BRICS Development Bank

Discussion in 'Foreign Relations' started by arya, Mar 26, 2013.

  1. arya

    arya Senior Member Senior Member

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    BRICS emerging powers on Tuesday sought a deal on setting up a development bank that would rival Western-backed institutions, trying to iron out significant differences ahead of a leaders' summit in Durban.

    The grouping of Brazil, Russia, India, China and hosts South Africa are racing to flesh out proposals for an infrastructure-focused lender that would challenge seven decades of dominance by the World Bank.

    Just hours before leaders kick off the summit at 17:30 GMT, finance ministers were still working to agree key elements of the plan.

    Disputes remain over what the bank will do, with each side trying to mould the institution to their foreign or domestic policy goals and with each looking for assurances of an equitable return on their initial investment of around $10 billion.

    Failure to secure a deal would be a major embarrassment for many of the participants and would play into the hands of those who argue the BRICS have little to bind them together.

    Xi Jinping, who has underscored the growing importance of the group by making Durban his first summit as China's president, earlier expressed hopes for "positive headway" in establishing the bank.

    In a keynote speech in Tanzania on Monday Xi vowed Beijing's "sincere friendship" with the continent, and a relationship that respects Africa's "dignity and independence."

    Meanwhile host President Jacob Zuma has lauded the summit as a means of addressing his country's chronic economic problems including high unemployment.

    "BRICS provides an opportunity for South Africa to promote its competitiveness," Zuma said in a speech on the eve of the summit.

    "It is an opportunity to move further in our drive to promote economic growth and confront the challenge of poverty, inequality and unemployment that afflicts our country."

    A failure to take concrete steps would raise questions about whether the BRICS grouping can survive.

    "Ironically it may be the cleavages within the BRICS grouping that more accurately hint at the future of the global order: tensions between China and Brazil on trade, India on security, and Russia on status highlight the difficulty Beijing will have in staking its claim to global leadership," said Daniel Twining of the German Marshall Fund.

    But if the leaders succeed it would be the first time since the inaugural BRICS summit four years ago that the group matches rhetorical demands for a more equitable global order with concrete steps.

    That would send a loud message to the United States and European nations that the current global balance of power is unworkable.

    Together the BRICS account for 25 percent of global GDP and 40 percent of the world's population.

    But members say institutions like the World Bank, the International Monetary Fund and the United Nations Security Council are not changing fast enough reflect their new-found clout.

    Diplomats say it could start with $10 billion seed money from each country, but the exact role of the bank is up for debate.

    Indian officials have pressed for a BRICS-led South-South development bank, recycling budget surpluses into investment in developing countries.

    Many developing nations inside and outside BRICS will hope that is a way of tapping China's vast financial resources.

    Meanwhile China would no doubt like the bank to invest in trade-multiplying projects.

    Aside from the development bank, the group will also try to establish a foreign exchange reserve pool worth as much as $240 billion to be drawn on in financial crises.

    China has the world's largest foreign exchange reserves, worth $3.31 trillion at the end of 2012, and establishing currency swap lines could help other BRICS tap that massive resource.

    Later on Tuesday Brazil is to sign a bilateral accord with China to promote trade in their national currencies.

    BRICS leaders will also establish business and think tank councils.

    With Syria's two-year long civil war escalating through the suspected use of chemical weapons, BRICS leaders will also have to weigh a call from President Bashar al-Assad to intervene.

    In a message to the summit leaders Assad asked "for intervention by the BRICS to stop the violence in his country and encourage the opening of a dialogue, which he wishes to start," said his senior adviser Bouthaina Shaaban after he delivered the message to Zuma.

    link :: BRICS wrangle over new development bank - FRANCE 24
     
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  3. asianobserve

    asianobserve Elite Member Elite Member

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    And they will fight how much money they will put in.. And they will fight who will control that bank... And they will fight how their funds will be lent... And they will fight to whom their fund will be lent... Oh well, good luck.
     
  4. drkrn

    drkrn Senior Member Senior Member

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    looks like Chinese stole the show in s.a
    their economy is doing wonders for them...

    but the question is would china accept to lend money without any leverages??
     
