LONDON (Reuters): The head of the European Union’s powerful lending arm has warned the West is at risk of losing the confidence of the global south, with China and Russia and others stepping in, unless it urgently intensifies its own support efforts.
Werner Hoyer, the European Investment Bank’s President, said this week’s BRICS summit in South Africa and a push to make the group’s New Development Bank – known as the BRICS bank – an alternative to established Western multilateral lenders, underscored the need to significantly increase lending.
“It should be a cause for concern that an increasing number of smaller developing world countries, especially in Africa, are looking to countries like China and other emerging market nations to give them support rather than the traditional Western institutions,” Hoyer told Reuters.
EIB is one of those institutions. Backed by the financial firepower of the EU’s 27 member countries, it has the biggest balance sheet among the world’s multilateral development banks and invests around 10 billion euros ($10.8bn) a year in the developing world via its EIB Global arm.
Hoyer’s comments are the most forceful yet by a high ranking EU official on the efforts of the BRICS countries – Brazil, Russia, India, China and South Africa – to expand the bloc and turn it into a global counterweight to the West.
He said the number of developing nations that had adopted a neutral stance on Russia’s invasion of Ukraine last year also signalled the challenge the West faced in maintaining the trust of those nations.
“Recent votes in the General Assembly of the United Nations have already made it clear that we are at risk of losing the confidence of global south unless we take more action and get more visible there,” Hoyer said.
UN meetings next month, including a summit on sustainable development, offered an opportunity for Western institutions to show up and demonstrate they were willing and able to provide more support to poorer countries, Hoyer said.
The increased focus on enlarging the BRICS group and on its bank comes because many developing countries were “feeling abandoned” by the West in their struggles with the COVID-19 pandemic, debt, energy costs and climate change, he added.
Headquartered in Shanghai, the New Development Bank was established in 2015 by BRICS members. Bangladesh, the United Arab Emirates and Egypt have joined since while Algeria, Argentina, Ethiopia, Honduras, Iran, Morocco, Saudi Arabia, Uruguay, and Zimbabwe are all in talks to become members.
“It’s symptomatic of something that Europe and Western institutions must confront urgently,” Hoyer said of the bank’s rise in importance.
“Unless we offer genuine partnership and more convincing ways to address the challenges of the Global South whether it is in the energy transition, the issue of indebtedness or tackling glaring health inequality – we are heading for trouble.”
