“More to BRICS summit than development bank”
July 16, 2014, 5:45 am

Russian President Vladimir Putin (R) is welcomed by Brazilian President Dilma Rousseff prior to the 6th BRICS Summit in Fortaleza, Brazil, July 15, 2014 [Xinhua]

“The cooperation amongst BRICS countries is anchored in its institutions, so the new development bank is an important step forward. When the bank and contingency reserve arrangement were first mooted, outsiders scoffed at the idea, but we have shown that with determination much can be achieved in a short space of time,” she said.

“In the same way, the BRICS Business Council is an important institution and although only one year old, it has attracted more than 700 business people to Fortaleza and by its people-to-people interaction will promote trade and investment between BRICS member countries. The BRICS Business Council will establish an information exchange platform, the BRICS Business Portal, so other countries can share in our opportunities,” she added.

A joint declaration at the end of the Summit said BRICS reiterate the call for urgent UN Security Council reforms taht would allow greater representation from the developing world.

“China and Russia reiterate the importance they attach to Brazil, India and South Africa’s status and role in international affairs and support their aspiration to play a greater role in the UN,” said the statement.

Rousseff also pointed out that reforms to the International Monetary Fund have hit a deadlock which is deeply disappointing for emerging economies.

“We also need to look at international economic governance and solving long-lasting regional conflicts. The BRICS account for 21 per cent of global output if measured in money terms and 27 per cent if measured on a purchasing power parity basis, yet we only have 11 per cent of the voting power in the Bretton Woods institutions such as the International Monetary Fund and the World Bank. Reform of the quota system of these institutions was agreed at the first G20 summit, yet those promised reforms have not yet been implemented,” she said.

In response to a question on whether non-BRICS countries would be benefit from the new development bank, Rousseff said countries like Argentina would be eligible for help, but that the country needed to ask for assistance and the bank would decide in terms of its own clear operating rules.

She said that the great thing about a bank was that it could leverage its capital base, so the envisaged $100 billion capital base of the development bank could be multiplied many times.

“The reason why Shanghai was chosen as headquarters was that it is a financial hub in the same way that Sao Paulo is in Brazil. We have not yet discussed names as to who will head the bank, but we are determined to get the bank up and running as soon as possible,” she said.

Earlier in the day each of the BRICS leaders addressed the plenary session. As host, Brazil led the way followed by the leaders of Russia, India, China and South Africa.

In his speech Russian President Vladimir Putin announced a BRICS university, which would provide online courses. He also proposed an energy alliance for BRICS nations, under which a Fuel Reserve Bank and BRICS Energy Policy Institute could be set up. He welcomed delegates to come to the next BRICS summit in Russia in June 2015.

Chinese President Xi Jinping noted that Chinese citizens now undertook more than 100 million outward bound tourist trips each year, which allowed for positive energy interaction. China was now the largest trading partner for 128 countries and that trade provided a win-win situation.

“We need to work to improve economic governance at a global level, increase the representations and voice of developing countries,” said Xi.

The Fortaleza Declaration, signed by the leaders, also says BRICS will now explore the potential for BRICS insurance and reinsurance markets to pool capacities.

The group also warned against “the harmful impact of tax evasion, transnational fraud and aggressive tax planning on the world economy”, saying they will step up cooperation in targeting tax base erosion.

The joint declaration also said BRICS will “reaffirm our commitment to establish by the end of this year a post-Bali work program for concluding the Doha Round”. India had earlier threatened to derail the Bali deal over the lack of consensus on agricultural subsidies. A Food Security Bill enacted by India’s last government guarantees five kilograms of food grain a month, at Rs 2 (under four cents) a kilogram to almost a billion people – or about 67 per cent of the Indian population.

To assuage Indian concerns, the BRICS declaration says the Bali “work program should prioritize the issues where legally binding outcomes could not be achieved at MC9, including Public Stock-Holding for Food Security Purposes”.

Meanwhile, South African President Jacob Zuma said the BRICS future was filled with great promise and that non-BRICS countries would also benefit from the growth and partnership of the BRICS countries. He highlighted the opportunities created not only by the new development bank, but also those in the export credit and the insurance markets.

Indian Prime Minister Narendra Modi said BRICS should provide a clear and united voice in international affairs. He added that BRICS cooperation should not only be at the governmental level, but at the inter-personal level. To foster those personal relations, he suggested that each BRICS country should provide more language schools.

Helmo Preuss in Fortaleza for The BRICS Post