BRICS: News and Discussion

ashish raval · Post by **ashish raval** » 15 May 2014 00:09

^^ don't like Argentina. They have defaulted and are not trustworthy.

Prem · Post by **Prem** » 15 May 2014 02:05

Uttam wrote:
Austin wrote:[BRICAS

BARICS

Philip · Post by **Philip** » 15 May 2014 08:30

http://rt.com/op-edge/158880-energy-sta ... ussia-oil/

As India and Russia try to diversify their energy focus – India as importer and Russia as exporter – both nations are at an interesting confluence with India’s energy need growing exponentially.

Russia is looking beyond Europe towards Asian markets for its energy export – the recent Western-Russian standoff is fueling this drive.

It’s a point where the insatiable energy demands of India meet the available energy reserve of Russia, especially those based on oil and nuclear technology.

India, ranked the world’s third largest oil importer behind the US and China, after an import of about 3.8 million barrels of crude oil per day in 2013-14. The International Energy Agency (IEA) says it will become world’s largest oil importer by 2020.

Most of India’s imports are from the Middle East, especially Iran. Due to the vulnerabilities and the unsteady conditions in the region, India is looking at multiplying its sources of energy import.

“India is trying to reduce its dependence on the volatile Middle East for its energy needs amounting currently to 76 percent and projected to grow to 85-90 percent whilst Russia is trying to diversify its export outlets, partly to open new markets in the Asia-Pacific region and also to neutralize the impact of sanctions on its global trade,” says international oil economist, Dr Mamdouh G. Salameh, oil and energy consultant to the World Bank, Washington DC and a technical expert with UNIDO who are headquartered in Vienna.

Excessive oil import is impacting India’s current account deficit accounting for more than half of India’s $191 billion trade deficit in 2013-14.

The country is looking at reducing its import dependence through collaboration with investors in various streams of the oil and gas industry.
Turning the gaze towards Asia

Investment opportunities in Indian oil and gas fields are huge: only $16 billion has been invested in the last 15 years in a country which ranks as the world’s 15th-largest in oil and gas reserves, according to the Boston Consulting Group. India has also evolved as the world’s fifth largest economy in refining capacity, with a share of 3 percent of global capacity. As Russia impresses on the West its capability to exploit multiple trade options in case of harsher sanctions, India will certainly be a viable choice. As Dr Salameh says: “Essentially Russia is seeking leverage over the West by demonstrating that it has other export markets besides Europe for its oil and natural gas exports, should Brussels impose too strictly sanctions against Moscow.”

A worker loads empty Liquefied Petroleum Gas (LPG) cylinders onto a supply truck in the southern Indian city of Chennai November 8, 2013. (Reuters/Babu)

European demands might stagnate soon, whilst growing Asian energy needs remain untapped. This gives Russia stronger reasons to reposition its focus. “Russia is in the process of reorienting its energy posture to Asia owing to the growth in energy demand in that region, coupled with the likely stagnation or decline of demand in Europe over the next few decades,” according to Dr Salameh.

The joint plan to construct a $30 billion oil pipeline through China’s restive Xinjiang province is a significant step towards this. If successful, the pipeline will be the most expensive in the world.

“Russian major energy companies would be very interested to invest in India’s oil and gas development as well as in nuclear energy. But Russia is equally interested in Indian investments in its energy sector,” Dr Salameh believes.
India has already made huge investments in Russian hydrocarbons and is involved in the joint exploration and extraction of oil and gas.

As of 2011, Indian investment in Russia is about $6.5 billion, primarily in the energy sector, with $2.8 billion in the Sakhalin-1 project, having acquired a 20 percent share in the venture and purchase of Imperial Energy, a London-listed oil major in Russia’s Tomsk region.

A comprehensive free trade agreement is also being negotiated in an attempt to boost commerce to some $20 billion by 2015.

India may invest around $1.5 billion in the Russian Yamal peninsula, which has one-fifth of global natural gas reserves. India has also proposed an exploration venture with Russian oil and gas majors (Gazprom and Rosneft) and sought a stake in the Sakhalin-III oil and gas project in the Far East, apart from proposing a joint venture to work on gas liquefaction projects in Russian offshore fields for shipment to India.
Nuclear prospect

In the long run, India plans to slice its dependence on imported coal, oil and natural gas, and generate energy through nuclear power.

