BRICS fails to establish new bank to challenge the West

BRICS fails to establish new bank to challenge the West

DURBAN - Agence France-Presse
BRICS fails to establish new bank to challenge the West

BRICS leaders pose for a family photograph during a summit in Durban. REUTERS photo

The BRICS groups of emerging powers’ leaders have failed to launch a much-anticipated new development bank to rival Western-dominated institutions like the World Bank.

Leaders from Brazil, Russia, India, China and hosts South Africa agreed in principle to create a joint infrastructure lender after two-day talks on March 26 and 27 in the port city of Durban. But they said further talks were necessary to finalize the plan.

“We are satisfied that the establishment of a new development bank is feasible,” said host President Jacob Zuma, in remarks that hint at little progress beyond an agreement reached in New Delhi a year ago. “We have decided to enter formal negotiations to establish a BRICS-led New Development Bank,” he added.

Officially leaders had been expected to consider the bank’s establishment, but South Africa and others had hoped to formally launch a $50 billion infrastructure fund at the two-day summit.

The mooted bank is seen as a way of gaining influence on the world stage, countering Europe’s dragging economic crisis and addressing the $4.5 trillion in infrastructure spending the BRICS are estimated to need over the next five years.

Instead of a $50 billion fund, BRICS leaders agreed only that the initial capital contribution would be “substantial and sufficient for the bank to be effective.” Key sticking points included how projects would be distributed and where the bank would be based, diplomats said.

Putin likens to ‘Big Five’

Russia’s President Vladimir Putin likened the BRICS nations - Brazil, Russia, India, China and South Africa - to Africa’s “Big Five” game beasts of trophy hunting lore - the lion, elephant, buffalo, leopard and rhinoceros, Reuters news agency reported.

Putin’s comparison captures the dilemma of these muscular emerging global powers, which together present a formidable potential economic and political counterweight to the developed West, but individually could hardly be more different. Russian envoy to Africa Mikhail Margelov said his country had pushed for a more incremental approach to establishing the bank.

“We believe in a step by step way of doing business,” he said. “We better talk about projects and then we talk about needed amounts of money.”

The outcome of the summit will fuel suspicions that a grouping as diverse as BRICS will struggle to take concrete action to bolster its demands for a say in world affairs that reflects their growing clout.

Leaders hailed a slew of accords reached at the summit, including progress toward establishing a $100-billion virtual reserve fund to fight potential liquidity crises. The arrangement would function much like the IMF’s credit lines, which act as deterrents against speculation as they are funds which can be drawn upon in crises.