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Lidia Kelly & Katya Golubkova
06 Jul 2015 15:32
Brics leaders pose at their meeting in Brazil in 2015. (Reuters)
The Brics emerging economies will launch a development bank at a summit this week which President
Vladimir Putin hopes will help reduce Western dominance of world
financial institutions and show Moscow is not isolated.
At a meeting in the remote Russian city of Ufa, originally a
fortress built on the orders of Tsar Ivan the Terrible, Brazil,
Russia, India, China and South Africa also aim to put the last
touches to a $100-billion contingency currency reserves pool.
The Brics account for a fifth of the world’s economic output
and 40% of its population. The pool and New Development
Bank, with an initial $50-billion in capital, are central to
their efforts to reshape the Western-dominated financial system.
“At this meeting we will make operational our two biggest
institutions, which is key for us to advance as a group and
learn more from each other,” said a Brazilian official involved
in the preparations for the meeting.
“Nobody thought that was
going to be possible a year ago when we ratified the proposals.”
The official asked not to be named as he is not allowed to
speak publicly about the two-day summit starting on Wednesday in
Ufa, nearly 1 170km south-east of Moscow.
For Putin, whose focus has shifted to the emerging economies
and especially Asia since the West imposed sanctions on Moscow
over its role in the Ukraine crisis, the summit is also a chance
to show the West that Russia can get along fine without it.
“The Bics, in addition to their economic and pragmatic
agenda, have become an influential factor in world politics,”
Russian Foreign Minister Sergei Lavrov said last week.
He denied the five countries’ efforts to join forces were
aimed against anyone else and praised their “important
stabilising role” in international affairs.
The unity of the Brics nations is important for Putin in his
stand-off with the West over Ukraine, especially as Russia
suffered the symbolic blow of being suspended from the Group of
Eight industrial powers over its seizure of the Crimea region.
But independent foreign policy experts say the Brics group
is still a long way from achieving its main goals and Russian
ties with China remain less developed than Moscow would like.
Progress on the New Development Bank, first proposed in
2012, has also been slow.
At last year’s Brics summit in Brazil it was agreed the
headquarters would be in Shanghai but China ratified the bank
only last week and it is not expected to be operational until
Other emerging markets such as Turkey, Mexico, Indonesia and
Nigeria could join as partners at a later date.
The contingency reserves pool is expected to start operating
immediately to help members if they are hit by a sudden exodus
of foreign capital.
The summit coincides with a meeting in Ufa of the Shanghai
Cooperation Organisation (SCO), a security bloc grouping China,
Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, which
India and Pakistan are set to join.
Putin is also expected to hold talks with Iranian President
Hassan Rouhani in Ufa. Iran has observer status in the SCO. - Reuters
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