Leaders of the BRICS group of emerging powers on Tuesday created a
Shanghai-based development bank and a reserve fund seen as counterweights to
Western-led financial institutions.
The leaders of Brazil, Russia, India, China and South Africa agreed to
launch the institutions to finance infrastructure projects and head off future
economic crises.
"These initiatives show that, despite our diversity, our countries
are committed to a solid and productive association," Brazilian President
Dilma Rousseff said at a summit in the northeastern seaside city of Fortaleza.
Russian President Vladimir Putin hailed the agreements as "a very
powerful way to prevent new economic difficulties.
The five emerging nations first unveiled their plans last year. The New
Development Bank aims to rival the Washington-based World Bank while the
reserve is seen as a "mini-IMF."
BRICS leaders have pressed for reform of the International Monetary Fund
to give developing countries more voting rights.
"The IMF urgently needs to review its distribution of voting power
in order to reflect the unquestionable weight of emerging countries,"
Rousseff said.
The development bank will have initial capital of $50 billion that could
rise to $100 billion, funded equally by each nation.
To ease worries of any nation getting more power than the other, BRICS leaders agreed to put the bank's headquarters in Shanghai. The
first president will be Indian while the first board chair will hail from
Brazil.
An Africa Regional Center will be based in South Africa. The bank will
help emerging and developing nations mobilize resources for infrastructure and
sustainable development projects, the summit declaration said.
China is expected to make the biggest contribution, $41 billion,
followed by $18 billion each from Brazil, India and Russia and $5 billion from
South Africa.
The summit comes as the economies of some BRICS countries, which
together represent 40 percent of the world population and a fifth of the global
economy, are cooling down, with Russia and Brazil expecting just one percent
growth this year.
For Putin, who visited Argentina and Cuba before coming to Brazil, the
trip gives him a chance to hammer home his calls for a "multipolar"
world amid tensions with the West over the Ukraine crisis.
The meetings give Putin his first international summit since being
kicked out of the G8 group of industrialized nations over the Ukraine crisis.
The United States is threatening to impose new economic sanctions on
Russia over accusations that it is backing pro-Moscow separatist rebels in
eastern Ukraine.
The BRICS summit declaration voiced "deep concern" over the
situation in Ukraine and called for "comprehensive dialogue, the
de-escalation of the conflict and restraint from all the actors involved, with
a view to finding a peaceful political solution."
