BRICS bank pillars could be ready next year: Brazil, by France 24, 30 JULY 2013 – 23H26

The statutes of the new development bank planned by the BRICS group of five emerging powers could be ready next year, Brazil’s foreign minister said here Tuesday.

“We made good progress during the last meeting in Durban and the expectation is that in the 2014 meeting in Brazil, enough progress has been made to conclude the statutes of the bank,” Antonio Patriota told reporters.

He made the remarks after discussing the issue here with his South African counterpart Maite Nkoana-Mashabane.

At their March summit in the South African city of Durban, leaders of the BRICS — Brazil, Russia, India, China and South Africa — failed to launch the much-anticipated bank.

Instead of a $50 billion fund, the leaders agreed only that the initial capital contribution would be “substantial and sufficient for the bank to be effective.”

“There was an agreement to establish such a bank. Our ministries of finance are busy with the final modalities because the viability has been checked, even economists from the World Bank have come out to say there is space for such a bank,” Nkoana-Mashabane said here.

The proposed bank is meant to rival Western-dominated institutions like the World Bank.

Key sticking points included how projects would be distributed and where the bank would be based.

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A ‘BRICs’ Bank? No Thanks, The IMF And World Bank Are Bad Enough, by Jens F. Laurson and George Pieler, 22 April 2013, Forbes.com LLC

Led by China, the five “BRICS” states (Brazil, Russia, India, China, South Africa) plan to set up a development bank of their own. This is loosely characterized as an IMF and World Bank rival, which is to say an unholy combination of the two. Does this mean the fast-growing graduates of the Developing World are finally coming together as a potent force?

It does not. Chen Yuan, the veteran of the China Development Bank, has been tasked with making this ill-defined BRICS Bank a reality, but as of yet there is no plan even on paper. The new institution might support infrastructure projects in the non-developed world, or leverage a stronger presence for China and its four friends anywhere they find takers, but so far it is still a phantom project.

What is most striking about this first really tangible BRICs initiative is its lack of originality. Everything so far points to the BRICs bank mimicking one or more of the Bretton Woods institutions that western nations devised after WWII with the objectives of supporting war recovery and spurring (peaceful) postwar development. (Whether their track record on development really makes them such good models for imitation is a question for another day.)

At the core of the planned development bank of the BRICs is a large void: an apparent lack of a central mission these countries want to collectively accomplish. Their development bank-project amounts more to an announcement that they will have one, too – just like the established economic powers. They’re free to have one, of course. The BRICs nations are already enmeshed in the status quo structure of international development finance, as it is, though they are clearly not satisfied with the role they play in the IMF and World Bank. China especially, which has long demanded a larger role in the Bretton Woods institutions, has a valid point.

But these institutions seem a strange model to emulate: China is renowned for offering no-strings development aid, particularly in Africa, as opposed to the tied or limited aid that usually comes from the development banks or bilateral deals. The western concern has been that its own development aims, whether in the field of human rights, public health, or improved governance, will be shot to bits if aid recipients can get unconditional deals from China.

What the supposed BRICs bank could do, though, is heighten China’s influence in places perceived as outside of its current realm of influence, yet more amenable to suasion by Russia, India, or Brazil. That would allow China to render services (or cash and credits as needed) via the other four BRICS. Aid-laundering, as it were. This also makes sense of South Africa’s membership: While the country doesn’t fit the rapid-growth criteria of the other four, it is in the mix for prestige and an African presence.

None of this will necessarily have profound geopolitical repercussions: The BRICs have not yet proposed their own trading bloc, and deal with their share of trade tensions within the group. Particularly Brazil and South Africa lock horns on agricultural products. They aren’t trying to stop the planned Trans Pacific Partnership anchored by the US. They say they are committed to the WTO principles of free trade as an aspiration of the postwar world trade order. They are certainly not planning a Euro-style currency bloc, although China keeps pushing for Renmimbi convertibility to establish its currency as an eventual competitor for the dollar. They don’t have treaties of mutual defense and support, and they continue to embrace all the status quo institutions of international relations, in short “global governance”: the UN, WTO, G20, and the various development banks.

The BRICs alliance is probably best seen as a collective effort to secure greater leverage in all these longstanding institutions, and generally to be seen as the champion(s) of less developed nations in their decision-making processes. Not an unreasonable goal, but not a very exciting one especially since the BRICs agenda doesn’t trump the BRICs members’ extant individual obligations as members of the Bretton Woods institutions, or their commitments and treaty obligations with the rest of the developed and developing world.

The BRICs are waiting expectantly, and not necessarily vulture-like, to see what their opportunities in a multipolar world will be. Everyone assumes the so-called unipolar world revolving around the United States is on its way out (if it isn’t already), and (to the extent the Eurozone is counted as part of the U.S. orbit) it isn’t daring to predict that will happen sooner, rather than later.

