Most mainstream commentary about the BRICS falls into one of two camps. One camp dismisses the BRICS as a mere figment of Goldman Sachs’s imagination, highlighting their strategic differences and lack of collective action. The other camp, however, sees in the BRICS a genuine threat to the Western-led international order, although analysts within this camp differ on whether that’s a good or bad thing. (For a wonderfully humorous take on the two extremes of Western reactions to the BRICS, see Dan Drezner’s blog post—complete with cat videos.)

Reaction to the July 15 agreement in Fortaleza, Brazil, to establish a BRICS Development Bank have fallen into one or the other of these two camps as well. Some dismiss the idea of a BRICS bank, noting that its total capitalization, $100 billion, means it will be able to loan only a modest portion of what the World Bank spends every year, and that it is capitalized in U.S. dollars. Others have called it a new Bretton Woods moment for the emerging powers, differing only on whether this is a good or a bad thing.

These differing perspectives parallel a wider debate about the strategic orientation of the emerging powers: whether they are merely seeking to increase their influence within the international order or are instead seeking to revise or overturn that order. What does the fact that the BRICS have, belatedly, gotten around to establishing their Bank tell us about that wider debate?

The first thing to understand about the BRICS’ desire to create a Bank is that it actually fills an economic and political need. Whatever the symbolic merits of the Bank, its first purpose will be to channel financing to where the BRICS need it most: infrastructure. The BRICS need an increasing flow of financing to infrastructure projects that will allow them to expand trade in natural resources and energy. This is not just another development issue. It’s mission-critical for both China and India to have continuously increasing access to resources to fuel their continued growth. And resource exports have been the bedrock of Brazilian growth and Russian recovery.

But aren’t these kinds of infrastructure projects something the World Bank can do? Yes, but the World Bank has increasingly placed social and environmental conditions on its infrastructure loans, especially to developing countries. (World Bank critics argue that these rules are typically relaxed for rich or friendly countries.) The BRICS don’t yet have the weight within World Bank decision-making to push back against these conditions in a meaningful way.

So why can’t they just finance projects bilaterally, using their own national development funds? Of course they can, but they want a multilateral vehicle for the same reasons the Western countries want them: to pool risk, to limit reputational costs, and to increase the perceived legitimacy of their spending. If China is going to widen its investments in African land deals or Bolivian bauxite mines, for example, far better to do so under the friendlier face of the Global South’s new development bank.

The reason it took the BRICS so long to collectively pluck this relatively low-hanging fruit reveals a lot about the groups internal relations. The bottom line: they have common economic interests, but they don’t trust each other. Russia and China share a long and contentious border. India and China look at each other across their oft-contested border and see both economic partners and strategic rivals. Brazil, a genuine democracy committed to multilateralism, looks askance at much of Russia’s policy—even if it chooses not to denounce it in public. There are philosophical differences too: Delhi, Brasilia, and Pretoria hold similar views on development policy—in particular on the need to embed development in a broader framework of good governance and the rule of law, concerns not shared in Beijing or Moscow.

There are also status issues: Brazil, South Africa, and India would hardly trade in their second-tier status in institutions dominated by the West for second-tier status in institutions dominated by China. At the onset of negotiations over the Bank, China proposed that shares in the capital stock of the Bank should be proportionate to GDP: In other words, China would have as many shares as the other members combined. Unsurprisingly, the other members resisted, led by India, and in the end they won. Each member of the BRICS is to have a 20 percent share. The Bank will be headquartered in Shanghai, giving China status and potentially greater influence over staffing, although even that remains to be seen, as to win that plum Beijing had to give up the Presidency to India for the first five formative years.

It also remains to be seen whether the new Bank will challenge or will complement the World Bank. It certainly won’t be able to compete at the same scale as the World Bank, but it could finance modest projects that the World Bank refuses to. It’s striking, though, that most of the official statements accompanying the announcement of the agreement focused on how the Bank would serve to increase the clout of the BRICS countries within existing international financial institutions, and within the G-20. One way to think about the BRICS, then, is as a caucus within the wider system.

That’s not ideal, from the West’s perspective. Five years ago, Carlos Pascual, Stephen Stedman, and I warned about what a BRICS caucus vs. Western caucus situation might do within the G-20; it’s not the best way to pull countries like India and Brazil, if not China, further and further into the established order. But with Russia being kicked out of the G-8, it looks like that’s where we’re headed at any rate. This is a lot less bad than some of the alternatives—such as a genuine play by the BRICS to upend the IMF. The latter is something that China may ultimately aspire to do but currently can’t afford and can’t persuade other members to support.

So is that all there is? Is the BRICS Bank just a tool to give its members more clout within the western-dominated institutions? Not quite.

As Tom Wright and I recently argued, there’s a deeper meaning to the BRICS’ recent efforts—a meaning that’s brought into sharper contrast by the West’s recent push to sanction Russia over its meddling in Ukraine. All of the BRICS but Brazil have suffered under Western sanctions at one time or another, and they tend to reject as a matter of principle the application of sanctions as a tool of international relations. They see that Russia is vulnerable to the West not just because sanctions can block Western trade with specific individuals or commercial entities, but because sanctions tend to ripple throughout financial institutions that work with U.S. dollars—meaning virtually every financial institution on the globe.

