Thursday, March 29, 2012

Top ten highlights of the BRICS Summit

The fourth edition of the BRICS summit began in Delhi today with Prime Minister Dr Manmohan Singh addressing the leaders and delegates from the five member nations. Dr Singh urged the member nations to speak in one voice on issues such as reforms of United Nations Security Council. He also said the member nations must ensure policy coordination to revive economic growth

The global situation facing us today presents a mixed picture. On the one hand, emerging market economies are growing at a healthy pace and increasing their share in global trade and output.

On the other hand, many obstacles have to be overcome if we are to sustain rapid growth in the years ahead. We are all affected by the global economic slowdown, the volatility in food and energy prices, the challenge of reconciling growth with environmental objectives, the political uncertainty in West Asia and the rise of terrorism and extremism. Our responses to these challenges may be different, but there is much common interest that binds us together.

I would like to share some thoughts on ten specific issues that I believe concern us all.

First, each of our countries has a unique demographic profile that presents its own challenges. In India, for example, we need to create 8 to 10 million jobs every year over the next decade to absorb the expected growth in the labour force. We are working on ambitious programmes of skill upgradation and education and creation of an environment conducive to an expansion of productive job opportunities. We would like to learn from the experiences of other BRICS countries on how they are dealing with these problems.

Second, the conceptual analysis that produced the positive BRICS narrative was based on a model of catch-up growth in which supply side constraints were not adequately addressed. Today, it is clear that constraints such as the availability of energy and food for countries that account for more than 40% of the world population can impede the entire story. Water is another critical area of scarcity which needs much greater attention than it has received thus far. We have much to learn from each other in how to handle these problems, and there is also room to cooperate internationally.

Third, we are united in our desire to promote sustained and balanced global economic growth. As members of the G-20, we must together ensure that appropriate solutions are found to help Europe help itself and to ensure policy coordination that can revive global growth.

We should also cooperate closely to breathe life into the Doha Round, looking for innovative solutions to overcome barriers that have stalled progress.

Fourth, as large and diverse economies, we should make a special effort to find ways to exploit intra-BRICS complementarities. We should promote greater interaction amongst our business communities. Issues such as easier business visas must be prioritized. As large trading countries, BRICS have a strong interest in removing barriers to trade and investment flows and avoiding protectionist measures.

Fifth, to revive global demand and growth, developing countries need access to capital, particularly for infrastructure development. We must address the important issue of expanding the capital base of the World Bank and other Multilateral Development Banks to enable these institutions to perform their appropriate role in financing infrastructure development.

We have agreed to examine in greater detail a proposal to set up a BRICS-led South-South Development Bank, funded and managed by the BRICS and other developing countries.

Sixth, BRICS countries must also work together to address deficiencies in global governance. Institutions of global political and economic governance created more than six decades ago have not kept pace with the changing world. 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.

Seventh, each of our countries is grappling with how to pursue 'green' growth without compromising on current needs. At the core of this complex issue is the use of fossil energy and the impact that it has on the environment.

We must reduce energy intensity of GDP by promoting energy efficiency and developing clean energy sources. This calls for greater investments in research and development, sharing of best practices, and encouraging transfer of technology. A dialogue between energy producers and consumers would also help in ensuring stability in energy markets.

Eighth, as our countries experience significant increases in per capita income, we will also face issues related to income inequality within our countries. Inevitably, we will handle the problem differently, but it may be useful for us to share experiences in this area.

Ninth, urbanization presents common challenges for all our countries. We should encourage sharing of experience in areas such as urban water supply and sanitation, waste management, storm water drainage, urban planning, urban transport and energy efficient buildings.

Finally, the continued prosperity of BRICS is linked closely also to the geopolitical environment.

In our restricted session, we discussed the ongoing turmoil in West Asia and agreed to work together for a peaceful resolution of the crisis. We must avoid political disruptions that create volatilities in global energy markets and affect trade flows.

All of us understand the threat that terrorism poses to our societies. We must therefore enhance cooperation against terrorism and other developing threats such as piracy, particularly emanating from Somalia.

We have also agreed on the need to restore stability in Afghanistan, and the importance of sustained international commitment to its future.

Excellencies, we have drawn up an ambitious Action Plan that will be adopted today along with the BRICS Delhi Declaration. I hope that we will be able to collaborate and cooperate with each other to shape global developments and bring tangible benefits to our peoples.

India reaffirms its full commitment to work with BRICS in this endeavour.

Leaders from Brazil, Russia, India, China and South Africa met in New Delhi at the BRICS grouping today. These nations comprise nearly half the world's population and a growing share of global GDP.

Here are the ten key outcomes of the Fourth BRICS Summit today:
1) Declaration after the summit cautions the West against allowing the Iranian situation to escalate into conflict. It backs dialogue to resolve the Iranian nuclear impasse. The declaration said the crisis over Iran's nuclear programme should be resolved diplomatically and should not be allowed to escalate. It also recognised the right of Iran to pursue peaceful nuclear energy. "We agreed that lasting solution to the problems in Syria and Iran can only be found through dialogue," Indian Prime Minister Manmohan Singh said.

2) The declaration also backs a Syria-led democratic transition. BRICS voices "deep concern" over Syria and calls for "an immediate end to all violence and violations of human rights" and backs a Syrian-led political process.

3) Leaders agree to explore the setting up of a BRICS-led South-South Development Bank in the mold of the World Bank. It will promote mutual investment and will help fund infrastructure and act as alternative lender to the World Bank and other finance bodies

4) The BRICS leaders also accused rich countries of destabilising the world economy five years into the global financial crisis. "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 a joint declaration.

5) IMF quota reforms: Pitch for greater representation of developing countries and emerging economies in the IMF by speeding up quota reforms. Promised changes to voting rights at the IMF have yet to be ratified by the United States, adding to frustration over reform of the G7 and the U.N. Security Council, where India and Brazil have been angling for years for permanent seats

6) Countries back a "merit-based selection-process" for the heads of the IMF and the World Bank, posts reserved customarily for a European and an American respectively.

7) BRICS leaders pitch for reform of global governance institutions, including the UN, the International Monetary Fund (IMF) and the World Bank.

8) The five BRICS nations, which collectively account for nearly half the world's population and a fifth of its economic output, signed an agreement to extend credit facilities in their local currencies, a step aimed at reducing the role of the dollar in trade between them.

9) Adopted an all-encompassing action plan that includes, among other things, meetings of foreign ministers on sidelines of the UN and meetings of Finance Ministers and Central Bank Governors on sidelines of G20 meetings/other multilateral meetings.

10) Other moves to bring their economies closer together include the launch on Friday of benchmark equity index derivatives allowing investors in one BRICS country to bet on the performance of stock markets in the other four members without currency risk. The indexes will be cross-listed on their stock exchanges from Friday.