| BRASILIA, July 11
BRASILIA, July 11 Leaders of the BRICS emerging
market nations meet next week to launch a development bank and
emergency reserves fund, an ambitious challenge to Western-run
multilaterals that have shaped global finances since the end of
World War Two.
Brazil, China, India, Russia and South Africa on Tuesday
will sign off on the new institutions after two years of tough
negotiations, a major step for the diverse group known more for
its anti-Western rhetoric than coordinated action.
The BRICS will pool an initial $50 billion in the bank, with
each country contributing an equal amount, and seek to gain
international clout by offering developing nations alternative
financing to the World Bank and International Monetary Fund,
long dominated by the United States and Europe.
"This is symbolically important. It signals dissatisfaction
of the BRICS countries with their position on the global
economic stage," said Charles Collyns, global economist with the
Institute of International Finance, which represents the world's
major private banks and financial institutions.
"The fact that they are able to get together and agree on
setting up these institutions is an important symbol of their
rising importance," Collyns said.
The bank will be called the New Development Bank, not the
BRICS bank, which leaves the door open for other emerging
nations such as Turkey, Mexico, Indonesia and Nigeria to join as
partners at a later date.
Many of the bank's rules of operations, such as future
investment in private projects, will be decided after its formal
creation at next week's summit in the Brazilian city of
Fortaleza. The bank is expected to make its first loan in 2016.
BRICS leaders will decide on Tuesday which country will hold
the first five-year presidency of the bank and whether it will
be headquartered in Shanghai or New Delhi.
Fears that China, whose economy is larger than that of all
the other BRICS put together, could hijack the bank to serve its
own interests have cast doubt on its future.
"The BRICS don't want to see a world in which China
substitutes the United States as the global hegemon. Brazil and
some of the others are very concerned with the rise of China,"
said Oliver Stuenkel, a professor at the Getulio Vargas
Foundation in Sao Paulo who has written extensively about the
The BRICS will also set up a $100 billion contingency
reserves pool, which could start operating by 2015 to help any
of its members if they are hit by a sudden exodus of foreign
The BRICS group is at the forefront of a growing chorus of
emerging and developed nations that complain the IMF and World
Bank impose belt-tightening policies on them in exchange for
loans while giving them little say in deciding the terms.
The New Development Bank and the reserves fund are a
response to failed attempts to increase the BRICS' influence
within the IMF at the center of the post-war Bretton Woods
monetary order created by the United States and Europe.
The BRICS' voting powers at the IMF do not reflect the
tremendous rise of their economies, which now make up nearly one
fifth of global GDP and sustain 40 percent of the world's
The term BRICS was conceived in 2001 by Goldman Sachs
economist Jim O'Neill as a catchy way to group together emerging
world economic powers. In 2009, leaders of the countries
embraced the name and began holding annual summits with an eye
on boosting their collective influence globally.
Although the BRICS continue to grow at a faster pace than
most developed nations, their economies have slowed sharply in
recent years. Some worry the slowdown could hinder their
influence in the global financial system even if they remain
engines of world growth.
"The BRICS' weight on the global stage is closely linked to
their economic performance," said Pedro da Motta Veiga, head of
the Center of Development and Integration Studies in Rio de
Janeiro. "They are not the same booming BRICS of a decade ago
and that could diminish their clout."
(Additional reporting by Anthony Boadle; Editing by Todd
Benson, Editing by Tom Brown)