Currently accounting for less than 3 percent of the country’s total energy generation, India expects to reach 20,000 MW in nuclear capacity by 2020 and 63,000 MW by 2032, while ultimately supplying 25 percent of electricity from nuclear power by 2050. This expansion plan requires an increased supply of nuclear fuel and reactor technologies.

As India opened up its nuclear market in 2008, after the Indo–US bilateral trade agreement and acceptance into the Nuclear Suppliers’ Group (NSG), international collaborators have been eyeing the vast opportunity of supplying nuclear technology to India.

Experts believe India will install nuclear reactors worth up to $150 billion in the coming decades. Apart from Russia, other frontrunners for the possible trade are the US, Canada and France.

However, it is Russia that has grabbed the largest chunk with the nuclear civilian agreement signed in 2009 for the transfer of latest reactor technologies and unhindered supplies of uranium fuel to India.
Why Russia?

There are a number of strategic reasons why India chose Russia. Experts in New Delhi believe an over dependence on the US for nuclear energy might lead to interference and dominance by the latter. Some Indian scientists are believed to have opposed the Indo-US nuclear deal, fearing it might lead to US dominance in India’s nuclear power plants.

Russia, on the contrary, has always been viewed as a much more reliable strategic partner, unlike the US and its allies, who many feel offer more conditional relationships.

Another reason is India’s belief in creating a more multi-polar world by giving prominence to strategic coalitions like the BRICS nations where Russia is a key player.

“India’s policy-makers are trying to promote energy cooperation based on political understanding,” says Dr Salameh.
Finally, the time tested ties that go back to the Soviet era when the two countries signed a nuclear cooperation deal in 1988. This was further updated a decade later in 2002 with newer agreements such as the construction of nuclear reactors by Russia at Kudankulam, in Southern India.

An employee fills diesel in a public bus at a fuel station in Kolkata, India. (Reuters/Rupak De Chowdhuri)

The first reactor at the Kudankulam Nuclear Power Plant project (KKNPP) is on line now, with Kudankulam 2 underway and agreements for a third and fourth recently signed.

Russia also signed a roadmap agreement with India in 2010 providing for sixteen nuclear power units over the next fifteen years. Russia's state-owned nuclear company, Rosatom State Nuclear Energy Corporation, is committed to build six reactors by 2017.

However there are a number of obstacles in the way. Indian liability laws are seen to be one of the sternest in the world deterring the entry of global suppliers. The general apprehension is that in case of an accident, irrespective of the causes, the investing foreign entity will be taken to task and held responsible.

However, the Indian side feels this is a misinterpretation and that the question of who is liable is determined only after the role of the supplier in a potential accident is proven. The impact of this was seen during the signing of agreements for the KKNPP 3 and 4 projects. As per India’s Civil Liability for Nuclear Damage Act (CLNDA), the construction company should bear the responsibility of financial liability in case of potential accidents for the entire term of use of the plant (even after it is built and transferred to India).

This ambiguous situation was not acceptable to Russia which delayed signing the agreement for about 12 months until a compromise was arrived at this year, where India agreed to raise the cost of the nuclear power plant inclusive of safety funds.

Additionally, there is a lot of political opposition against the use of nuclear power to fulfill India’s energy needs. Arvind Kejriwal, leader of the new and influential Aam Aadmi Party, has voiced his opposition to nuclear power plants due to the ‘enormous’ destruction potential in case of an accident.

“There is a very strong and influential constituency that lobbies against the use of nuclear energy. India also has complicated the efforts of foreign investors to invest in India's nuclear sector,” says Michael Kugelman, senior program associate for South and Southeast Asia at the Woodrow Wilson Centre.

Even in oil and gas, the collaboration is not very easy. Many international firms have stayed away from entering due to unfavorable taxes, regulations and domestic price controls.

As Kugelman reiterates, “The investment climate in India, despite the country's economic successes, remains very challenging for foreign companies. Corruption, red tape, bureaucracy, and a very strong state presence make investors hesitant to come to India.”

Recently the Asian Development Bank indicated energy pricing as the "core problem" in India. Oil prices are government-controlled and do not fully reflect the procurement prices serving as disincentives for energy efficiency efforts.
As India is slated for a new government in May, many are hoping for some drastic steps if the Bharatya Janata Party led by Narendra Modi comes to power. There are indications of opening up the energy sector for private players as well as loosening control on the pricing of natural gas, diesel and electricity. However, how much of these will see the light of the day remains to be seen.