If Russia is thus exposed, then so too are they. Indeed, they are even more vulnerable, given the scale of their participation in global financial markets. The BRICS didn’t embrace Putin as the U.S. was trying to isolate him because they had any sympathy with Kremlin policy (after all, China made the rare move of abstaining on rather than vetoing a UN Security Council resolution that condemned Russia’s actions). Rather, they were seeking to limit their own exposure to American financial muscle-flexing. They want to diversify their relationships beyond the West.

Not that a BRICS Development Bank, or even the Contingency Reserve Fund they established (a fund designed to help countries weather financial crises) can actually achieve this end. The BRICS, even collectively, are still too small in global financial terms to act independently of the U.S. dollar or the established international financial systems. And they have an awful lot at stake in the continuation of those systems in the near term: A sudden breakdown would mean catastrophic financial and economic loses for all of the BRICS. Nevertheless, these moves are steps in a particular direction, and they may take further steps in time.

We ought to expect them to do so because even the well-meaning members of the BRICS are growing genuinely frustrated with the West’s truculence on reforming international financial and development institutions. There has been limited movement at the World Bank, and even less movement at the IMF, all while the West has continued its ill-conceived efforts to pull the emerging powers into the OECD.

Even hedging doesn’t fully capture the dynamic of some of the BRICS members towards the established order. Russia and China are going farther—though not in the same way or to the same degree.

Russia under Putin’s second presidential term has clearly moved in a more aggressive and less cooperative direction. That’s not to deny that cooperation isn’t still proceeding on certain key issues—in the Arctic, on Iran, over Afghanistan, and in the Indian Ocean, for example. But those instances of cooperation look smaller and smaller when juxtaposed to the Kremlin’s policies in, say, Georgia, Syria, or eastern Ukraine. The Brazilian hosts got lucky with the timing of the recent summit in Fortaleza, managing by a couple of days to avoid having images of group hugs with Putin shown in split screen with images of the wreckage of Malaysia Airlines Flight 17. (The Australian government, which hosts the G-20 in November 2014, has already signaled that Russia may not be welcome in Brisbane.)

Some have argued that China, too, is now a revisionist power, but judgment seems premature. Certainly, with an increasingly assertive stance in the South and East China Seas, and with growing naval capacity, China is pushing up against the boundaries of the Western order, “testing the tensile strength” of the U.S. alliance system in Asia. But China is still dead set on avoiding conflict with the United States, as such a conflict would be devastating for its economy; furthermore, it’s still seeking to expand economic cooperation with the United States. For example, in the recent Strategic and Economic Dialogue, China’s President Xi Jinping raised with Secretary Kerry the prospect of moving forward on a Bilateral Investment Treaty, an offer the Kerry rebuffed.

It also bears repeating: Notwithstanding common economic interests and a shared desire to increase their freedom of action in the international system, the BRICS are not an anti-Western alliance. Brazil and India still express strong interest in deepening their ties to the United States, and as the shadows of Edward Snowden’s revelations recede, they’re both gearing up for moves in this direction. And the BRICS continue to mistrust one another—Russia and China in particular. Before the fallout with the West over Crimea, Russia was hedging against Chinese expansion in Asia by trying to bury the hatchet with Japan, with whom it had made good progress on an agreement to resolve outstanding territorial disputes. (The United States put a stop to that after the Crimea affair, calling in chips with Japan’s Prime Minister Abe to compel him to join forces on a strategy of isolating Russia.) However, a central purpose of the BRICS mechanism is to allow the members to put growth before geopolitics.

However, the West’s tactics on the BRICS have often seemed hapless. I’m not much fussed about a BRICS Development Bank, even if it does compete with the World Bank. (I spent a year on loan to the World Bank in 2011 and have rarely seen an institution that was more in need of competition.) Still, its creation was clearly an own-goal by the West. Had the United States and Europe been more willing to reform the existing international institutions, the BRICS Bank probably would have run out of steam. Surely the U.S. and Europe have enough other sources of influence that they could have traded leadership of the World Bank to one of several highly competent candidates from Brazil or India, in exchange for positive movement on one of any number of issues. While the West’s official policy is that the main institutions of the international order are open to increased participation by the emerging powers, that hasn’t been the reality from the mid-2000s on.

In the end, to understand the BRICS, the West has to be willing to let go of the traditional dichotomies it has used to understand geopolitical relationships. The BRICS are not an alliance against the West, but they do share an interest in curtailing Western dominance. The BRICS aren’t trying to break the established order; nor are they standing idly by, waiting for the West to offer them a genuine set of reforms. The BRICS aren’t embracing Putin’s policy in Ukraine; nor are they going to agree to help isolate him.

With respect to China’s bilateral relationship with the United States, Xi Jinping has called for a “new kind of great power relationship.” We don’t know yet much about what that means. In the BRICS Summit, though, we’re watching the formation of a new kind of great power club. It’s neither a strategic alliance nor a mere act of symbolism. It’s a collective effort by a group of individual members who want greater freedom of action—including freedom of action with respect to fellow members. When it comes to the established international order, the BRICS are both in and out.