Siddharth Varadarajan

Summit will also focus on the challenges the financial crisis poses

YEKATERINBURG: If the Shanghai Cooperation Organisation, whose meeting an Indian Prime Minister is attending for the first time, is a body with an essentially Asian, security-centric footprint, the Brazil, Russia, India, China summit being held here the same day is being seen globally as a grouping whose political interactions could help to alter the shape of the international financial system and the global economy that it underpins.

Writing exclusively in The Hindu today, Brazil’s president Luis Inacio Lula da Silva says the BRIC summit “marks a major turning point in how our countries engage in a world undergoing profound change and … [beset by] broken paradigms and failing multilateral institutions.”

With 40 per cent of the world’s population and output (in purchasing power parity terms), “the BRIC grouping has the potential to lead global economic growth,” Prime Minister Manmohan Singh said in a statement before leaving New Delhi.

But if Dr. Singh spoke coyly of the BRIC “coordinating international efforts to overcome the ongoing financial and economic slowdown,” Mr. Lula was more blunt about the political economy of the quartet’s first summit agenda. “Are rich countries willing to accept supranational oversight and control of the international financial system, so as to avoid the risk of another global economic meltdown? Are they willing to forfeit their stranglehold on decision-making at the World Bank and the IMF? Will they agree to cover the costs of technological adaptation required for people in developing countries to also benefit from scientific progress, without harming the global environment? Will they eliminate protectionist subsidies that make modern agriculture in many developing countries unviable, leaving poor farmers at the mercy of commodity speculators and generous donors?”

Declaring that “the time for politics” has come, he said these are “the questions that the BRICs want answered.”

Indian officials said the summit would also focus on the emerging challenges the financial crisis posed, adding that the National Security Advisors or equivalent officials from the four countries met recently to review the issue.

“Supranational” currency

Among the four members, Russia has been the most forthright about the need for the world’s rising economies to push for the creation of a new “supranational” currency to replace the dollar as the primary international unit of account for foreign reserves.

China and Brazil favour an expansion of the IMF’s Special Drawing Rights (SDRs), with Brasilia recently offering the IMF a $10-billion loan towards this end. India remains noncommittal, with Foreign Secretary Shiv Shankar Menon describing these discussions as “academic” and “premature.”

Senior officials told The Hindu that Russia had since clarified that it did not intend to use the BRIC forum to press the debate on a shift away from the dollar.

More In: Today's Paper