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Modi’s chance to cement BRICS for a bank
In 2012, India mooted a development bank. Last year, BRICS leaders agreed to set up one with an initial capital of $50 billion to lend money to developing nations. For Modi, it’s an opportunity to score on the world stage.
Raj Chengappa

Raj ChengappaPrime Minister Narendra Modi was invited to witness the soccer World Cup finals between Argentina and Germany to be played early tomorrow morning at the historic Estádio Maracanã in Rio. Most of us would have given a right arm and a leg to witness live what is undoubtedly one of the greatest sporting spectacles on earth. But Modi chose to pass up the opportunity. The Indian Prime Minister will be flying today directly to the beach resort of Fortaleza in Brazil where the Sixth BRICS summit is being held from July 14-16.

Despite having a billion-plus population, India has never made it to the big league though football is one of the cheapest sports to play. Modi may have stayed away from the finals to avoid answering uncomfortable questions as to why India figures at the bottom of the heap in the world’s most loved field game. His host, Brazilian President Dilma Rousseff, may not mind Modi’s absence. After her country’s humiliating 7-1 defeat to Germany in the semi-finals, all of Brazil has gone into mourning. Even more galling for it is that archrival Argentina would be the cynosure of all eyes in the finals and if it wins, the darling of South America.

Modi though can use the opportunity to score several goals on the diplomatic front. BRICS, a disparate group of nations formed in 2009 in the shadow of the world’s financial crisis, is the acronym for Brazil, Russia, India, China and South Africa. These five countries form a powerful team accounting for an estimated 26 per cent of the world’s geographic area, 43 per cent of the world’s population, 17 per cent of international trade and 25 per cent of the global GDP in terms of purchasing power.

BRICS members continue to remain among the fastest growing economies despite the economic recession. Brazil and Russia are among the world’s largest petroleum producers, China and India the globe’s biggest energy consumers while South Africa is still the leader of African nations. While in the initial years BRICS was just another talking shop, after the fifth summit in Durban in March last year the grouping finally moved towards time-bound, resulted-oriented agendas, particularly on the economic front.

In the initial years both Russia and China wanted to use the BRICS forum as a political front on the world stage. They had hoped to leverage the support of three of the biggest nations straddling three continents to take on the West, particularly the US, whenever needed. But India, Brazil and South Africa were clear that the real benefit lay in boosting economic ties and pushed hard for concrete economic outcomes. In 2012, when India hosted the fourth BRICS summit, it mooted the idea of a new development bank. It was seen as a move to build an alternative economic architecture to the one dominated by the US, Europe and Japan, particularly the World Bank and International Monetary Fund.

At the Durban summit last year, BRICS leaders finally agreed in principle to set up such a multi-lateral bank with an initial subscribed capital of $50 billion to lend money to developing nations for infrastructure building and development projects. China and Russia, with surplus funds in their coffers, were keen on becoming majority shareholders of the bank. But the three other nations, including India, resisted and it is now agreed that each country would chip in $10 billion and thereby hold an equal number of shares.

At the BRICS summit, Modi would be involved in finalising with the other four leaders the finer details such as where the bank would be located, what would be its lending policy and which country’s representative would be the President. The leaders would also give concrete shape to another good idea thrown up at Durban, which is the setting up of a Contingency Reserve Fund (CRF) of $100 billion to bail out member countries in times of financial crisis without the crushing conditions that the IMF usually imposes. For this phone-a-friend type of fund, China is expected to chip in $41 billion, while India, Brazil and Russia are likely to put in $18 billion each with South Africa contribution the remaining $5 billion.

Modi would also have what is termed as ‘getting to know each other meetings’ with Russian President Vladimir Putin and Chinese President Xi Jinping. Both these leaders would be visiting India later in the year and Modi could use the occasion to bond with them and set the agenda for their bilateral visits. There is an added bonanza for Modi. Rousseff has invited 11 leaders of South American nations to attend the summit and it would give him an opportunity to meet all of them.

For Modi, who had so far correctly focused on building relations with South Asian leaders, the BRICS summit would be his first real contact as Prime Minister with the world at large. With a flurry of summits and bilateral visits to follow, including with US and European leaders, by the year-end Modi would have had a broad sweep of global affairs and leaders that would help shape his worldview for his term as Prime Minister.





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