Jhinuk Cchowdhury for RT

Pratyush · Post by **Pratyush** » 15 May 2014 12:44

The greatest issue with gas from Russia is the geographical bottlenecks in shipping the gas from Russia to India. The pipeline through the PRC, will place our energy supply in the easy grip of the PRC. We have seen the action of the PRC in the South China Seas. What is the assurance that the same will not be repeated with the pipeline to India.

IOW, PRC is a larger version of the TSP. When it comes to the energy corridors to India.

vijaykarthik · Post by **vijaykarthik** » 15 May 2014 14:31

we surely need to look into a good credible energy policy and also look at serious capacity addition. that has been one of my pet gripes with the Manmohan singh govt. capacity addn recently has been quite poor and not quick enough for our hungry nation. A credible and sensible energy and defense policy is the need of the hour.

vijaykarthik · Post by **vijaykarthik** » 15 May 2014 14:35

Pratyush wrote:The greatest issue with gas from Russia is the geographical bottlenecks in shipping the gas from Russia to India. The pipeline through the PRC, will place our energy supply in the easy grip of the PRC. We have seen the action of the PRC in the South China Seas. What is the assurance that the same will not be repeated with the pipeline to India.

IOW, PRC is a larger version of the TSP. When it comes to the energy corridors to India.

I am not sure how it works. But the clauses that will be written should surely factor this stuff in. Something on the lines of "even in the event of war, strife etc etc, integrity of the pipeline should be maintained etc"

But, yes, there are problems. However, that shouldn't be a reason to completely ignore it. [Come to think of it -- ditto with TAPI, IPI etc isn't it. Heck, same with Russia / Ukraine nat gas pipeline. What happens to those once Ukraine turns totally against. Well, that's the risk that one takes and clauses usually handle those cases]

Pratyush · Post by **Pratyush** » 15 May 2014 15:32

The thing with any treaty is the sovereign ability to enforce it. Once the shooting starts. The PRC has no incentive to allow the pipeline to keep flowing.

But before the shooting starts, it gives them an enormous amount of leverage.

ramana · Post by **ramana** » 14 Jul 2014 20:40

ramana · Post by **ramana** » 14 Jul 2014 20:52

X-Post...

Neela wrote:Without Manmohan’s US-baggage, Modi can score high at BRICS summit

The most vital announcement was made at the 2013 summit in South Africa — the setting up for a new development bank that is different from the IMF and the World Bank. At $ 41 billion, China has promised the highest capital for the bank while brazil, India and Russia committed 19 billion each. South Africa would contribute $5 billion. However, the process of formation of the bank has been slow owing to disagreements on the location of the Bank (China wants to host it) and sharing of the resources

This is going to affect Gringos and Europeans on multiple levels. The WB and IMF have been firmly in their hands. That meant that large loans and conditions on loans were dictated by these lot. With the climate talks putting the onus on developing countries to reduce emissions while at the same time , the developed world making no such commitments, one can easily imagine how IMF and WB could influence projects.

With a $100B reserve and independent functioning, it will be theGringos and EU who will should be worried about setting standards for emissions and using these as a tool to impose tariffs and barriers. Here is one article from UNU which seems to already talk about climate even before the bank has been setup.

Be Careful, BRICS Development Bank
Yes, be careful, because the world is watching. The world, the whole world, not only the World Bank and IMF, not only the US, the EU or the UK, not only the countries and companies eager for money from these five fat cats, but also nature and the people — the river that will be dammed, the forest that will be harvested, the fish and elephants that will be disturbed, and the indigenous people that will be resettled. The latter do not, and cannot, speak loudly, but in the end we may be confronted with greater irreversible natural loss and human disaster as a result of the bank’s lending, and a question: multilateral development banks, is their constructive capacity as real as their destructive capacity?
MMS ,the US puppet, stalled proceeedings. If you remember, BRICS nations treated him badly in S.Africa ...his contingent was placed 40km from the venue of the conference....I think it was them sending a message.

Actions of Modi on the BRICs bank is going to reveal his position on where he stands.

and

Gunjur wrote:Delhi locked in tight race to house BRICS Bank HQ
The national capital is engaged in a tight battle with Johannesburg and Shanghai to emerge as the headquarters of the proposed BRICS Bank with a decision on the multilateral body expected next week when leaders from the five countries, including Prime Minister Narendra Modi, meet in Brazil.

