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The declaration issued by the BRIC nations at a summit meeting here their second since 2009 shows a collective assertiveness in world economic matters that is bound to make leaders and bankers in the West sit up and take notice. With a confidence borne of their successful role as a caucus at G-20 meetings over the past year, the leaders of Brazil, Russia, India and China on Thursday demanded the commitment to reform the Bretton Woods financial institutions that the advanced economies made at Pittsburgh during the G-20 summit be completed by this year itself.
The IMF and the World Bank urgently need to address their legitimacy deficits, the BRIC summit declaration says. We call for the voting power reform of the World Bank to be fulfilled in the upcoming Spring Meetings, and expect the quota reform of the IMF to be concluded by the G-20 Summit in November this year.
And in an attack on the jobs for the boys approach of the West to the two international financial institutions, the BRIC document calls for an open and merit based selection method, irrespective of nationality, for the heading positions of the IMF and the World Bank. Moreover, staffs of these institutions need to better reflect the diversity of their membership. There is a special need to increase participation of developing countries.
New relevance for BRIC
Addressing reporters at the end of the summit hurriedly held to allow the Chinese president to leave for home in the wake of Wednesdays devastating earthquake in Qinghai Prime Minister Manmohan Singh said BRIC, the name was coined by Goldman Sachs in 2003, was not borne out of a crisis but was an act of long-term faith in our people and in our economies. However, the global economic and financial crisis has created a new relevance for BRIC.
The Brasilia summit was evidence that he and President Lula da Silva of Brazil, Dmitri Medvedev of Russia and Hu Jintao of China are clearly enjoying their newfound relevance. Their declaration ranged from advocating the need for restructuring the global economy, to evolving common positions on climate change, energy, trade, terrorism, agriculture and reform of the United Nations.
UN reform
On U.N. reform, Russia and China both permanent members of the Security Council baulked at endorsing the specific demand India and Brazil have made for permanent seats. But the declaration re-affirmed the need to make the world body more effective and representative. We reiterate the importance we attach to the status of India and Brazil in international affairs, and understand and support their aspirations to play a greater role in the United Nations, they said.
The four rising powers also took on board a suggestion Mr. Medvedev made in the run up to the summit, declaring that in order to facilitate trade and investment, We will study feasibilities of monetary cooperation, including local currency trade settlement arrangement between our countries. Recognising that such talk might weaken the position of the dollar and adversely affect their own holdings, the leaders also underlined the importance of maintaining relative stability of major reserve currencies.
While expressing satisfaction at the emergence of the G-20 as the premier forum for international economic coordination and their own significant contribution to that group, the four leaders said much more remains to be done to create a reformed and more stable financial architecture for the world. Their declaration also made a pitch for a more stable, predictable and diversified international monetary system.
Cancun summit
On climate change, the BRIC leaders said the upcoming negotiations in Mexico should be more inclusive and transparent. The Cancun talks should produce an outcome that fair and effective, while reflecting the principles of the UN Framework Convention, especially the principle of equity and common but differentiated responsibilities.
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