July 12,2014
As Brazilian President Dilma Rousseff prepares for World Cup closing ceremonies on Sunday, she also is working on another big event. Her country will host the sixth annual BRICS summit on Monday. BRICS, the acronym for a group of five emerging national economies with significant influence on regional and global affairs, includes Brazil, Russia, India, China and South Africa.
The group of five will convene in the northeastern Brazilian city of Fortaleza.
“We should expect to see the announcement of a major new multilateral development bank in which the five-member state will each contribute a certain amount of capital -- up to $100 billion total over a number of years. There is also some discussion of setting up a contingent reserve authority which would sort of be an alternative to the IMF," said Trinkunas.
Discussions to create a lending institution similar to the World Bank started in New Delhi two years ago, but the Indian government says nothing is set in stone yet. Sujata Mehta, with the country’s Foreign Ministry, said, "We are still at the stage when we are negotiating it, so I wouldn't want to speculate what would be the roadmap we would be utilizing."
Ross Anthony, of the Center for Chinese Studies at South Africa's Stellenbosch University, said establishing the bank would help the BRICS countries achieve tangible economic benefits.
"Without a bank, without something material that backs up rhetoric of these five economies grouping together, BRICS will remain more of a talking club than something more substantial," he said.
However, setting up a bank of that size and reach is not likely to yield immediate results.
“Most of the other successful multi-lateral development banks that we know of, such as the World Bank, really took many years, decades even to really become fully operational and consolidated and establish a global reputation as lenders,” said Trinkunas.
There is also concern about economic growth slowing in most of the BRICS countries, but Trinkunas said most of the countries have large foreign currency reserves and are not expected to enter a major crisis anytime soon.
Meanwhile, some critics say that as important as economic development issues are, international affairs issues also should be discussed. Russia's recent annexation of Crimea is one example. While the United States and its European allies heavily criticized Russia, reaction from the BRICS countries was almost non-existent.
There are also talks of adding more countries to the group, including Indonesia, Turkey and Nigeria.