When the BRICS nations met in New Delhi last month there was no shortage of global issues on the agenda.
Dilma Rousseff of Brazil, Dmity Medvedev of Russia and Jacob Zuma of South Africa joined China’s Hu Jintao and India’s Manmohan Singh to talk ‘global stability, security and prosperity’.
And with 43% of the world’s population, not to mention four of its largest economies, the group talked a lot about global influence too.
Below are the key discussions and decisions that have come to define the BRICS fourth annual summit:
1. Boosting intra-BRICS trade
The five countries resolved to “promote greater interaction among the business communities of BRICS nations”.
Key to this resolution was the signing of two currency agreements: ‘The Master Agreement on Extending Credit Facility in Local Currency’ and the ‘Multilateral Letter of Credit Confirmation Facility Agreement’.
These initiatives aim to reduce the transaction costs for intra-BRICS trade and promote trade in local currencies. Many believe they are a step towards replacing the dollar as the main unit of trade between the nations.
2. Creation of a BRICS bank
The ‘BRICS bank’ proposal has featured heavily in press coverage of the Summit. Not only did the five nations criticise the World Bank – “the leadership must commit to transform the bank into a multilateral institution that truly reflects the vision of all its members” – but they discussed an alternative in the form of a “South-South development bank, funded and managed by the BRICS and other developing countries”.
This BRICS Development Bank is expected to be organised along the same lines as the World Bank, but it would offer funding outside the current global financial system and allow member countries to pool resources for infrastructure development. The countries’ Finance Ministers are apparently examining the bank’s feasibility as we speak.
Meanwhile outgoing President of the World Bank, Robert Zoellick, told The Financial Times that not backing the creation of a BRICS bank would be a “mistake of historic proportions”.
3. Criticism of the Eurozone
In their joint Delhi Declaration, published at the end of the Summit, the BRICS expressed concern over economic instability in the Eurozone: “The build-up of sovereign debt in advanced countries is creating an uncertain environment for global growth.”
But they declared a willingness to work with the international community to ensure “macroeconomic stability”.
Speaking at the Summit, Brazil’s Dilma Rouseff remarked that the BRICS had become “the most important engines of the world economy in the past few years. Together, we will be responsible for more than half of the foreseen growth for 2012, 56% according to the IMF”.
4. Diplomatic clout
The Delhi Declaration is being seen as symbolic of the BRICS growing diplomatic clout.
The Global Times observed that the group is now “flexing its diplomatic muscles”. And this confidence is clear in the language of the declaration itself, which begins with the BRICS powerful reminder: “Coming, as we do, from Asia, Africa, Europe and Latin America, the transcontinental dimension of our interaction adds to its value and significance”.
While on the subject of world policing, the declaration states: “China and Russia reiterate the importance they attach to the status of Brazil, India and South Africa in international affairs and support their aspiration to play a greater role in the UN.”
Eleven years since Jim O’Neill’s BRIC epiphany, the BRICS’ fourth annual summit should be a wake up call to the west. Despite their many differences, it is becoming abundantly clear that these fast-growing economies have more than enough common ground to re-define the world economic and political order. As China Daily put it in a recent headline: ‘United, they stand tall and strong.’
It will be fascinating to see how this ‘diplomatic clout’ has grown in a year’s time at the fifth BRICS Summit in South Africa.
Ministry of External Affairs, Fourth BRICS Summit – Delhi Declaration, March 2012
Financial Times, Zoellick throws support behind BRICS bank, March 2012
BBC News, BRICS summit of emerging nations to explore bank plan, March 2012