Putin calls for BRICS to assert financial independence from West

By bne IntelliNews July 10, 2015

bne IntelliNews -


With a total GDP of $32 trillion and uniting 43% of the world’s population, the BRICS grouping of emerging powers took an assertive global stance at its annual summit in the Russian city of Ufa, as it unrolled plans to rival Western-dominated financial institutions.

Marking the organisation’s seventh summit meeting, the leaders of Brazil, Russia, India, China and South Africa hailed its most significant achievements to date as it establishes itself as a powerful new global financial institute.

“We welcomed the completion of the creation of the New Development Bank and reserve currency pool with total resources of $200bn,” Russian President Vladimir Putin said in his opening remarks. He also took the opportunity to remind listeners of the growing external debt of some unnamed leading countries, and called for BRICS members to be self-sufficient.

"We are worried about instability on the markets, high volatility of energy prices, the building up of sovereign debts by some big countries," Putin said, adding that the BRICS countries will use their own resources to deal with the unpredictable financial climate. The New Development Bank will ensure BRICS’ independence from Western financial markets, he said.

Headed by Indian financier Kundapur Kamath and conceived as an alternative to the existing US-dominated World Bank and International Monetary Fund (IMF), the New Development Bank is scheduled to implement its first projects in 2016.

BRICS, which held its first summit in 2009 and was known as BRIC before the inclusion of South Africa in 2010, will have a broad spectrum of operation outside finance, Putin said in his remarks to Brazilian President Dilma Rousseff, Indian Prime Minister Narendra Modi, Chinese President Xi Jinping, and South African President Jacob Zuma.

“Our union will continue to do its part in ensuring international security and global growth and the resolution of key problems of our time”, Putin said, naming also energy policy and the fight against terrorism, narcotics and piracy as areas of cooperation.

Zuma, meanwhile, praised the benefit to his country since its accession to the grouping in 2010. “Since joining BRICS, trade has grown exponentially,” said Zuma.  “In 2011, South Africa’s trade with BRICS countries was ZAR268bn ($21.5bn),” said Zuma. “In 2014, there was an increase to ZAR382bn.”

"New word centre"

Other government officials also hailed the event’s significance with lofty statements.

"BRICS is in fact an already established new centre of the multi-polar world and a new and more democratic system of international relations," Russian Deputy Foreign Minister Sergey Ryabkov said. "BRICS is a phenomenon of the 21st century and this is its difference from military and political unions that come from another epoch and alliances of states built under a principle of hierarchism.”

While revelling in their combined weight, the leaders were careful not to stoke international tensions. Xi said it was  “necessary to draw lessons from history, to abandon the Cold War ideology", but also pointed to the need to “jointly safeguard peace and stability around the world”.

The summit was held from July 8-9 in Ufa, located nearly 1,170 km southeast of Moscow, chosen for its location on the threshold between Europe and Asia. The significance of the event was reinforced by a parallel summit on July 10 of the Shanghai Cooperation Organisation (SCO), a Eurasian political, economic and military organisation that was founded in 2001 in Shanghai by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. India and Pakistan are expected to be admitted as full members in 2016, bringing an additional 1.5 billion people to the organisation’s territory.

The dual summits are an especially valuable platform for Putin as his team reposition Russia towards Asia in response to Western sanctions over Moscow’s actions in Ukraine, and following Russia’s suspension from the Group of Eight (G8) industrial powers for its annexation of Crimea in 2014.

The participants had no differences of opinion over Crimea’s recognition as part of Russia after a referendum on the matter held on the peninsula in March 2014, Russian Foreign Minister Sergei Lavrov stressed. "The BRICS, in addition to their economic and pragmatic agenda, have become an influential factor in world politics," Lavrov said. "None of our partners declare their non-recognition of the referendum’s results, which became the basis for Crimea’s reunification with Russia,” the minister told a press briefing, adding that the Crimean issue "had been closed by the Crimean people".

A number of major deals were closed and memorandums of cooperation were signed during the summit. Among these, Russian oil major Rosneft signed a 10-year, 100m tonne oil supply contract with India's Essar Oil, and has agreed to buy up to 49 per cent of a refinery owned by the company.

The Russian state nuclear power agency Rosatom also signed a memorandum of understanding with South Africa's Energy Ministry on the training of 200 South African nuclear industry workers, as Russia angles for an estimated $100bn worth of contracts for the construction and maintenance of eight nuclear power plants.


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