Against the backdrop of the Greek referendum result sparking fresh concerns of yet another blip in the already fragile global economic recovery, the BRICS nations — India, Brazil, Russia, China and South Africa — are expected to set the ball rolling on a proposal to trade with each other in their local currencies.
The move is expected boost the economic engagement among five of the world’s biggest emerging countries amid renewed efforts to insulate themselves from over-dependence on Bretton Woods institutions and the hegemony of the US dollar.
The seventh summit in Ufa, Russia on July 8-9 is also slated to build on two of the major initiatives formalised at their last meeting in Fortaleza — the launch of the New Development Bank that is being packaged as an “alternative” to the International Monetary Fund and the World Bank, and setting the ball rolling on the $100 billion Contingency Reserve Arrangement that each member can draw from in a financial crisis. Also on the anvil is a proposal entailing special business visas for entrepreneurs from five member states for easier travel among the countries of the grouping.
The PM, who will lead the Indian delegation to the summit, will head there from visits to Kazakhstan and Uzbekistan, which formed the first leg of an extended central Asia tour that will see him visit Turkmenistan, Kyrgyzstan and Tajikistan after the BRICS meetings in the eastern Russian city, some 1,300 km from Moscow. “The Summit last year was productive and I am sure we will build on the ground covered during the last Summit. I expect positive outcomes in economic cooperation and cultural ties among the BRICS nations… India attaches high importance to BRICS. It is a great forum that can contribute effectively to mitigate global challenges,” Modi had said in a Facebook post before beginning his visit.
The theme of the Ufa summit is ‘BRICS Partnership — A Powerful Factor for Global Development’. The agenda for the summit covers both political and economic issues, with indications that the overwhelming emphasis this time would be on the economic cooperation aspect. On the possibility of intra-BRICS trade in national currencies, the central banks of all five countries are learnt to have worked on drafting agreements. Unlike the Bretton Woods institutions, the NDB will have equal contributions from all five member states, representing a departure from the Bretton Woods institutions and a new model for equality between participating members, with each of the five BRICS nations slated to contribute $10bn each to the bank as seed money to start. The first President of the New Development Bank, ICICI chief K V Kamath, is at the summit and has started the formal work on the launch.
Ahead of the summit, Russia has convening a meeting of finance ministers in Moscow on Tuesday, attended by Finance Minister Arun Jaitley, as well as a trade ministers meet.
An Indian delegation official described the Ufa multilateral meeting of the BRICS and the BRICS outreach as a very important forum for “consolidating positions among five significant economies in the world on issues of common interest”, significant among them being issues of governance as well as of coordination and cooperation on global economic and financial issues. There are also indications that India could come under some pressure to open up its retail e-commerce sector to foreign investment, with Russia learnt to have pushed for an agreement on ecommerce at the trade ministers’ meeting in Moscow on Tuesday.
For Modi, the upcoming meeting in Ufa is the third time that he will be interacting with his peers in BRICS, after the sixth BRICS Summit in Fortaleza last year, and a meeting of BRICS leaders in Brisbane on the margins of the last G20 meeting.
After the BRICS summit, Modi will attend the Shanghai Cooperation Organisation summit in Ufa. India had formally applied for membership in SCO in September 2014. The SCO Foreign Ministers met in June in Moscow, and they had a positive recommendation regarding India’s membership to the Summit. India, alongside Pakistan, is likely to get the formal membership of the SCO at this year’s summit.
On April 1, the day Russia assumed the presidency of the BRICS, Russian president Vladimir Putin had announced that in addition to strengthening global security and stability, the BRICS grouping would focus on the group’s Strategic Economic Partnership and will facilitate the launch of the New Development Bank and the Currency Reserve Pool.