investments. Not only products, but investments. My experience has shown that is much more interesting and wise to rely on direct foreign investments.

We have a good political basis for development of mutual relationship and we have strong historic relations as well as relations in other fields.

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