Even before the two-day Sixth BRICS Summit begins on Tuesday, Prime Minister Narendra Modi, who arrived here on Monday afternoon, faced a packed schedule with back-to-back meetings, first with President Xi Jinping of China and then with President Vladimir Putin of Russia, within a few hours of his arrival.
Modi’s first meeting with Xi since taking over as the PM is significant as India is keen to engage with its Asian neighbour, not just economically to boost trade and investment, but strategically too, with a number of border issues still outstanding. The meeting is scheduled to last 40 minutes and will take place at the Gran Marquise, the hotel where Xi is staying.
Modi will later meet Putin for an hour at the Marina Park hotel where the latter is staying.
Senior government officials said while the broad contours of the BRICS Bank, originally conceived in the Fourth BRICS Summit in New Delhi, have been agreed upon, four critical issues are still open for dialogue. These are: shareholding, location, name and presidency. India is pressing for equal shareholding, given that other Bretton Woods institutions such as the World Bank and the International Monetary Fund (IMF) have remained mostly under Western influence.
“We want equal contribution by the five countries and equal shareholding. That’s central to the idea of setting up an institution that can be an alternate to the Bank and the Fund,” said a senior government official who is part of Modi’s delegation. While the draft agreement states that each country will contribute $10 billion over the next seven-eight years, China has evinced interest in contributing much more. Brazil, on the other hand, wants economic weight to determine shareholding.
“Every country wants to take away something from the Summit. South Africa is also keen to have the bank headquartered in its country,” said the official. Modi already endorsed the name of the BRICS Bank as “New Development Bank” in his departure statement. He has not, however, indicated any preference over the location. If the new bank is not headquartered in India, the government will certainly push for the presidency or key managerial positions.
Another official said the five countries will contribute $ 2 billion each in the next three-four years. It will be fully capitalised over a fairly long period of time. Ultimately, the bank will be fully capitalised at $ 100 billion, with other developing countries too being roped in as shareholders.
The modalities of the contingency reserve arrangement (CRA) are more or less decided and this may be reflected in the Fortaleza Declaration of the Summit. The $ 100 billion CRA will work like a swap arrangement between the five countries, and will be drawn upon only when any of them faces short term liquidity pressures. There will be limits on how much funds can be accessed based on several parameters, officials said.
While Modi will meet Xi and Putin on Monday, he is scheduled to meet Brazil’s Dilma Rousseff and South African President Jacob Zuma on the sidelines of the summit on Tuesday. “I look forward to meaningful meetings with them to intensify bilateral relations and exchange views on global and regional developments,” he said.
Modi’s meeting with German Chancellor Angela Merkel in Berlin had to be put off since the latter flew to Rio de Janiero to watch her country play, and win, the FIFA World Cup Final with Argentina.
Significantly, Modi has said that the meeting in Brazil will usher in the second cycle of BRICS summits. Ahead of his departure, he said the heads of the five countries were meeting at a time of political turmoil, conflict and humanitarian crisis in several parts of the world, and persisting weakness and risks in the global economy.
“Many emerging economies have experienced a slowdown, which has increased the challenge of pursuing inclusive and sustainable economic development,” Modi said in his departure statement. The Indian economy grew sub-5 per cent in the last two financial years and has projected a GDP growth of 5.4-5.9 per cent in 2014-15.