Leaders have to agree on several issues, including the equity structure and the focus of the development institution that has been in the works for four years. After much debate the issue of equity contribution has been sorted out with BRICS - Brazil, Russia, India, China and South Africa - chipping in with equal contribution of $10 billion each, with the authorized capital to be pegged at $100 billion. Earlier, South Africa was reluctant to be an equal partner and China was willing to help it out but that would have given Beijing additional say in the bank.

The other decision is related to the headquarters, where Moscow had also shown interest, but now the race has narrowed down to three capitals, a senior finance ministry official told TOI. Although Delhi is vying for the slot, Johannesburg's chances appear the brightest given that there are concerns over language barrier and freedom of expression in Shanghai. Johannesburg comes with the added advantage of being "centrally located".

Apart from the BRICS Bank, the leaders will discuss a Contingent Reserve Arrangement (CRA) that will provide a buffer to the five countries in times of a balance of payments problem. It will have an initial subscribed capital of US$ 100 billion, of which India, Brazil and Russia will chip in with $ 18 billion each. China is expected to contribute $41 billion, with the remaining $5 billion coming from South Africa.

Experts said focusing too much on locating the headquarters of the BRICS Bank in Delhi may not be a sensible idea for the government. "What you are going to get is 200-300 jobs for bureaucrats. Instead, India should focus on getting the presidency in the initial years so that it can guide the future of the institution," said a source who has worked on formulating India's strategy.

Another expert said China, South Africa and even Brazil would be more interested in seeing that the BRICS Bank, whose name is yet to be formalized, focused on lending more to Africa, while it made sense for India to get the institution to work in its neighbourhood.

In any case, China is keen on having the maximum say in the proposed development institution, modeled on the lines of the Asian Development Bank.
But meanwhile this article says that shanghai is more or less the HQ for BRICS bank.

Austin · Post by **Austin** » 14 Jul 2014 22:05

Yes I had posted in Economic Thread BRICS bank will be based out of Shanghai

India attaches great importance to BRICS

I leave today for Brazil at the invitation of Brazilian President Dilma Rousseff to attend the Sixth BRICS Summit being held in Fortaleza and Brasilia on July 15-16, 2014.

India attaches high importance to the BRICS forum for promoting global economic growth, peace and stability. In the course of the past five summits and several ministerial and official processes, BRICS has made major strides in pursuit of these goals.

I leave today for Brazil at the invitation of Brazilian President Dilma Rousseff to attend the Sixth BRICS Summit being held in Fortaleza and Brasilia on July 15-16, 2014.

India attaches high importance to the BRICS forum for promoting global economic growth, peace and stability. In the course of the past five summits and several ministerial and official processes, BRICS has made major strides in pursuit of these goals.

Philip · Post by **Philip** » 14 Jul 2014 22:12

A news report said that the BRICS bank HQ would 200+ create jobs for another babu entity ,while India should prefer to get the presdiency of the BRICS bank instead. As long the HQ is not in China,it matters little.

ramana · Post by **ramana** » 14 Jul 2014 22:24

Philip, It ignores the golden rule. He who has the gold rules. China is contributing 40% of the capital to India's 10%. its khyali pullao to think the bank will be located in India. I don't get how MEA and babucracy rises unreasonable expectations and causes repeated perception of failure.
Besides the same babucracy under MMS sabotaged the South Africa BRICS summit to please US.

gandharva · Post by **gandharva** » 15 Jul 2014 02:42

svinayak · Post by **svinayak** » 15 Jul 2014 03:54

Any mil looking people from the PRC side

chanakyaa · Post by **chanakyaa** » 15 Jul 2014 04:28

BRICS development bank has not started yet, but are plans brewing in NGO world to bankrupt it?

http://www.oxfam.org/sites/www.oxfam.or ... 714-en.pdf

THE BRICS DEVELOPMENT BANK
Why the world’s newest global bank must adopt a pro-poor agenda

In July 2014, a new multilateral and Southern-led development bank
is expected to be launched by the leaders of Brazil, Russia, India,
China and South Africa – better known as the BRICS. The BRICS
Development Bank will provide a fresh source of finance for
developing and emerging economies to meet their development
needs. Little has been made public regarding the proposed Bank’s
core mandate or activities but while governments negotiate the
technicalities of the Bank, it is critical that they also provide a solid
vision of the principles, priorities and objectives on which the
Bank’s activities and operations will be premised. This policy brief
recommends that these include commitments to: ending extreme
poverty and inequality, with a special focus on gender equity and
women’s rights; aligning with environmental and social safeguards
and establishing mechanisms for information sharing, accountability
and redress; leadership on the sustainable development agenda; the
creation of mechanisms for public consultation and debate; and the
adoption a truly democratic governance structure.

ramana · Post by **ramana** » 15 Jul 2014 09:16

Can depend on NGOs to sabotage.

