SYYED MANSOOR AGHA, in the light of the resolutions adopted at the recently held BRICS summit held in New Delhi, opines that emerging economies of the world have taken up the cudgel to contain the bluff of developed economies.
Five emerging economies of the world, under the banner of BRICS, raised their voice against monopolist policies of developed economies and hegemonic designs of the west in world political issues. If translated into action, it is expected to go a long way.
A one-day conference of heads of five states – Brazil, Russia, India, China and South Africa (BRICS) – on Mar 29, in New Delhi has expressed its concern on US, EU and Israel’s noises against Iran. The summit stood firmly for Islamic Republic of Iran’s right of developing nuclear capability for its declared peaceful purpose. It also pitched against external intervention in Syria aimed at regime change.
The five countries, which account for 40 per cent of global GDP and nearly half the world’s population, also agreed in principle to establish a BRICS Development Bank on the lines of World Development Bank to provide funds for projects-relating infrastructure and alternate source of energy and promote local currency for intra-group trade and business.
The presence of heads of all five states shows how much importance these fast developing countries give to cementing their economic ties in the four-year old group. Brazilian president Dilma Rousseff, Chinese president Hu Jintao, South African president Jacob Zuma and Russian president Dmitry Medvedev along with Indian Prime Minister Dr. Manmohan Singh participated in the deliberations.
The emerging economies also pressed western powers to cede more voting rights at the IMF and flayed the rich world’s reflationary monetary policies for putting global economic stability in jeopardy.
“This dynamic process of reform is necessary to ensure the legitimacy and effectiveness of the Fund,” said the joint declaration. It elaborated, “We stress that the ongoing effort to increase the lending capacity of the IMF will only be successful if there is confidence that the entire membership of the institution is truly committed to implement the 2010 Reform faithfully.”
Though changes to voting rights have been promised at the IMF, the US is reluctant to ratify, adding to frustration over reforms of the G7 and the UN Security Council blocking the way of India and Brazil to permanent seats in UNSC.
WORLD ECONOMY
The BRICS leaders also voiced their concern for destabilising the world economy five years into the global financial crisis by rich countries.
“It is critical for advanced economies to adopt responsible macroeconomic and financial policies, avoid creating excessive global liquidity and undertake structural reforms to lift growth that create jobs,” they said in the joint declaration. The west policies have also destabilised Middle East nations and North African countries. Though Israel is in the centre of gross human rights violations, these countries are hounding Arab and Gulf nations.
The rich world’s monetary policy “brings enormous trade advantages to developed countries, and results in unfair obstacles for other countries,” Brazil’s President Dilma Rousseff said at the summit.
LOCAL CURRENCY
In a far reaching agreement, heads of the group took call to switch their money transactions from dollar to their own currencies. Saying goodbye to the prevalent system of money exchange in dollars and promoting use of their own currencies will safeguard the group against the dollar monopoly, controlled by the US and the west through various monitory systems. To achieve this, officials in the presence of heads of BRICS nations signed two agreements to provide a line of credit for business community. China and Russia have also such an arrangement. A bilateral agreement to trade in local currencies between Russia and India has been signed and it is hoped that modalities may be put in place within next three years.
The Master Agreement on Extending Credit Facility in Local Currency and the Multilateral Letter of Credit Confirmation Facility Agreement signed on Mar 29 are being perceived as a step towards replacing the dollar as the main unit of trade between them in a couple of years.
It is expected that such intra-BRICS initiatives will contribute to enhance trade and investments among the nations and facilitate economic growth in difficult economic times.
BRICS DEVELOPMENT BANK
Finance Ministers have been tasked to examine the proposal and report by the next summit. The initiative to set up a BRICS Development Bank on the lines of the World Bank would allow the member countries to pool resources for infrastructure development and could also be used to lend during the difficult global environment. The proposed bank will work on the lines of multilateral lending agency. As reported by agencies Intra-BRICS trade is about $230 billion and has the potential of more than doubling to $500 billion by 2015.
SOLIDARITY WITH IRAN
India, on Mar 29, pitched for avoiding political disruptions that create volatilities in global energy markets affecting trade flow as the BRICS Summit began here to discuss ways to enhance intra-BRICS trade and review the situation in the region.
In his opening remarks, obliquely denouncing current US and EU nation’s efforts against Iran, Dr. Singh said, “We must avoid political disruptions that create volatilities in global energy markets and affect trade flow… We must ensure policy coordination to revive economic growth,” he said.
Dr. Manmohan Singh urged member countries to speak in one voice on key issues such as UNSC reforms and his advice was received well by other Heads of States.
The Delhi Declaration issued at the end of the summit reflected the shared perception of the BRICS countries, on these burning global issues that pit them against the Western approach of using sanctions and speculation about the use of force to resolve complex global issues.
