In the process, China reduced the summit to a sideshow of talking heads from the world’s five dominant emerging economies. The summit ran well behind schedule on Wednesday, because of what officials claimed was bad planning.
The summit, fifth in as many years, to hammer out common economic and geostrategic agenda among a bunch of disparate economies – recognised as much for crony capitalism as for their experiments with free market economy – started with a series of bilateral engagements, between South Africa and China, South Africa and Russia, South Africa and Brazil, and China and Brazil, leaving little voice for India to make its presence felt.
The giant funding plan for the South African national railways Transnet aims to upgrade tracks and transport infrastructure move South Africa’s substantial mineral wealth to ports for onward shipment to China. South Africa accounts for a third of Beijing’s trade with Africa.
South Africa’s Infrastructure Development Corporation (IDC) has also signed a memorandum of understanding with Russia and Brazil for country-to-country agreements to strengthen economic ties.
Russia also signed a multi-billion deal with a private South African company to refurbish dozens of Russian helicopters in service across the African continent.
India’s 74-member business delegation, its largest ever to Africa, put up a show of commercial interest in the South African sweepstake with $250 million deal by India’s Action group – makers of Action shoes and Microtek inverters – for an industrial park in Durban in collaboration of local company Dube. The South African government will provide 250 acres of land for free.
Expectedly the summit announced the feasibility of setting up the new development bank, famously touted as the BRICS Bank. The five summit chiefs, including Indian prime minister Manmohan Singh and Brazilian president Dilma Rousseff, Russia’s Vladimir Putin and South African president Jacob Zuma took note of its desirability in their respective speeches at the summit. Member countries have not reached an agreement about its structure, corpus and other modalities.
Summit host President Jacob Zuma said the initial capital of the bank should be sufficient and substantial for financing infrastructure growth in member countries. Officials participating in the negotiations claimed that the ‘feasibility’ of the bank was announced in deference to the host country’s desire to “show an outcome” at the summit.
Major differences remain among the member countries on the corpus of the bank, with China reportedly pushing for $100 billion capital, to help it make a significant contribution, and therefore, have a substantial say in its operation. India and Russia, on the other hand, are reported to be pushing for a $50 billion corpus, with each if the five member countries contributing $10 billion, considering the significantly lower financial wherewithal of the other member countries compared with China.
South Africa reportedly has even less money to spare for the bank’s capital. Wednesday’s summit failed to put a final figure on the corpus for want of agreement among the finance ministers of the five negotiating countries.
That said, and China’s dominance, notwithstanding, the member countries need to stick together and carry forward the experiment to avoid being overwhelmed by the global economic turmoil and slowing economies in China, India and Russia.
The coming together, in that sense, seems prompted more by the collective fear of the unknown in a stressed global financial climate than China’s pre-eminence as an economic super power at the current juncture. China needs the growing consumption markets of the BRICS to keep its export engine oiled, even as it needs to source huge quantities of raw material resources from BRICS countries, including India, Russia and Africa to run its giant factories.
Wrapping up the summit, President Zuma said the BRICS forum offered a platform for pursuing the political, social and development agendas as part of the shared values of member countries.
He said the infrastructure requirements of the five economies taken together amounted to $4.5 trillion in the next five years. Summit members were also working towards a $100 billion BRICS contingency reserve arrangement to take care of unforeseen economic consequences arising out a liquidity crisis.
Zuma said the members had agreed to launch the BRICS Business Forum and a grouping for think tanks to enhance collaboration among member countries. Zuma said Africa needed to upgrade the skills of 3.2 million youths to make them employable.
Aware of its significant role in keeping the grouping focused on common values, China’s president Xi Jinping said, the world should respect the decision of countries to choose their development path and strengthen their own economies. We should support Africa’s efforts for growth.
Prime minister Manmohan Singh, said our roadmap for the future should focus on consolidating and deepening our existing cooperation. “We should carefully prioritise existing and new areas, keeping in view our strengths, our resources, and the difference we can make, both for our people and the world.”