BRICS, South America toast to new financial architecture
July 17, 2014, 4:50 am

Leaders of the BRICS nations met with South American leaders Wednesday at the 6th BRICS Summit in Brasília, in the first iteration of what some leaders suggested could become a more permanent alliance.

After the meeting Brazilian President Dilma Rousseff declared a toast to “a joint path between us,” and “a permanent relationship between UNASUL [The Union of South American Nations] and BRICS.”

Working lunch hosted by President of Brazil Dilma Rousseff in honour of the leaders of Russia, India, China, South Africa and South American nations on 16 July 2014 in Brasilia, capital of Brazil [PPIO]

“[BRICS and UNASUL] have the same goal: the construction of a new financial architecture that will benefit economic development in terms of equity for our countries, to end the speculative financial capital that loots our economies and start to promote productive investment,” Maduro said.

He added that, “The face of a new covenant, a new global geopolitics, a new alliance now for development and peace, is beginning to be seen.”

Chinese President Xi Jinping said at the Summit that efforts should be made to strengthen the connectivity between the two large markets of BRICS and South America.

“We should jointly push the international order toward a fairer and more rational direction, maintain the rights of people’s self-choice for choosing social system and development path. BRICS countries can actively participate in infrastructure construction, resource exploration, industrial development and fund-rising projects in South America,” he said.

The previous day, in north-eastern Brazilian city Fortaleza, BRICS leaders finalised an agreement to create a development bank, with $100 billion authorised capital, and a $100 billion currency reserve fund. Headquartered in Shanghai, and initially with an Indian CEO, the bank will offer emerging economies an alternative multilateral financial institution to the US-based International Monetary Fund (IMF) and World Bank.

Emerging economies like Brazil and China have often complained that existing institutions such as the IMF and the World Bank are de facto tools of the economic policies of the US and Europe and have not been open to reforms which could help developing countries.

“The multilateral economic entities now in place such as the IMF or the World Bank fall short of providing either the attention or the resources to fulfil the needs of the developing world,” said Marcos Troyjo, co-director of the BRIClab at Columbia University.

Even so, Troyjo believes that the NDB is not being designed to compete with these institutions.

“Quite the contrary,” he told The BRICS Post. “Its motivation is to perform a complementary role to existing Washington-based institutions. It should be welcomed by the entire international community – and particularly by the BRICS themselves.”

Lucy Jordan in BRASÍLIA, Brazil for The BRICS Post