“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.
“We are concerned about the situation that is emerging around Iran’s nuclear issue,” the joint declaration said in a veiled allusion to the speculated plan by the US and Israel to strike at suspected Iranian nuclear facilities.
The danger of Israel plunging the world into another war escalated with the unconfirmed reports on Mar 28 that the Zionist regime has lured Azerbaijan to let out its abandoned airfields which are lying unused after disintegration of USSR regime. The present Azeri regime is known for its anti-Islamic policies and so unfavourable to its next neighbour, Islamic Republic of Iran.
IRAN AND SYRIA
Backing Iran’s right to peaceful uses of nuclear energy, the BRICS countries said they “support resolution of the issues involved through political and diplomatic means and dialogue between the parties concerned, including between the IAEA and Iran and in accordance with the provisions of the relevant UN Security Council Resolutions”.
The unfolding crisis in Syria declaration voiced “deep concern at the current situation” and called for “an immediate end to all violence and violations of human rights in that country”.
“Global interests would best be served by dealing with the crisis through peaceful means that encourage broad national dialogues that reflect the legitimate aspirations of all sections of Syrian society and respect Syrian independence, territorial integrity and sovereignty,” it said.
The declaration supported “a Syrian-led inclusive political process”, an explanation India had used to justify its vote on the UN’s Syria resolution, and welcomed the joint efforts of the UN and the Arab League.
The BRICS leaders also welcomed the appointment of Kofi Annan, a former UN secretary general, as the joint special envoy on the Syrian crisis and supported him in his efforts to play a role in spurring a political resolution of the crisis.
Russian president Dmitry Medvedev warned against external interference, saying that it has the potential to destroy the dialogue process. Medvedev added that he has proposed a collective humanitarian aid by the BRICS countries to the Syrian people.
A political commentator noted the BRICS’ stand on Syria and Iran will be viewed with unease by the west which has tended to see the five-nation grouping as an attempt at an alternate world order.
In this respect, BRICS summit marked the evolution of a group focused on global economic governance issues to one which is trying to achieve greater political coherence.
This was reflected in the BRICS’ formulation on the festering crisis in the Middle East and North Africa.
“We agree that the period of transformation taking place in the Middle East and North Africa should not be used as a pretext to delay resolution of lasting conflicts but rather it should serve as an incentive to settle them, in particular the Arab-Israeli conflict,” said the declaration.
REACTIONS
The U.S. reacted with dismay but refrained from any criticism to the BRICS nations. “We’ve reviewed BRICS leaders’ Delhi Declaration and believe that their engagement in multilateral institutions, global multilateral institutions, can only strengthen our international system as well as we appreciated their comments in support of the global economic recovery,” state department spokesperson Mark Toner said at his daily news conference.
Toner also allayed apprehensions that BRICS nations move towards a joint development bank will duplicate the efforts of other multilateral institutions.
Stressing that there were no differences with BRICS nations on the issue of import of Iranian oil, he said the US was “engaged in close consultations” with governments on the requirements of its specific law.
“In all our consultations, we’re making very clear the importance of reducing reliance on Iranian oil, and also unwinding countries’ business dealings with the Central Bank of Iran, and we’re going to continue those discussions,” he said.
Asked about the stand of BRICS nations over military options against Iran, Toner said President Barack Obama has already made it clear that “no option has been taken off the table” and there was “still time” for a diplomatic solution.
WORLD BANK PRESIDENT
World Bank President Robert Zoellick expressed his apprehension that the proposed BRICS Development Bank will have a hard time getting off the ground and would struggle to match the World Bank’s expertise.
Deflecting criticism that the World Bank is too dominated by the US, Zoellick said it had changed dramatically in his term, with a managing team now made up of many more figures from the emerging world.
“I think the interests of India may be more in terms of bringing capital in, the interests of China may be more in terms of internationalising the Renminbi. I think Russia is a little uncertain and Brazil has a very big development bank,” he said.
“The World Bank works with private sector funders, development banks, regional banks and we’d work with a BRICS bank, but it would probably be difficult for it to replicate the knowledge and expertise that we fund.”
Zoellick, who was visiting a bank-funded coastal conservation project in east Orissa state, told reporters later that setting up a new bank was “a complicated venture” which would present challenges such as getting capital and a good rating from international financial agencies.
The head of the global money lender is ending his five-year term in June and the job is now one of the most hotly contested, with a US candidate for the first time being challenged by two contenders from the developing world.
Under a so-called “gentleman’s agreement” between the US and Europe, Washington has claimed the top post at the World Bank since its founding after World War II, while a European has always led the International Monetary Fund (IMF), its sister Bretton Woods institution.