Leaders from China, Russia, India, Brazil and South Africa, known as the BRICS, are gathering in the coastal city of Durban, South Africa, on today and tomorrow.
The leaders will discuss reports prepared by working groups led by Brazil on the proposed reserves pool, and another by India and South Africa on the creation of a joint development bank, which would provide financing to emerging and developing economies for infrastructure projects. The pool of central bank money would be available to emerging economies facing balance of payments difficulties or could be tapped to stabilize economies during periods of global financial crises, according to documents outlining the plan
The proposals reflect frustration among emerging market nations at having to rely on the World Bank and International Monetary Fund, which they see as still reflecting the interests of the United States and other industrialized countries.
BRICS countries were also considering injecting an initial $50 billion into the new infrastructure bank. Details on the scale, location and structure of the bank will be discussed, but not agreed at the summit. The bank would support the ever-growing financing needs in emerging and developing nations for roads, modern-day port facilities, reliable power and rail services.
While BRICS started as an economic bloc with China at the helm, it has been transformed into a geopolitical institution representing the developing world, as well as a growing political force.
Now BRICS accounts for about 40 percent of the world's population and has long seen itself as a counterweight to established powers, such as the United States or the European Union.
BRICS, in positioning itself as a rival to the G8, has become a club that many developing countries would like to join. Nigeria, Indonesia and Turkey have all been touted as potential members, while Egyptian President Mohamed Morsi this week suggested the grouping be expanded to “E-BRICS.”
It is also becoming an alternative force to Western powers on political and security issues. In a message passed by a senior adviser this week, Syrian President Bashar al-Assad asked for intervention by the BRICS nations “to stop the violence in his country and encourage the opening of a dialogue.”
BRICS' countries have exceeded all expectations. In slightly over a decade the group's GDP has grown from approximately $3 billion to $13 billion. The BRIC countries have the potential to avert a global recession and to grow faster than the rest of the world and to pull all of us along with them as a (growth) engine.
While the creation of a BRICS-led development bank to rival the IMF and World Bank is expected to be a key outcome, this will only be on paper. An actual bank ready to extend loans is likely years away.
At this point, it would be important for the BRICS countries to launch concrete projects if they want to be more than a club that is loosely tied together. They have already agreed on measures to facilitate trade between them and issued joint demands on some foreign and environmental policy topics. More can be done.
By Guylain Gustave Moke
Photo Credit : AFP