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BRICS members sign pact to trade in local currencies

Taking note of uncertainty in global political and economic situation, India, China, Russia, Brazil and South Africa on Thursday took the first step towards mutual trade in local currency and voiced strong opposition to any military action or rhetoric with regard to Syria and Iran.

New Delhi: Taking note of uncertainty in global political and economic situation, India, China, Russia, Brazil and South Africa on Thursday took the first step towards mutual trade in local currency and voiced strong opposition to any military action or rhetoric with regard to Syria and Iran.

At their Summit meeting, Prime Minister Manmohan Singh, Chinese President Hu Jintao, Russian President Dmitry Medvedev, Brazilian President Dilma Rousseff and South African President Jacob Zuma pitched for close coordination among the five leading economies to meet the challenges being witnessed in the global scenario.

After the Brazil-Russia-India-China-South Africa (BRICS) Summit, an agreement was signed under which credits would be extended in local currencies under the BRICS Interbank Cooperation Mechanism. Another pact signed was the Multilateral Letter of Credit Confirmation Facility Agreement between BRICS countries' Exim/Development Banks.

The agreements mark the initial steps for intra-BRICS trade in local currency.

Singh said the agreements would boost trade among the BRICS countries. At the same time, he pressed for easing of business visas to facilitate increase in intra-grouping trade and investment.

A suggestion was made to set up a BRICS Development Bank, the Prime Minister said, adding the leaders directed finance ministers to examine the proposal and report back at the next Summit.

Summing up the sense of the meeting, Singh said all the five countries were affected by the global economic slowdown, volatility in food and energy prices, political uncertainty in West Asia and the rise of terrorism and extremism.

After the Summit during which the BRICS Action Plan was unveiled, Singh said the leaders discussed the 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."

Noting that the global situation today presented "a mixed picture", the Prime Minister said that emerging market economies were growing at a healthy pace and increasing their share in global trade and output.

Talking about the challenges in the shape of global economic crisis, political uncertainty in West Asia and rise in terrorism and extremism, he said, "Our responses to these challenges may be different, but there is much common interest that binds us together."

Singh underlined the need for BRICS countries, which have 25 per cent share in the world GDP, to 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," he said.

BRICS should speak with one voice on important issues such as the reform of the UN Security Council, he said.

India, Brazil and South Africa are aspirants for permanent membership of the UNSC. While Russia categorically has expressed its support for India's bid, China is yet to come out with clear support, only saying that it backs its aspiration to play a greater role in the UN.

The Chinese President said the world was going through major development changes with regional and international "hotspot" issues affecting world peace and the economic situation being unstable.

A Joint Delhi Declaration said the meeting took place "against the backdrop of developments and changes of contemporary global and regional importance" and, in that regard cited the examples of "faltering global recovery made complex by the situation in the Eurozone" and "developing political scenario in the Middle East and North Africa that we view with increasing concern".

Expressing deep concern over the situation in Syria, the leaders called for an immediate end to all violence and violations of human rights.

"Global interests would best be served by dealing with the crisis through peaceful means that encourage broad national dialogues that reflect legitimate aspirations of all sections," the declaration said.

The Russian President underlined that there should be no foreign intervention in Syrian affairs and the perception that the issue could be addressed militarily only is "doomed to fail".

Rousseff also opposed any unilateral military action against Syria.

On Iran, the BRICS leaders voiced concern over the situation emerging around its nuclear programme and said it cannot be allowed to "escalate into conflict" as it could have "disastrous consequences" which will be in no one's interest.

"We recognise Iran's right to peaceful uses of nuclear energy consistent with its international obligations, and support resolution of issues involved through political and diplomatic means and dialogue between parties concerned," it said.

In an apparent reference to the US which has been threatening military action against Iran, Rouseff stressed the need for giving up "rhetoric" that could lead to violence.

The declaration said the leaders stated, "We are concerned over the current global economic situation" and pressed for further international financial regulatory oversight and reform of global architecture.

They stood ready to work with developed and developing countries together on the basis of universally recognized norms of international law and multilateral decision-making to deal with challenges and opportunities before the world today, it said.

The BRICS nations emphasised the need for multilateral diplomacy with the UN playing a central role in meeting challenges and threats.

"In this regard, we reaffirm the need for a comprehensive reform of the UN, including its Security Council, with a view to making it more effective, efficient and representative so that it can deal with today's global challenges more successfully," the Declaration said.

They vowed to cooperate and strengthen multilateral approaches on issues pertaining to global peace and security in the years to come.

The Russian President said the BRICS countries were interested in reform of the "outdated" global financial system which is not in tune with the current realities.

The leaders also discussed terrorism. Observing that it was a threat to their societies, they pledged to enhance cooperation against the menace as also other developing threats such as piracy, particularly emanating from Somalia.

Holding that the UN has a central role in coordinating international action against terrorism, the five countries emphasised the need for an early finalisation of the draft of the Comprehensive Convention on International Terrorism in the UN General Assembly and its adoption by all member countries.

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