Austin · Post by **Austin** » 15 Jul 2014 12:14

More Details on BRICS Bank

BRICS nations launch new development bank

SanjayC · Post by **SanjayC** » 15 Jul 2014 12:54

udaym wrote:BRICS development bank has not started yet, but are plans brewing in NGO world to bankrupt it?

Goras are in a panic, as the BRICS bank would emerge as a competing center of patronage and reduce their ability to arm twist other countries. In the current form, IMF and World Bank are nothing but an imperialistic racket run by Goras.

Austin · Post by **Austin** » 15 Jul 2014 13:22

Interview with Putin on BRICS

Vladimir Putin: It is time to raise the BRICS' role to a new level

panduranghari · Post by **panduranghari** » 15 Jul 2014 13:58

Why is Nigeria and Mexico not in BRIC group is beyond me. If SouthAfrica can be in it, then the aforementioned 2 should be there for having bigger economies, more dynamic economies and less beholden to the Anglo Axis. Egypt as a part of BRIC is crazy just for the sake of being an Islamic country. Nigeria actually fulfils both criteria - primarily Islamic but a biggest African economy too.

Austin · Post by **Austin** » 15 Jul 2014 14:42

^^ Well let BRICS first do something good within the 5 countries and then having something concrete in Plan and Implementation over few years can look to expand.

Else it will become another Kitty Party Group ever expanding to chatter but little to show.

rsingh · Post by **rsingh** » 15 Jul 2014 20:17

Philip wrote:A news report said that the BRICS bank HQ would 200+ create jobs for another babu entity ,while India should prefer to get the presdiency of the BRICS bank instead. As long the HQ is not in China,it matters little.

Do the founding members haveveto power?

Austin · Post by **Austin** » 15 Jul 2014 20:24

rsingh wrote:
Philip wrote:A news report said that the BRICS bank HQ would 200+ create jobs for another babu entity ,while India should prefer to get the presdiency of the BRICS bank instead. As long the HQ is not in China,it matters little.
Do the founding members haveveto power?

I think the idea of BRICS is to have equal power for all and decision taken by consensus.

Having veto power would mean some are more equal then others

Austin · Post by **Austin** » 15 Jul 2014 20:26

Breakthrough in BRICS Summit: China Likely to Get $100 Billion Bank

Hours before BRICS nations meet in Brazil to launch a joint development bank, they have reportedly reached a breakthrough on where it will be headquartered. Sources said China is all set to get the BRICS bank, which is likely to be located in Shanghai. (Shanghai Most Likely Headquarters for BRICS Development Bank)

The sources also said that India's demand for an equal share in the bank is likely to be accepted.

Negotiations had been stalled on a dispute between China, India and South Africa over who would host the bank. BRICS is a group of emerging economies and draws its name from the five member countries - Brazil, Russia, India, China and South Africa. (PM Modi Arrives in Brazil to Attend BRICS Summit)

The deal that they hope to finally sign will create a $100 billion bank and a reserves fund of the same size to challenge Western dominance over global finance. (When China and India Meet, the World Watches: Chinese President)

At the 5th BRICS summit in Durban, the members had resolved to set up the bank. At the 6th summit in the Brazlian beach town of Fortaleza, the members have to decide on the bank's name, location, presidency and shareholding. (What India Hopes to Achieve at BRICS Summit)

Finding a name will be the easiest part when the heads of the five nations sit down for discussions - Prime Minister Narendra Modi has reportedly suggested that it be called the New Development Bank.

The disagreement over the location has also delayed a decision on which of the countries will hold the first five-year presidency of the bank. There have also been tough negotiations over shareholding. (South Africa Wants BRICS Bank for Johannesburg: Minister)

China has argued that the economic strength of a member nation should be the criteria for contribution to the bank - a higher contribution will automatically mean greater control. But India has demanded that each member have an equal share and sources said it is likely to accepted. (World Cup Final Comes Between PM Modi and Merkel)

The stark economic and political differences between the BRICS countries has made it difficult for the group to turn rhetoric to concrete action in coordinating policies.

