Monday, March 25, 2013

Will Durban talks lead to a development bank for BRICS?

The finance ministers of the BRICS group of nations - Brazil, Russia, India, China and South Africa - will meet in Durban, South Africa, on Tuesday to try and iron out differences on the big ticket issue: the setting up of a BRICS development bank, which will be an alternative source of funding to US-dominated institutions like the International Monetary Fund and the World Bank.

Government sources told NDTV that the finance ministers, who were tasked last year with looking at the viability of such a bank, will say it is feasible in a report that's being presented today. But the bank itself may not get off the mark for at least another year.

Key areas of concern are capital, membership and, most of all, governance. The contentious issues include how much money each country should put in. Since China has more funds at its disposal, it may propose a reserve of over $100 million -- a figure the others cannot afford. The fear is the bank may be dominated by China if it pledges the most money.

How BRICS deals with this issue is also an important indicator of how the group wants to position itself as a powerful economic and political bloc.

The idea of the development bank was mooted by India last year during its presidency and has the support of the other members.

Before leaving for South Africa, Prime Minister Manmohan Singh said the countries will "discuss ways to revive global growth and ensure macroeconomic stability as well as mechanisms and measures to promote investment in infrastructure and sustainable development". But he made no mention of the bank.

"It is important that BRICS continue to consult closely on developments affecting global peace and security," Dr Singh said, in an obvious reference to a higher quota for developing countries in Bretton Woods institutions like World Bank and IMF and the reform of the UN Security Council.