It’s fair enough to extrapolate from today’s trends a trajectory for the global economy, but it would be folly to assume it can’t come out any other way. And if it weren’t to happen soon, expect the loose BRICs-alliance to break apart before long. Russia needs China much more than the reverse, and the longstanding territorial rivalries between China and India are seething just below the surface. Brazil may be better placed to play a leading role in the economies of the southern hemisphere than get enmeshed in global power-plays.

Russia isn’t growing so fast these days, China’s growth has been bogged down by systemic corruption and increasingly obvious environmental and social limits, and slowed down by design, to achieve a hope-for sustainability instead of a crash. The BRICs, by pushing modification of the old order while pretending to proclaim a new one, merely reinforce the global preference for gradual evolution of global economic relations, not a revolution led by newly-wealthy players on the global stage. This makes sense, given that wealth has been won by adopting western-style markets and – at least to some extent – newfound respect for the rule of law in international relations.

 

BRICS wrangle over new development bank, Source: Al Jazeera And Agencies, Last Modified: 26 March 2013 11:04

BRICS emerging powers sought a deal on setting up a development bank that would rival Western-backed institutions, trying to iron out significant differences ahead of a leaders’ summit in Durban.

The grouping of Brazil, Russia, India, China and hosts South Africa are racing to elaborate on proposals for an infrastructure-focused lender that would challenge seven decades of dominance by the World Bank.

Just hours before leaders kick off the summit at 17:30 GMT on Tuesday, finance ministers were still working to agree key elements of the plan.

Disputes remain over what the bank will do, with each side trying to mould the institution to their foreign or domestic policy goals and with each looking for assurances of an equitable return on their initial investment of about $10bn.

Failure to secure a deal would be a major embarrassment for many of the participants and would play into the hands of those who argue that the BRICS have little to bind them together.

‘Positive headway’

Xi Jinping, who has underscored the growing importance of the group by making Durban his first summit as China’s president, earlier expressed hopes for “positive headway” in establishing the bank.

In a keynote speech in Tanzania on Monday Xi pledged Beijing’s “sincere friendship” with the continent, and a relationship that respects Africa’s “dignity and independence”.

Meanwhile, host President Jacob Zuma has lauded the summit as a means of addressing his country’s chronic economic problems including high unemployment.

“BRICS provides an opportunity for South Africa to promote its competitiveness” Zuma said in a speech on the eve of the summit.

“It is an opportunity to move further in our drive to promote economic growth and confront the challenge of poverty, inequality and unemployment that afflicts our country.”

A failure to take concrete steps would raise questions about whether the BRICS grouping can survive.

“Ironically it may be the cleavages within the BRICS grouping that more accurately hint at the future of the global order: tensions between China and Brazil on trade, India on security, and Russia on status highlight the difficulty Beijing will have in staking its claim to global leadership,” said Daniel Twining of the German Marshall Fund.

But if the leaders succeed it would be the first time since the inaugural BRICS summit four years ago that the group matches rhetorical demands for a more equitable global order with concrete steps.

That would send a loud message to the US and European nations that the current global balance of power is unworkable.

Together the BRICS account for 25 percent of global GDP and 40 percent of the world’s population.

But members say institutions such as the World Bank, the International Monetary Fund and the United Nations Security Council are not changing fast enough to reflect their new-found clout.

Diplomats say it could start with $10bn seed money from each country, but the exact role of the bank is up for debate.

BRICS FACTS

Economic data shows that the grouping of Brazil, China, India, Russia and South Africa now account for 25 percent of global GDP and 40 percent of the world’s population.

China has become the informal leader of the group. With a GDP of $8.25 trillion in 2012, the IMF
estimates that the Chinese economy will climb by a whopping 8.2 percent in 2013.It remains the globe’s most-populated country, with 1.34 billion inhabitants.

Brazil: With a GDP of $2.425 trillion in 2012, Brazil is the world’s seventh largest economy. It holds only a modest place in world trade activity, however, and experienced sluggish growth of one percent last year.

Russia: Ranking ninth on the list of the world’s biggest economies, Russia accumulated a GDP of $1.953 billion in 2012, boosted mainly by its gas exports, making it the world’s eighth largest exporter.

India: Despite its population of 1.24 billion, India remains a smaller player among the world’s economies, falling into a 10th place with a GDP worth 1.946 trillion.

South Africa: Smallest of the BRICS economies is South Africa. Placing 41st world exporters, the country has a GDP of $390 billion and a population of 50.5 million.

 

Africa: Brics Seeks New Dialogue With Africa, re pulished from Africanliberty.org, 7 January 2013

Johannesburg — South Africa plans to boost links between Africa and its partners in the Brazil, Russia, India and China alliance at a landmark summit, which will be held in this country in March, Xavier Carim, deputy director general at the Department of Trade and Industry, told IPS.

