BRICS to focus on strategic cooperation

The seventh summit of the BRICS (Brazil-Russia-India-China-South Africa) countries scheduled in the city of Ufa, in Russia on July 9 and 10 this year will be a big test for Russian President Vladimir Putin. Putin would have to seek the support of the member nations for steering investment and growth within the group.

Russia is the host country of the seventh BRICS summit. Putin, while taking over the presidency of the group, said in a statement that BRICS nations are coordinating their policies on key international issues closely and are playing an active part in shaping a multi-polar world order, along with developing modern models for the world’s financial and trading systems. The issue of speedy investment and trade collaboration is getting priority at the summit. The Ufa summit is expected to launch the New Development Bank (formerly known as the BRICS bank) and the proposed Currency Reserve Pool (CRP).The New Development Bank (NDB) Bank which was conceptualized at the last BRICS summit in Brazil is scheduled to fund infrastructure projects and challenge the dominance of the World Bank and the IMF. The NDB set up by the BRICS nations will also be supplemented by the operations of the proposed Asian Infrastructure Investment Bank (AIIB). This combined onslaught of new monetary systems is sure to lessen the level of dominance that the West backed International Monetary Fund and the World Bank has on the global financial system.

Central Banks of the member countries will have to finalize an Inter-Central Bank Agreement before the arrangement can be made operational. During the Ufa summit, the first president of NDB, an Indian, is expected to be confirmed. The headquarters of the NDB will be in Shanghai-China. The Chinese Government is taking all possible steps to complete the work on the headquarters and indications are that the new office of NDB will be in a position to start functioning from the end of 2015 itself.

Russia, as a host country, is taking a lot of interest in the timely launching of operations of the NDB. Given that Russia finds itself confronting worsening relations with the United States and the European Union, it is in desperate need to cultivate alternative sources for marketing its products along with sources for future imports to fill the gap of its substantial erosion in trade with the west. The BRICS members are steady friends of Russia and President Putin will certainly explore the possibility of intensifying trade cooperation with the four other members of the BRICS at the summit. Holding a trade and investment focused BRICS summit in 2015 makes sense for the member countries in the context of falling oil prices and slowing growth. Expanding investment cooperation and exploring a strategy for multilateral economic cooperation suit all countries in the present global economic climate.

President Putin, as the host of the summit, is expected to focus on collaboration between the BRICS countries in education, culture, science and healthcare. There is a proposal for establishing a BRICS Network University. However, the most important programme at the summit which will be considerable interest to India is the discussions on how to provide jobs to the youth of the BRICS countries. Indian officials can contribute a lot in discussions on the youth and employment issue. The Ufa summit proposes to take concrete steps to deal with the issue of speedy generation of jobs for the youth as a part of the overall programme of growth and equity in the member countries.

Energy security and collaboration in renewable energy area will also dominate discussions at the Ufa summit. BRICS sources indicate that the five countries account for 26 per cent of the land area, 45 per cent of the population and 18 per cent of global GDP. Energy efficiency, renewable energy and management of pollution are important pillars of the transition to a green economy for the BRICs countries. BRICS experts point out the innovative financial mechanisms such as the soon to be launched New Development Bank and the CRP have the potential to not only ease short term liquidity pressures and contribute to international financial stability, but also to construct an enduring green infrastructure, long term competitiveness for the BRICS economies and strengthen South-South cooperation. The differences in economic and social realities of the BRICS countries are not an obstacle to concerted joint action. The developing countries of the emerging economies group face the challenge of energy supply and access. Clean energy investment in developing countries has risen by 36 per cent to US$ 131 billion as against the investment in the developed countries to the tune of US$ 139 billion (in 2014).And while much of this surge has been on account of China’s aggressive focus on renewable energy, three other BRICS economies- Brazil ($7.6billion), India ($7.4 billion) and South Africa ($5.5 billion) were among the ten top investing countries in clean energy in 2014. The Ufa Summit is expected to further hasten the process of transitioning to a green economy.