  5. desicanuk

    desicanuk Regular Member

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    What boggles the mind is why should India participate in such a project which will be dominated by PRC - given the size of its economy and its contribution of the seed money.We Indians will undoubtedly join in for prestige and then watch the PRC veto any infrastructure funds that we ask for.Remember the infrastructure project loan for Arunachal Pradesh from ADB vetoed by PRC.We pay and PRC vetoes??Amazing!!Are we stupid or what!!
     
  6. drkrn

    drkrn Senior Member Senior Member

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    brics is not un to have a veto.the amount going to be infused is 100000crore dollars by 5 nations
     
  7. badguy2000

    badguy2000 Respected Member Senior Member

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    frankly speaking, such a bank is purely a prestige project.......

    China already has CDB(China Developement Bank) as a tool to compete WB and IMF


    In the past several years, CDB already has provided African countries with funds more than the combination of WB and IMF....and is already the dominant fund resouce in Africa...
     
    drkrn and Shaitan like this.
  8. Shaitan

    Shaitan Zandu balm all day Senior Member

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  9. drkrn

    drkrn Senior Member Senior Member

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    will brics bank fund countries other than fellow nations
    ?
     
  10. asianobserve

    asianobserve Elite Member Elite Member

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    The interests of these "BRICS" countries do align with each other. It'll be very interesting to watch how they will jockey to control this IMF killer bank to safeguard and advance their own interests...
     
  11. nimo_cn

    nimo_cn Senior Member Senior Member

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    Well, if India wishes to have more veto power in the bank, simply inject more money into it.
     
  12. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    Most of these are political issues some kind of resolution will be reached since these are
    the only cash rich countries that can help bring the world economy back and already have
    huge trade with each other.
     
  13. agentperry

    agentperry Senior Member Senior Member

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    bank will not be a forum to create more trouble but to it would be a tool to create more support for new group "brics"
    none of them will have a hegemonic thinking of hijacking the moment
     
  14. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    This can be easily resolved by having all the nations pick an equal amount to place in the bank.
     
  15. badguy2000

    badguy2000 Respected Member Senior Member

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    CHina's GDP is 70%+ of Brics' one.
    in the coming decade, the ratio will increase and China economy will be the dominant role among Brics.
    with the power disparity widened, China obvioulsy looks on Brics as a tool to undermine the dominance of west countries, just as well as SCO.

    as for Brics banks, it is just as prestige project ,As I post.

    CHina already has CDB as a successful competitor of world bank and IMF and successful make CDB the dominant fund resource in Africa .
     
  16. badguy2000

    badguy2000 Respected Member Senior Member

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    China wont' accept it!
    CHina looks on the bank as a tool to competite WB and IMF.

    if the tool were not be contolled by CHIna, CHina would simplly deny it and continue to use CDB,although CDB is not so "internaionalized" .
     
    Last edited: Mar 30, 2013
  17. GromHellscream

    GromHellscream Regular Member

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    They are joining together, simply because more profits can be made out of this way.
     
  18. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    China is not that powerful.
     
  19. badguy2000

    badguy2000 Respected Member Senior Member

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    it has nothing to do with "powerful",
    it is just a wise caculation of cost performance.

    for anyone,his own second-hand pickup is better tha other's brand-new Rolls-Royce

    CDB is CHina's second-hand pickup,because it is not so "internationalized 'as WB and it is so "political right" now.however, after all, CDB is CHina own bank..


    if Bric bank is not controlled by China, then it would just another other's Rolls-Royce to China,as well as WB.
     
  20. anoop_mig25

    anoop_mig25 Senior Member Senior Member

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    would china allow funds to be used for developing infrastructure in AP ,North east,and j&K
     
  21. desicanuk

    desicanuk Regular Member

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    No thank you.It will be stillborn because PRC will push its own agenda at the expense of other partners.BRICS is an acronym.Let's leave it at that.Prestige obsessed Indian leaders please get off the BRIcS bandwagon!!
     

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