The multinational lender keeps expanding its global reach, aiming to help member states reduce dependence on the US dollar and euro.
The New Development Bank (NDB) of the BRICS group of major emerging economies is currently in talks with Saudi Arabia on admitting the kingdom as its tenth member, the Financial Times reported on Sunday.
The move is expected to cement ties between the Shanghai-based lender, established by BRICS (Brazil, Russia, India, China, and South Africa) back in 2014, with the world’s second biggest producer of oil.
“In the Middle East, we attach great importance to the Kingdom of Saudi Arabia and are currently engaged in a qualified dialogue with them,” the NDB said in a statement seen by FT.
Launched with the purpose of financing infrastructure and sustainable development in member states and other emerging economies, the NDB has expanded its membership to include Bangladesh, the United Arab Emirates, Uruguay and Egypt. It has lent $33 billion to more than 96 projects in the five founding member nations.
The multinational financial institution is preparing to embark on a formal evaluation of its funding options, which were shaken after Russia was hit by several waves of Western sanctions over its military operation in Ukraine. The BRICS bank is scheduled to hold its annual meeting from May 30-31.
For Riyadh, membership in the bank offers the prospect of strengthening bonds with the BRICS member states. The five economies account for more than 40% of the world’s population and nearly a quarter of global GDP.
The talks also come at a time when Saudi Arabia and China are increasing co-operation. In March, Beijing mediated a landmark agreement between the kingdom and Iran, helping to ease regional tensions. Saudi Arabia has also significantly strengthened its energy ties with China.
The Saudis are expected to emerge as another financially reliable shareholder in the NDB as the international lender assesses its ability to mobilize funds. Sanctions on Russia have raised concerns about the bank’s dependence on Moscow, which holds a stake of around 19%.
Saudi Arabia’s relationship with the US is symbiotic, whenever the latter needs for their energy requirements the former provides. However, recently the US (Biden administration) had demanded Saudi Arabia to increase their oil production beyond the quota provided by OPEC an oil production regulatory body of oil producing countries set up to protect their interests which Saudi Arabia is a member. This immediate demanding attitude of the US doesn’t sit well with the Saudis and the first time ever that Saudi Arabia did not oblige to the US demand. Well, there are good reasons why Saudi Arabia is distancing from the US, apart from their declining economy their global influence is declining too.