“The summit theme is BRICS and Africa – a partnership for development, integration and industrialisation,” explained Carim of the meeting to be held in Durban, South Africa.

“We want to align our interests to support the integration agenda in Africa, not just to focus on access to resources.”

There have been suggestions that because South Africa is the smallest of the BRICS nations in terms of population and GDP, it therefore may not deserve a place in this club of leading developing nations.

However, one answer to this criticism is that South Africa can offer its BRICS partners better access to the mineral-rich African continent and hence plays not just a national role, but a regional one, in the BRICS.

The heads of government who will be attending the BRICS summit will be invited to a meeting immediately after the main event with the New Partnership for Africa’s Development (NEPAD) Steering Committee.

“This will be at presidential level and will help to link the BRICS with Africa,” explained Carim.

Pretoria-based international affairs consultant John Maré welcomed the plan to boost relations between Africa and the BRICS grouping at the Durban summit.

“This is important. In particular, it means South Africa is facilitating an Africa-China business dialogue.

“It is important that business deals ensure there is no exploitation of Africa by the Chinese,” he told IPS.

He emphasised the importance of China in particular for Africa, suggesting that the Asian giant is the key member of the original BRIC grouping from Africa’s perspective.

“The BRIC grouping invited South Africa to join, making it the BRICS, as we are seen as the most suitable gateway to Africa,” he said.

“If there is this emphasis on Africa at the Durban summit, it will mean South Africa is playing the role everyone assumed we would play when we were invited to join.”

Maré suggested that the BRICS should seek a new dialogue with Africa along the lines of this continent’s existing one with the European Union (EU).

“The EU has a specific dialogue with Africa, through the African Union Secretariat,” he noted.

“This linkage between NEPAD and the BRICS could be a mirror image of that – and would give the BRICS a relationship with Africa which neither the United States nor Japan has.

“I am sure this Durban meeting will be the first of a regular dialogue.”

Johannesburg-based independent analyst Ian Cruickshanks also welcomed the prospect of South Africa facilitating a closer link between Africa and the BRICS.

“I welcome any extension of South African influence in global economic and political groupings,” he told IPS.

“The BRICS is seen as a new vibrant group with political and growing economic clout, access to capital, able to influence new fixed investment in Africa – which is the last frontier in exploitable energy and industrial commodity reserves.”

Cruickshanks noted that Africa presently only contributes about three percent of global GDP, with South Africa accounting for around one percent.

“But Africa has the potential to advance faster than the developed world, provided that there is better access to capital, and this could be tapped through the BRICS industrial powerhouses,” he predicted.

He noted that South African resources are already significantly exploited, but questioned whether shale oil might provide new energy reserves, with the possibility of these reserves being developed through partnerships with BRICS partners, with export potential to the rest of Africa.

“South Africa’s advanced financial sector could provide the basis of a gateway to Africa for the BRICS, bringing a huge economic boost, and contributing to funding President Jacob Zuma’s promised 900-billion Rands in infrastructure development plans,” said Cruickshanks.

In another development, Carim said that there was work underway to try to anticipate and defuse trade friction within the BRICS.

He gave examples of applications for South African anti-dumping duties against chicken imports from Brazil and against paper imports from China.

“These things do come up, and it’s inevitable when you see how our trade is growing,” he explained.

“The more you trade, the more frictions – it’s a normal part of the relationship.”

However, he said that in dealing with BRICS partners “we are looking at ways of taking the sting out of these matters, before they happen.”

Carim insisted that companies which believe they are the victims of dumped goods – goods sold in a foreign market at lower prices than they are sold domestically, and which do damage to foreign rivals – do have the right to apply to their governments for protective measures.

He said that ways must also be explored to get a better balance in trade with South Africa’s BRICS partners.

“When South Africa’s imports go up, there is an impact on our domestic industries,” he argued.

“There has to be some way to alleviate the pressures, to find outlets for our exports and to find ways to support our exports – such as wine to Brazil.”

However, Carim said that the conditions are not yet ripe for a Free Trade Area among the BRICS nations.

“No one is talking of a Free Trade Area (FTA), because with an FTA you open your markets, and you can lose sectors,” he explained.

“India is vulnerable with its agriculture, and if you look at manufactured goods, the Chinese are extremely competitive. Meanwhile, Brazil is extremely competitive in agriculture.

“You run risks from a free-trade perspective.”

He emphasised that there is a lot of scope for the BRICS nations to learn from one another, and gave the example of the ways in which Brazil has an effective development finance institution – from which South Africa’s Industrial Development Corporation can learn lessons.

Meanwhile, the Chinese and Indians are good at developing Industrial Development Zones – an area in which South Africa has yet to excel.

“We should look at sharing experiences, rather than destructive competition,” Carim concluded.