The BRICS group of emerging powers on Tuesday created a Shanghai-based development bank and a reserve fund seen as alternatives to Western-led institutions.<\/p>\n
The leaders of Brazil, Russia, India, China and South Africa agreed to launch the institutions to finance infrastructure projects and head off future economic crises.<\/p>\n
“We took the historic decision to create the BRICS bank and the reserve agreement — an important contribution to reconfigure the system of international economic governance,” Brazilian President Dilma Rousseff said at a summit in the northeastern seaside city of Fortaleza.<\/p>\n
Russian President Vladimir Putin hailed the agreements as “a very powerful way to prevent new economic difficulties.”<\/p>\n
The five emerging nations first unveiled their plans last year. The New Development Bank will mirror the Washington-based World Bank while the reserve is seen as a “mini-IMF.”<\/p>\n
“We need to work to improve economic governance at a global level, increase the representations and voice of developing countries,” said Chinese President Xi Jinping.<\/p>\n
Rousseff pressed again for urgent changes in the International Monetary Fund’s voting shares “to reflect the unquestionable weight of emerging countries.”<\/p>\n
The development bank will have initial capital of $50 billion that could rise to $100 billion, funded equally by each nation to avoid concerns that one country has more power than the other.<\/p>\n
After drawn-out negotiations about the bank’s location, BRICS leaders agreed to put its headquarters in Shanghai. The first president will be Indian while the first board chair will hail from Brazil.<\/p>\n
An Africa Regional Center will be based in South Africa, whose President Jacob Zuma failed to convince his peers to place the bank’s headquarters in Johannesburg.<\/p>\n
The bank will help fund infrastructure and sustainable development projects, the summit declaration said.<\/p>\n
The Contingent Reserve Arrangement will have $100 billion at its disposal to head off potential economic volatility linked to the United States exiting its stimulus policy.<\/p>\n
China is making the biggest contribution, $41 billion, followed by $18 billion each from Brazil, India and Russia and $5 billion from South Africa.
\nRousseff left open the possibility of using the fund to help non-BRICS nations, saying the group would be willing to “examine” any request from Argentina, which is in danger of defaulting on its debt.<\/p>\n
The bank and fund, however, have to be ratified by each BRICS country’s legislature before coming into force.<\/p>\n
The summit comes as the economies of BRICS countries, which together represent 40 percent of the world population and a fifth of the global economy, are cooling down.<\/p>\n
The talks in Fortaleza opened a series of summits in Brazil, with BRICS leaders meeting with South American presidents in Brasilia on Wednesday.<\/p>\n
The Fortaleza talks allowed Xi and India’s new Hindu nationalist Prime Minister Narendra Modi to meet face-to-face for the first time.<\/p>\n
Modi said the BRICS must act as a “united and clear voice for a peaceful, balanced and stable world.”<\/p>\n
For Putin, who visited Argentina and Cuba before coming to Brazil, the trip has given him a chance to hammer home his calls for a “multipolar” world amid tensions with the West over the Ukraine crisis.<\/p>\n
Russia has been kicked out of the G8 group of industrialized nations over the Ukraine crisis.<\/p>\n
The United States is threatening to impose new economic sanctions on Russia over accusations that it is backing pro-Moscow separatist rebels in eastern Ukraine.<\/p>\n
The BRICS summit declaration voiced “deep concern” over the situation in Ukraine and called for “comprehensive dialogue, the de-escalation of the conflict and restraint from all the actors involved, with a view to finding a peaceful political solution.”<\/p>\n
Rousseff said BRICS leaders “lament the lack of concrete progress” in Ukraine and other hotspots, including Iraq, Syria and the Israeli-Palestinian conflict.<\/p>\n
After Wednesday’s BRICS-South America summit, Xi will launch the China-Latin America forum on Thursday, highlighting Beijing’s growing interests in Washington’s backyard.<\/p>\n
SA to fork out $5 billion for BRICS bank<\/strong><\/a><\/p>\n