BRICS Rising!!! - Hit Over IMF and World Bank Policies

The BRICS summit successfully ended (as claimed by all the Members) yesterday (i.e. 29.3.2012). Many Indian newspaper today (i.e.30.03.2012) had different headlines on the BRICS summit, like, “Brics seeks bigger say at IMF, World Bank”, “BRICS stresses cooperation spirit at Delhi Summit” etc…. In New York Times it had the following headline on BRICS summit “BRICS Leaders Fail to Create Rival to World Bank” and the article stated that “The leaders of the five countries, Brazil, Russia, India, China and South Africa — the so-called BRICS nations — emphasized their mutual good will and their growing economic power, but fell short of achieving the tangible goal most discussed before the gathering: the establishment of a new development agency to rival the World Bank.”

In the Article titled “BRICS NATIONS THREATEN IMF FUNDING” in Financial Times, it stated that “Leaders of the world’s most powerful emerging economies have threatened to withhold additional financing requested by the International Monetary Fund to fight the European sovereign debt crisis unless they gain greater voting power at the Fund.” The article further stated that the “Meeting in India on Thursday, the heads of state from Brazil, Russia, India, China and South Africa expressed frustration at the slow pace of reform at the Washington-based multilateral lender, historically dominated by Europe and the US.”

It also stated that “In a joint statement, the so-called BRICS nations said there was an urgent need to “better reflect economic weights” and “enhance the voice and representation of emerging market and developing countries” at the IMF.” “We stress that the ongoing effort to increase the lending capacity of the IMF will only be successful if there is confidence that the entire membership of the institution is truly committed to implement the 2010 reform faithfully.”

It is believed that the IMF’s shareholders had agreed to shift more voting weight towards emerging market nations during 2010, but US has not passed enabling legislation. The BRICS leaders criticized the western countries for their poor handling of the global economy post financial crisis.

The Reuters (famous and leading international news agency) had given the key points of the BRICS summit (click here).

My Perception:

First of all the great news is BRICS summit ended successfully with tight security and many road blockades. Now, the good news is BRICS nations are asking bigger say at IMF and World Bank. It's really appreciable move that BRICS nations had said to IMF that we will withhold the additional finance which was requested to fight the European sovereign debt crisis unless we gain greater voting power. Many people may think this some biased statement and what BRICS had said is something inappropriate at this juncture. But, if one sees the fact and the truth that, Europe and USA had dominated the IMF and World Bank from the time it is established and the outcome from these 2 big institutions is very meagre. In fact, when one looks back what IMF and World Bank had done is nothing but more of a patch work for the economies in trouble not development. If you see the history of financial crisis, one of the major financial crisis (Asian Crisis) was due to the intervention of IMF. The BRICS nations were also rightly criticized the western countries for their poor handling of the global economy post financial crisis.

All these are good things in the BRICS summit. Now, here is the major eyebrow raiser incident that questions the China's role among BRICS. It is believed that when the discussion came up for the United Nations Security Council the BRICS nations agendas were remained divided. While India, Brazil and South Africa are aspiring for the permanent seats on the UN Security Council, as earlier Russia has endorsed it, the same position was repeated on Thursday by President Dmitri A. Medvedev. The China (as usual) has remained noncommittal on the issue, especially regarding India, and Mr. Hu was noticeably silent on that point during his remarks. The silence of China means lots of things, only time will say how much unity BRICS has among themselves!!