BRICS group of emerging powers scales back plans to challenge Western supremacy
Leaders from the BRICS group of emerging powers on Wednesday were to unveil a scaled-back plan to challenge Western supremacy at global institutions like the World Bank.
Leaders from Brazil, Russia, India, China and hosts South Africa were set to hammer out deals designed to counter the impact of Europe’s dragging economic crisis and gain more influence on the world stage.
Topping the agenda on the final day of the BRICS summit is an agreement to establish an infrastructure bank designed to rival the US and European-led World Bank that has dominated development finance for several decades.
“The BRICS-led bank is intended to mobilise domestic savings and to co-fund infrastructure in developing regions,” host and South African President Jacob Zuma told the gathering in the port city of Durban.
Together the BRICS economies account for 25 percent of global output and 40 percent of the world’s population.
But members say global institutions such as the World Bank, the International Monetary Fund and the United Nations Security Council are not changing fast enough reflect their new-found clout.
Echoing the BRICS’ new-found confidence, Brazilian President Dilma Rousseff said the summit came “at a point in time that is marked by deep economic changes, sweeping changes, which have made our BRICS nations key stakeholders and players.”
The disparate BRICS grouping has, however, struggled to turn that ideological belief into concrete progress toward their goals.
BRICS negotiators had been under pressure to come up with a deal on the bank to prove it is more than a talking shop, but a wide-ranging agreement appears to be beyond reach.
A push for the bank to have a substantial $50 billion starting balance is likely to be significantly scaled back and there is little agreement on the bank’s mandate.
The details were “being hammered out”, South Africa’s Trade Minister Rob Davies admitted.
“There’ll obviously be a process to put in place the remainder of the details,” he told AFP.
The bank is not likely to be up and running for years.
The key sticking points were defining the scope of the bank, how projects would be distributed and where it would be based.
The World Bank said Tuesday it was ready to support the new development bank.
But “establishing a development bank is a significant undertaking”, it warned.
“We await the details related to the new bank’s financing, governance, and location and stand ready to assist this newest player in global development any way we can,” it said.
Chinese President Xi Jinping, who underscored the growing importance his country attached to the group by making Durban his first summit destination in his new role as head of state, admitted the BRICS countries had a long road ahead.
“The potential of BRICS development is infinite,” he said, but “the real potential of BRICS cooperation is yet to be realised.”
Many emerging nations both inside and outside the BRICS grouping hope the bank will be a way to tap China’s vast financial resources, not least it’s massive $3.31 trillion foreign reserves, the world’s largest.
Addressing concerns that trade with China was seen as too much of a one-way street, Xi insisted China was “committed to making our economy more open.”
In a bid to harness China’s clout, BRICS leaders are expected to agree to establish a currency swap line worth around $100 billion.
Members would be able to draw on the funds during a liquidity crunch or other crises.
Zuma said the group would also agree to build a high-capacity 28,400 kilometre (17,600 mile) fibre-optic cable between the BRICS countries to “remove dependency on developed countries as interconnection points.”
BRICS leaders will also consider an appeal from Syria’s embattled President Bashar al-Assad to mediate in the conflict there.
Assad’s senior advisor Bouthaina Shaaban said the president had appealed to the summit’s leaders to intervene “to stop the violence in his country and encourage the opening of a dialogue, which he wishes to start”.
Speaking ahead of the summit, Russian President Vladimir Putin said the group would try to act in concert.
“We will coordinate our activities to find a peaceful solution for the Syrian crisis,” he said.
Russia and China have repeatedly blocked moves at the UN Security Council to impose sanctions against the Assad regime.