By Swann Collins, writer and consultant in international affairs – Eurasia Business News, May 28, 2023

Saudi Arabia and the BRICS New Development Bank are negotiating the accession of Riyadh. The Saudi kingdom may become the ninth member of the multilateral bank created in 2014 and based in Shanghai.

The New Development Bank told the Financial Times that it attaches great importance to Saudi Arabia and conducts a “competent dialogue” with it. A positive decision on this issue will lead to the strengthening of ties between the members of the bank, which was created by the largest developing economies of the world as an “alternative to the Bretton Woods institutions under the leadership of the West.”

The BRICS include Brazil, Russia, India, China and South Africa. The New Development Bank was launched in 2014-2015 as an alternative to the existing World Bank and the International Monetary Fund.. Its task is to finance infrastructure projects and sustainable development projects of the BRICS countries. In 2021, Bangladesh, Egypt, the United Arab Emirates and Uruguay joined the bank.

The NBD is an international financial institution, a development bank, founded by the member countries of the BRICS in order to finance infrastructure and sustainable development projects. The beneficiaries of this funding are the BRICS and developing countries.

The Board of Directors of the New Development Bank (NDB) unanimously elected Dilma Rousseff on March 24 as president of the institution. Dilma Rousseff will chair the NDB until July 2025, when Brazil’s term in charge of the financial institution, which is headquartered in Shanghai, China, ends.

On April 13, during his first state visit to China since taking office in January, the Brazilian President Luiz Inácio Lula da Silva called to choose an alternative currency to the dollar for use in trade between the BRICS countries.

“Why can’t a bank like BRICS’ bank have a currency that would be used in trade between Brazil and China, Brazil and other BRICS countries. It’s difficult because some people aren’t used to it,” he said during the inauguration ceremony of Dilma Rousseff as the new head of the New Development Bank (BRICS Bank) in Shanghai.

Lula da Silva added that other countries could be more active in using their own currencies in trade, without using the dollar.

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Saudi Arabia joining the BRICS would accelerate the use of the Chinese yuan as a trading currency between major economies. The geopolitical choice made by Riyadh is under scrutiny, as the Saudi kingdom was the second largest oil producer in 2022 with 10,64 million bbl/day, after the United States and before the Russian Federation, China and Canada.

The BRICS group of nations plans to decide next August during their Summit in Durban whether to admit new members and what criteria they would have to meet, with Iran, Algeria and Saudi Arabia seeking entry.

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© Copyright 2023– Swann Collins, writer and consultant in international affairs.