BRICS Summit in Delhi: Why it's important
New Delhi: The BRICS group of emerging world powerhouses - Brazil, Russia, India, China and South Africa - is expected to launch plans this week for a joint development bank and measures to bring their stock exchanges closer together.
Officials say the initiatives will take time as they need to sort out details. But they herald a new level of ambition for a bloc that brings together about half the world's people. The Middle East and energy security will also be discussed, officials say.
The BRIC acronym was coined in 2001 by Goldman Sachs economist Jim O'Neill, who was searching for a catchy way to encapsulate the broader shift in global economic growth towards emerging markets. South Africa joined the grouping in 2010 so that it became BRICS.
The countries held their first summit in 2009 and have been criticised since as nothing more than an empty acronym as they struggle to find common cause from four different continents with radically different economies, systems of government and competing priorities.
The most relevant announcement from this week's meeting in India of the countries' leaders is likely to be plans for a joint development bank in the mold of the World Bank.
The initiative would allow the countries to pool resources for infrastructure improvements, and could also be used in the longer term as a vehicle for lending during global financial crises such as the one in Europe, officials say.
Brazilian Trade Minister Fernando Pimentel told reporters in Brasilia last week that the countries would sign a deal at the summit to study the creation of the bank.
Sudhir Vyas, a senior Indian foreign ministry official, told reporters on Monday that the BRICS would have to determine how the bank would be structured and capitalised. Such an ambitious project would take time, he said.
"We don't set up a bank every ordinary day," he said.
A benchmark equity index derivative shared by the stock exchanges of the five BRICS nations will be launched on Friday, the exchanges involved said earlier this month. They would be cross-listed, so can be bought in local currencies.
The leaders are also expected to sign agreements allowing their individual development banks to extend credit to other members in local currency, a step towards replacing the dollar as the main unit of trade between them.
A senior Indian government source said the Middle East and energy security will be high on the agenda, including Iran. The Russian ambassador in New Delhi said this week that a discussion on Syria would be among his country's top priorities.
While the plenary session on Thursday is likely to focus on common ground, bilateral meetings could touch on more sensitive issues.
The exchange rate of China's currency has sparked protests from countries, including Brazilian manufacturers, for being undervalued. Most member countries also face a slowdown in their economies.
"For different reasons, each of the (countries) has got some serious policy issues to deal with here that will determine whether they continue down the path we got everybody so excited about," O'Neill said.
Despite the problems, the growth outlook is still better than in most of the developed world, meaning the BRICS' clout will likely keep growing. O'Neill predicts the bloc's total GDP will be larger than the United States within three years and China's economy alone will overtake the United States by 2027.