The BRICS group of emerging world powerhouses – Brazil, Russia, India, China and South Africa – is set to outline plans at a summit this week for a joint development bank, while the five countries’ stock exchanges will also move closer together.
Officials say details of the initiatives still need to be agreed, but they herald a new level of ambition for a bloc that brings together about half the world’s people but which has been criticised as an empty acronym.
The Middle East, including oil imports from Iran, will also be discussed at Thursday’s meeting in India, officials say.
Security was tightened in the capital on Wednesday before the arrival of BRICS leaders including China’s Hu Jintao.
His visit drew protests from Tibetan activists, one of whom died earlier in the day after he set himself ablaze. Police arrested about a dozen Tibetans before the summit.
BRICS leaders held their first summit in 2009 and have sought to increase their global influence to reflect their growing economic clout. But with radically different economies and systems of government, and competing priorities, the countries from four different continents have often struggled to find common cause.
A significant announcement at this week’s meeting is likely to be the plan for a joint development bank in the mould of the World Bank. Such an initiative would allow the countries to pool resources for infrastructure improvements and could eventually serve 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.
The leaders are also expected to sign agreements allowing their individual development banks to extend credit to other members in their local currencies, a step towards replacing the dollar as the main unit of trade between them.
Five Nation Stock Index
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 will be cross-listed on their stock exchanges from Friday, the exchanges said earlier this month.
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 concentrate on common ground, bilateral meetings could touch on more sensitive issues.
The exchange rate of China’s currency has sparked protests, including from 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,” said Jim O’Neill, chairman of Goldman Sachs Asset Management.
O’Neill, who coined the BRIC acronym in 2001 as a catchy way to encapsulate the shift in global economic growth towards emerging markets, with South Africa added in 2010, predicts the bloc’s GDP will exceed that of the United States within three years and sees China as the world’s biggest economy by 2027.