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Developing world leaders show new power at summits
June 16, 2009 / 12:19 AM / 8 years ago

Developing world leaders show new power at summits

YEKATERINBURG, Russia (Reuters) - Leaders of emerging world powers discussed reducing reliance on the United States, as well as boosting security and trade, at two summits on Tuesday hosted by Russia but excluding the West.

<p>Russian President Dmitry Medvedev (C) holds talks with Afghan President Hamid Karzai (L) and Pakistan's President Asif Ali Zardari during the Shanghai Cooperation Organization (SCO) summit outside Yekaterinburg June 15, 2009. REUTERS/Sergei Karpukhin</p>

The range of topics on the agenda and the line-up of presidents attending showed the growing economic and political power of the world’s emerging nations, including India and China, and their desire to forge new levers of influence.

Host president Dmitry Medvedev of Russia hailed the Urals city of Yekaterinburg as “the epicenter of world politics.” The need for major developing world nations to meet in new formats was “obvious,” he said.

The so-called BRIC nations of Brazil, Russia, India and China called for reform of international financial institutions, sweeping changes to the United Nations to give a bigger role to Brazil and India and a “stable and predictable” currency system.

Iran’s president, re-elected in a disputed vote, fired a salvo at the United States, the leaders of India and Pakistan had their first one-to-one meeting since the Mumbai attacks and the four top emerging market economies held their first summit.

A common thread running through the Shanghai Cooperation Organisation (SCO) summit and a separate meeting between Brazil, Russia, India, and China (BRIC) was discussion of a new world order less dependent on the United States.

Medvedev told a news conference that existing reserve currencies, including the U.S. dollar, had not performed their function and said it was time for change.

“We are likely to witness the creation of a supranational reserve currency ... which will be used for international settlements,” Medvedev said. “The existing currency system is not ideal.” Countries should use their national currencies more for trade, he added.

DOLLAR FALLS

The BRIC summit ended with a statement by Medvedev and a communique which demanded more power for developing nations. It did not mention two key Moscow initiatives -- a smaller role for the U.S. dollar and a supranational reserve currency.

The Kremlin’s top economic aide, Arkady Dvorkovich, said the International Monetary Fund (IMF) should expand the basket of its Special Drawing Right (an international reserve asset) to including the Chinese yuan, the Russian rouble and gold.

The dollar fell 0.9 percent against a basket of major currencies on world markets after Medvedev’s comments. The slide “underlines the likely sensitivity of the FX market to comments emerging from today’s meeting,” analysts at Barclays wrote.

Between them, the four BRIC nations represent around 40 percent of the world’s population and 15 percent of its GDP. Russia and China lead the SCO, a security and economic co-operation forum which also includes four Central Asian states, plus Iran, Mongolia, India and Pakistan as observers.

“Such a type of coordination will allow us to better explain our positions to each other and work out a novel path to resolving international financial problems and the reform of international financial relations,” Medvedev told BRIC leaders.

Underlining its growing economic influence abroad, Chinese President Hu Jintao offered Central Asian states $10 billion of credit support to help counter the global economic slump, though he did not mention the proposals for diluting dollar dominance.

Beijing, with its massive holdings of U.S. dollars and bonds, has been very cautious about the these ideas, which moved the value of China’s dollar holdings down on Tuesday.

SNUB TO WEST

In another snub to the West, the SCO leaders welcomed Iranian President Mahmoud Ahmadinejad, making his first foreign trip to attend the summit since his disputed re-election.

Ahmadinejad arrived a day late in Yekaterinburg after mass protests against his disputed victory in Tehran but Kremlin spokeswoman Natalia Timakova said the SCO presidents had congratulated Ahmadinejad on his victory.

“America is in the grasp of political and economic crisis,” Ahmadinejad told the SCO leaders in a speech which touched on the Palestinian issue and reform of the world order.

“The United States and its allies are unable to deal with the crisis,” he said through a translator. Medvedev listened carefully while Chinese President Hu Jintao made notes.

On the sidelines, Indian Prime Minister Manmohan Singh met Pakistani leader Asif Ali Zardari for the first time since the Mumbai attacks and asked him to ensure that Islamist militants could not operate from Pakistani territory.

“The territory of Pakistan must not be used for terrorism,” Singh said. His tough words offered little hope for a breakthrough in relations between the two nuclear-armed Asian powers.

Writing by Michael Stott, editing by Richard Balmforth

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