The BRICS summit is Mr Modi's first multilateral engagement since he took over as Prime Minister in May this year. He met Chinese president Xi Jinping this morning.

chetak · Post by **chetak** » 15 Jul 2014 20:28

Austin wrote:Breakthrough in BRICS Summit: China Likely to Get $100 Billion Bank

Hours before BRICS nations meet in Brazil to launch a joint development bank, they have reportedly reached a breakthrough on where it will be headquartered. Sources said China is all set to get the BRICS bank, which is likely to be located in Shanghai. (Shanghai Most Likely Headquarters for BRICS Development Bank)

The sources also said that India's demand for an equal share in the bank is likely to be accepted.

Negotiations had been stalled on a dispute between China, India and South Africa over who would host the bank. BRICS is a group of emerging economies and draws its name from the five member countries - Brazil, Russia, India, China and South Africa. (PM Modi Arrives in Brazil to Attend BRICS Summit)

The deal that they hope to finally sign will create a $100 billion bank and a reserves fund of the same size to challenge Western dominance over global finance. (When China and India Meet, the World Watches: Chinese President)

At the 5th BRICS summit in Durban, the members had resolved to set up the bank. At the 6th summit in the Brazlian beach town of Fortaleza, the members have to decide on the bank's name, location, presidency and shareholding. (What India Hopes to Achieve at BRICS Summit)

Finding a name will be the easiest part when the heads of the five nations sit down for discussions - Prime Minister Narendra Modi has reportedly suggested that it be called the New Development Bank.

The disagreement over the location has also delayed a decision on which of the countries will hold the first five-year presidency of the bank. There have also been tough negotiations over shareholding. (South Africa Wants BRICS Bank for Johannesburg: Minister)

China has argued that the economic strength of a member nation should be the criteria for contribution to the bank - a higher contribution will automatically mean greater control. But India has demanded that each member have an equal share and sources said it is likely to accepted. (World Cup Final Comes Between PM Modi and Merkel)

The stark economic and political differences between the BRICS countries has made it difficult for the group to turn rhetoric to concrete action in coordinating policies.

The BRICS summit is Mr Modi's first multilateral engagement since he took over as Prime Minister in May this year. He met Chinese president Xi Jinping this morning.

cheeni are the malik and the Indians are the chowkidars??

Bank in shanghai with Indian boss??

Austin · Post by **Austin** » 15 Jul 2014 20:30

Putin: No plans for BRICS military, political alliance

First of all, this is the common intention to reform the international monetary and financial system. In the present form it is unjust to the BRICS countries and to new economies in general. We should take a more active part in the IMF and the World Bank's decision-making system. The international monetary system itself depends a lot on the US dollar, or, to be precise, on the monetary and financial policy of the US authorities. The BRICS countries want to change this,”Putin said.

“Another long-term common interest of the association’s members is strengthening the rule of international law and the UN’s leading role in the international system,” the president added. “To be honest, without Russia’s and China's principled position on Syria in the Security Council the events in that country would have followed the Libyan and Iraqi scenario.”

It is in our common interest to use the complementarity of national economies to the maximum. Cooperation opportunities are great indeed. This is the market with almost three billion consumers. The BRICS countries have unique natural resources and a substantial technological, financial and industrial potential.”

Another important initiative that is underway is creating a BRICS pool of foreign currency reserves. It will become a safety net to help us form a joint response to economic challenges.”

Austin · Post by **Austin** » 15 Jul 2014 20:32

Sometimes I find Putin to be naive a bit , He directly calls US what he thinks he should without mincing words , Calling Spade a Spade some times it helps being discrete and working quietly.

I am sure the Western World will have Takleef from the new BRICS Bank

RamaY · Post by **RamaY** » 15 Jul 2014 20:36

http://www.themoscowtimes.com/business/ ... 03411.html

The New Order
Last week, Russian Finance Minister Anton Siluanov shed some light on the mechanics of the fledgling institutions.

The BRICS bank will have starting capital of $50 billion, made up of $10 billion in cash and $40 billion in guarantees, Siluanov told RIA Novosti. Each BRICS country will contribute $2 billion to the starting capital pot. In the longer term, capital will rise to $100 billion.

