BRICS to set up joint bank, for dialogue on Iran, Syria

[1]

Seeking to reinforce their growing economic heft with diplomatic clout, the BRICS grouping on Thursday pitched for a bigger say in global governance institutions, including the UN and the IMF, and told the West that dialogue was the only way to resolve the Iranian nuclear issue and the Syria crisis.

Brazil, Russia, India, China and South Africa, which comprise nearly half the world's population and a growing share of global GDP, signed two pacts to spur trade in their local currencies. They also agreed to set up a working group for a joint development bank to promote mutual investment in infrastructure.

Prime Minister Manmohan Singh of India and Presidents Hu Jintao (China), Dmitry Medvedev (Russia), Dilma Rousseff (Brazil) and Jacob Zuma (South Africa) ended the fourth BRICS summit by renewing the pitch for reforming global governance institutions and closer coordination on global issues.

Lack of movement on the political side

The five leaders stressed on the restructuring of the world order to accommodate emerging economies and developing countries and for promoting sustained and balanced global economic growth.

"While some progress has been made in international financial institutions, there is lack of movement on the political side. BRICS should speak with one voice on important issues such as the reform of the UN Security Council," said Manmohan Singh, the summit host.

"We are committed to stepping up exchanges with other countries on global economic governance reforms and increasing representation of developing countries," said Hu.

The BRICS include Russia and China, two veto-wielding members of the UN Security Council, and three aspiring members for a permanent seat - India, Brazil and South Africa.

The BRICS leaders also pitched for greater voting rights for developing countries in the IMF and voiced disappointment with the West over the slow pace of the quota reforms.

Creation of a bank

In a fresh assertion, BRICS asked the West to implement the 2010 governance and quota reform before the 2012 IMF/World Bank annual meeting, as well as the comprehensive review of the quota formula to better reflect economic weights.

They asked for enhancing the voice and representation of emerging market and developing countries by January 2013, followed by the completion of the next general quota review by January 2014.

In a signature step, the BRICS decided to create their first institution in the form of a BRICS-led South South Development Bank that will mobilise 'resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries', the BRICS' Delhi Declaration said.

The leaders directed their finance ministers 'to examine the feasibility and viability of such an initiative, set up a joint working group for further study, and report back by the next summit'.

The development banks of the five countries signed two pacts, including a master agreement on extending credit facility in local currency and BRICS multilateral letter of credit confirmation facility agreement, which could help scale up bilateral trade from $230 billion to $500 billion.

Iran, Syria solution only through talks

Challenging the West's hegemony of the Bretton Woods institutions, the BRICS leaders welcomed the candidatures from the developing world for the position of the president of the World Bank and backed 'an open and merit-based process' for selection of the heads of the World Bank and IMF.

Contesting the West's narrative, the five countries warned the West against allowing the Iran situation to escalate into a conflict and said dialogue was the only way to resolve the Iranian and Syria issues.

"We agreed that a lasting solution in Syria and Iran can only be found through dialogue," Manmohan Singh said.

"The situation concerning Iran cannot be allowed to escalate into conflict, the disastrous consequences of which will be in no one's interest," said the declaration, in a veiled allusion to the speculated plan by the US and Israel to target Iran's nuclear facilities.

The declaration saw the leaders voicing 'deep concern' over Syria as they called for 'an immediate end to all violence and violations of human rights in that country', backing a Syrian-led inclusive political process.

China and Russia had earlier voted against the US and Arab League-backed UN resolution on grounds that it amounted to a regime change, while India had supported the resolution.