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| The 2012 BRICS Think-Tanks Forum in Chongqing, Sept. 26. (Photo/Xinhua) |
Experts
from five emerging world economic powers have told how a two-day forum for
thinktanks this week reached consensus on creating a BRICS development bank
designed to complement existing global financial institutions such as the World
Bank.
Liu Youfa,
deputy director of the China Institute of International Studies, said, "At
the previous forum before the BRICS summit meeting in March, we were still
discussing whether to create this bank, but now we are talking about how to
create this bank."
The 2012
BRICS Think-Tanks Forum, held in southwest China's Chongqing municipality on
Wednesday and Thursday, was part of efforts by the five countries — Brazil,
Russia, India, China and South Africa — to create a BRICS development bank. Its
establishment joined the official agenda when BRICS leaders agreed at the
organization's summit in India's New Delhi in March to consider the possibility
of creating a new development bank. They decided to convene expert meetings on
the matter.
Being the
first think-tank forum of its kind, briefed to advise governments of each BRICS
country, experts at the event said in follow-up interviews that their agreement
on the necessity and practicality of creating the bank would be presented to
officials, who would advance the governments' decision making.
Ideas that
carry weight
Liu Youfa
said thinktanks are a preliminary step in government policy-making and the
influence of their ideas in part depends on their feasibility and thoroughness.
According
to Liu, the consensus from the forum has three main aspects: the need to build
a legal framework, the need to establish a theoretical framework and the need
to further discuss technical issues. The first of these concerns defining the
legal status of the bank, the second was to explain its purpose, and the third
was about how the bank should be run and capitalized and other specific
matters.
Leonid
Grigoriev, deputy director of the Russian Energy Agency and professor of the
Higher School of Economics, said, "We generally agreed to create this
bank. We scanned all the related issues to be further discussed and formed our
opinions on them, issues such as the mode, the capitalization, the purpose of
the bank.
"What
we did is groundwork and solving technical issues. The rest is for political
negotiations, but the governments need ideas in making decisions, especially
those from other countries."
Such
think-tank forums are usually held right before BRICS leader meetings, as they
were before the summit in New Delhi this year and the one in Sanya, China, last
year. Interviewed experts said much of the content of the reports formed at the
two forums eventually appeared on the summit declarations.
According
to HHS Viswanathan, a distinguished fellow of India's Observer Research
Foundation, this week's event did not produce a report, but its discussion will
surely be included in the report of the next forum, set to take place in South
Africa before the next summit there in 2013.
Viswanathan
told Xinhua that India expects to see the bank established as soon as possible.
Although no timetable was set, a road map has become clear after this week's
forum and all five sides are clear what to do next: figuring out the bank's
form of organization, equity shares, head office and other issues.
At March's
summit, the BRICS leaders also directed finance ministers to examine the
feasibility and viability of the bank, set up a joint working group for further
study, and report back to them before the next summit.
Experts at
the forum clarified that the study by the working group was not as thorough as
their discussion and that finance ministers usually focus on domestic issues.
The experts
said in interviews that they believe a detailed plan that covers the issues
mentioned above could be forwarded to the five governments in a year and that,
if the plan is adopted, the governments will probably later set up a
preparatory committee to kick off the bank's establishment.
Alternative
to World Bank
The Delhi
Declaration, issued after the BRICS summit, said the new development bank's aim
was "mobilizing resources for infrastructure and sustainable development
projects in BRICS and other emerging economies and developing countries, to
supplement the existing efforts of multilateral and regional financial
institutions for global growth and development."
When
explaining why the BRICS countries need a development of their own, many
experts found fault with the existing global financial institutions, in particular
the World Bank, for not providing adequate capital for much-needed large
infrastructure projects in BRICS and other developing countries.
Yaroslav
Lisovolik, member of the Management Board of Deutsche Bank Russia, said the
bulk of world savings and financial resources was concentrated in the
developing world, but the pattern of the past decade had seen developing
countries channelling a significant part of their reserves into the developed
world.
For the
BRICS, the creation of a development bank may support the institutional base of
BRICS integration. For other developing nations, the bank could address one of
the greatest reserves for growth in the world economy — the development of
infrastructure, Lisovolik said.
Since the
word BRIC was coined 10 years ago to group four leading emerging economies —
later expanded to include South Africa — its member countries have consistently
grown faster than developed nations. By the end of 2011, the BRICS account for
42% of the world's population, 20% of GDP, and 15% of international trade.
Despite
that, experts at the meeting said BRICS countries did not have a corresponding
role in global governance, particularly in a world financial system dominated
by the United States and Europe.
BRICS and
other developing countries have continuously called for reform of the World
Bank and the International Monetary Fund. The Delhi Declaration said, "We
welcome candidatures from the developing world for the position of the
President of the World Bank. We reiterate that the Heads of the IMF and the
World Bank be selected through an open and merit-based process."
"Furthermore,
the new World Bank leadership must commit to transform the Bank into a
multilateral institution that truly reflects the vision of all its members, including
the governance structure that reflects current economic and political
reality."
The
developing world's reform efforts have not made much progress yet. Most
noticeably, in 2011, developing countries failed to agree to a powerful
alternative to Christine Lagarde, who eventually won the nomination to IMF
chief.
Oliver
Stuenkel, a professor of international relations from Brazil, said at the forum
that the United States and Europe remained reluctant to fully include emerging
powers into existing financial structures, and a BRICS development bank could
indeed become an effective tool to serve emerging powers' needs, while
bypassing restrictions and political pressures from US- and Europe-funded
banks.
Forum
delegates generally agreed the BRICS banks should be a supplement to the World
Bank and other multilateral or bilateral financial institutions, and its
creation was not intended to subvert the current Bretton Woods system. However,
they said the BRICS bank could put pressures on the current system and compete
with the World Bank.
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