US Disengagement has Consequences

American disengagement in the world is not consequence free. The new BRICS bank announced in Fortaleza by Brazil, Russia, India, China, and South Africa is largely a political exercise, which has been given a big boost by American indecision on IMF quota reform. U.S. detachment and inaction have given the BRICS the political cover to start something that would likely die with a whimper if Congress could muster the political will to pass IMF quota reform. The United States suffers from a lack of presidential leadership in the Bretton Woods arena; as we withdraw others fill the vacuum, and we cannot choose our replacements. American leadership always starts at the Presidential level, but Republicans share blame for the rise of the BRICS bank based on their inability to get IMF quota reform done in Congress.

The BRICS have complained about "vote" and "voice" in the Bretton Woods institutions. If we address the ostensible political grievances of countries like China and others at the IMF by passing quota reform their arguments for a BRICS bank largely collapse.

As long as the United States maintains implicit veto and influence over the selection the Bretton Woods institutions' leaders, we should accept marginal adjustments in shareholdings -- this has already happened at the World Bank, and the rest of the G20 has signed off on reform at the IMF. The IMF Quota reform is a good arrangement for the United States until a time when we can trade the U.S. held presidency at the World Bank for the managing director role at the IMF with the Europeans.

The international system still operates under the same essential structures and assumptions that were laid out in "the world America made" at the Bretton Woods Conference and elsewhere following WWII, and that international system works best under vigorous U.S. leadership. The BRICS bank is one of a growing number of efforts to "defect" (I think we should bring that verb back in its Cold War form) from an American led system, which serves both U.S. and world interests.

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