- POSTED: 17 Jul 2014 01:22
- UPDATED: 18 Jul 2014 10:43
The BRICS group of emerging powers met on Wednesday with South American presidents as they justified the creation of a development bank seen as an alternative to Western-dominated global financial organisations.
BRASILIA: The BRICS group of emerging powers met on Wednesday with South American presidents as they justified the creation of a development bank seen as an alternative to Western-dominated global financial organisations.
The leaders of Brazil, Russia, India, China and South Africa held closed-door talks in Brasilia with counterparts from Argentina, Chile, Colombia, Ecuador, Venezuela and other Latin American nations.
The gathering follows a BRICS-only summit on Tuesday in the seaside city of Fortaleza, where the five nations agreed to create the US$50 billion bank for infrastructure projects and a US$100 billion crisis reserve fund described as a "mini-IMF."
Brazilian President Dilma Rousseff insisted that the BRICS were not seeking to distance themselves from the Washington-based International Monetary Fund.
"On the contrary, we wish to democratise it and make it as representative as possible," she told reporters following talks with Indian Prime Minister Narendra Modi before joining other leaders.
Emerging and developing nations have been frustrated at the slow pace of IMF reform aimed at giving them bigger voting rights within the institution.
The South Americans welcomed the creation of the emergency reserve and the New Development Bank, which will fund infrastructure projects in developing nations, a senior Brazilian official said.
"There was a lot of support for the BRICS bank and the reserve," the official said on condition of anonymity.
Rousseff has left open the possibility of using the new institutions to aid debt-ridden Argentina if it asks for it.
Argentine President Cristina Kirchner praised the BRICS bank and fund deal as alternatives to the World Bank and IMF.
"There are more and more institutions being formed that question how multilateral organisations function, which instead of coming up with solutions only complicate people's lives," she told a forum of leftist activists before the summit.
Argentina is at risk of defaulting on US$1.3 billion in debts after losing a US Supreme Court battle with hedge funds seen as "vultures" by Buenos Aires.
"We believe that we must end with this international pillaging in finance that they are trying to do against Argentina and that they will certainly try to do against other countries," Kirchner said.
The Brazilian official said leaders voiced concern that Argentina's situation could compromise debt negotiations of other countries in the future.
It could take two years, however, for the institutions to become operational because they have to be ratified by the legislatures of each BRICS nation, Brazilian officials say.
Chinese media hailed the creation of the BRICS bank, which will be based in Shanghai, with the official Xinhua news agency saying in an editorial that it will "usher in a long-awaited and helpful alternative to the Western-dominated institutes in global finance."
After Wednesday's talks, Chinese President Xi Jinping will spend one more day in Brazil to launch a China-Latin America forum with leftist leaders including Cuban President Raul Castro.
The meetings represent a new push by Beijing to gain clout in a region traditionally seen as a US backyard.
China's massive purchases of commodities and exports of manufactured goods to the resource-rich region have boosted its two-way trade with Latin America to a total of US$261.6 billion last year.
The meetings are also another opportunity for India's Modi to present himself to the world.
For Russian President Vladimir Putin, the talks give him a platform following his country's exclusion from the G8 group of industrialised nations over Moscow's annexation of Crimea from Ukraine.
The BRICS leaders were joined by South American presidents including Chile's Michelle Bachelet, Venezuela's Nicolas Maduro, Colombia's Juan Manuel Santos and Ecuador's Rafael Correa.