Before the leaders of Brazil, Russia, India and China meet, a summit of the Shanghai Cooperation Organisation (SCO) of Central Asian powers will also underline the growing international stature of China and Russia.
The four BRIC nations — which account for 15 percent of the $60.7 trillion global economy — will focus on ways to reshape the financial system after the economic crisis.
But immediate agreement on practical steps among the members of this loose and untested bloc appears most unlikely.
“These four countries are all quite influential in international economic development, and I think if in the meeting they raise some proposals and initiatives, that would be fair and reasonable,” said Wu Hailong, a senior Chinese Foreign Ministry official.
“Especially, some countries have proposed establishing a super-sovereign currency, and I think their impetus is ensuring the security of each country’s foreign currency reserves.”
Chinese and Russian officials have in recent days played down talk of a discussion on a new supranational reserve currency to reduce dependency on the U.S. dollar.
The BRIC term was coined by Goldman Sachs economist Jim O’Neill in 2001 to describe the growing power of emerging market economies. Tuesday’s summit in the Russian Urals city of Yekaterinburg marks a step towards cohesion as a group.
A one-on-one meeting between Indian Prime Minister Manmohan Singh and Pakistani President Asif Ali Zardari is planned on the sidelines of the SCO summit and could help break the ice between the two nuclear-armed powers.
The SCO summit is likely to produce general pledges to work together more closely for regional development and security.
Iran, while only an observer member of the SCO, has again stolen much of the attention at the SCO summit.
Doubt hangs over whether President Mahmoud Ahmadinejad will attend the SCO summit this year, defying street demonstrations that have decried his re-election last week as rigged.
He did not arrive on Monday, when the SCO opened its two-day summit, but he may arrive on Tuesday.
As part of proposals to rebuild the financial system, Russian President Dmitry Medvedev has made proposals on giving a greater role to the International Monetary Fund’s Special Drawing Rights that echo ideas from Chinese central bank chief Zhou Xiaochuan.
Russia said it would reduce the share of U.S. Treasuries in its $400 billion reserves and buy IMF bonds. China, Russia and Brazil have pledged to help capitalise the IMF as they seek more influence at the fund.
“China and Russia share some agreement on general ideas about dealing with the financial crisis and regional issues, otherwise the BRIC summit wouldn’t be happening at all,” said Zhao Huasheng, an expert the two countries’ relations at Fudan University in Shanghai.
“But translating those concepts into practice is difficult, especially when there are so many other diverse countries also present,” said Zhao.
FinancialMirror, June 16, 2009 – By Chris Buckley and Guy Faulconbridge (Reuters)