By Nitya Chakraborty
The seventh summit of the BRICS (Brazil-Russia-India-China-South Africa) countries scheduled at Ufa in Russian Federation on July 9 and 10 this year, will be a big test for the Russian President Vladimir Putin in organizing the support of the major economies of the world for working a strategic cooperation for steering investment and growth within the group.
Russia is the host country of the seventh summit and President Putin, while taking over the presidency of the group, said in a statement that BRICS are coordinating their policies on key international issues ever more closely and are playing an active part in shaping a multi-polar world order and 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 as already steps have been taken to set up the New Development Bank and the Ufa summit is expected to launch the BRICS Bank and the proposed Currency Reserve Pool (CRP).The BRICS Bank finalized at the last summit in Brazil is scheduled to fund infrastructure projects in the member countries and challenge the dominance of the World Bank and the IMF. This NDB set up by the BRICS will also be supplemented by the operations of the proposed Asian Infrastructure Investment Bank (AIIB) which also has all the BRICS countries as founder members. This combined onslaught of the NDB and the AIIB in the coming years, is sure to lessen the level of the dominance of the USA and the West backed IMF and the World Bank on the global financial system.
The Ufa summit has to complete the formalities for the effective starting of the operations of the Bank since the Bank can only begin operations after all the member countries deposit their instruments of ratification with Brazil. Central Banks of the member countries will also have to finalize an Inter-Central Bank Agreement containing the operational details of swap transactions and the Standing Committees Operational Procedures (SCOP) before the arrangement can be operational. During Ufa summit, the first president of NDB, an Indian, is expected to be confirmed while the headquarters will be in Shanghai in China. 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.
Russia, as a host country, is taking big interest in the timely launching of operations of the BRICS Bank since Russia finds itself confronting worsening relations with the United States and the European Union over Ukraine crisis in addition to its own economic problems. Russia is in a desperate need to cultivate alternative sources for marketing its products as also imports to fill the gap of its substantial erosion in trade level with the west. The BRICS members are steady friends of Russia and President Putin will certainly explore the possibility of increased trade cooperation with the four other remaining 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 in the group excepting India. 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. But the most important programme which will be of interest to India is the discussions on programme to provide jobs to the youth of the BRICS countries. There is a report on the youth and employment in the BRICS countries which analyses the possibilities of generating employment. Programmes to create jobs for younger people in the BRICS countries fall into three broad categories and there is big emphasis on skill development and access to credit to promote self employment and entrepreneurship.
Indian Prime Minister Narendra Modi’s initiatives in skill development and the focus on self employment are on the broad lines of the BRICS Report. That way, Indian officials can contribute a lot in discussions on this 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 as also cooperation 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 mention that innovative financial mechanisms under the BRICS such as the soon to be launched New Development Bank and the CRP have the potential to not only ease short term liquidity pressure 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 by36 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 2014. The Ufa Summit is expected to hasten the process of transition to a green economy. (IPA Service)