The bank is to be named the New Development Bank, Siluanov said, signifying that other developing countries are welcome to join, although the BRICS countries' share will not be allowed to fall below 55 percent.

Likely headquartered in Shanghai, the bank is expected to make its first loans in 2016 and will focus on bi- or multilateral development projects involving companies from participant countries. According to a report for the UN released in March by Columbia University economist Stephany Griffith-Jones, the bank could could ramp up lending to $34 billion per year within 20 years.

While the New Development Bank will be based on equal shares, the $100 billion contingency dollar reserve fund, which Siluanov referred to as a "mini-IMF," will factor in China's extra weight. China will contribute $41 billion to the total pool; South Africa will give $5 billion; and Russia, Brazil and India will contribute $18 billion each.

However, a system of multipliers will compensate for the imbalance in contributions — China will be able to use half of what it put in, or $20.5 billion; South Africa will have access to double its contribution, or $10 billion; while Russia, India and Brazil will be able to receive the sum that they committed, Siluanov said.

Each country would hold the amount in their own reserves. In the event of a crisis, the pool would be used to buy up the unlucky country's local currency to staunch the outflow of capital.

The five countries will be able to receive a third of their contributions on request. But, perhaps in an indication that it is not easy to escape the existing international financial system, further aid will depend on the existence of an IMF stabilization program for the country.

The BRICS countries will be represented by their finance ministers or Central Bank chiefs, who are to sit on the governing body of the contingency fund. The fund will be steered by representatives of the participating countries' Central Banks under the supervision of a BRICS nation, selected on the basis of an annually rotating presidency.

Will It Work?
Just before flying to South America, Russian President Vladimir Putin repeated his well-worn line about the emerging multipolar global order, but if the aim of the new institutions is to rival the rich world's international financial infrastructure, the BRICS are an odd group to take on the task.

Lumped together in an acronym by Goldman Sachs economist Jim O'Neill in 2001, 13 years on the BRICS countries are an amorphous bunch with little to bind their aims, said Maxim Osadchy, head of analysis at Moscow-based Corporate Finance Bank. Politically, economically and geographically, the countries have little in common.

Beyond that, there is China's overwhelming economic force within the group. China's economy is bigger than those of all the other BRICS combined. And it is growing faster. At its current rate, China will add a new Russia to its economy within 2 1/2 years. India, with its vast population, is the only other BRIC with the obvious potential to play in the same ballpark.

By virtue of this imbalance, "first fiddle [in the new institutions] will be played by China and India," Osadchy said, and these two will likely gain the most.

But given the incoherence of the group, he added, the bank may well be "stillborn."

Financially, Russia may not even need the new structures. Even amid a series of economic blows this year, including capital outflow resulting from the Ukraine crisis, a global redistribution of capital toward developed markets and the likely reluctance of multilateral lenders to finance new Russian projects, the country is well equipped to defend itself. Russia is sitting on foreign currency reserves worth a whopping $480 billion and is looking forward to a healthy oil revenue-funded budget surplus this year.

As for the infrastructure projects that development banks typically fund, the Russian government already spends billions of dollars on financing infrastructure each year.

But access to funding alone may not be the point: If the New Development Bank is able to match the efficiency of the World Bank and the IMF, it could be a more effective financier of infrastructure projects than the Russian government, which is often accused of wasteful spending, said Alexander Morozov, chief economist for Russia at HSBC.

According to Morozov, excessive Chinese sway over the institutions is precluded by the equality written into the agreements: It is "far from domination," he said. Indeed, Russia stands to gain from roaring Chinese growth, as it generates demand for new infrastructure between the two countries.

rsingh · Post by **rsingh** » 15 Jul 2014 20:54

What if tarrel then mountain grants 10billion to Bakis to rebuild economy and another 10 billion to make dams in POK?
We need some kind of veto power for such things.

ramana · Post by **ramana** » 15 Jul 2014 21:14

Something to ruminate on....

X-Post from GDF...

chaanakya wrote:India likely to get BRICS Bank presidency, headquarters to be in China

India, under the previous UPA government, had agreed to China basing the bank’s headquarters in Shanghai. “We fought hard for the presidency. We will get it,” the official said, without willing to be quoted in the crucial hours of negotiation.

The VI BRICS Summit in Brazil is likely to announce the setting up of the bank in its declaration.
So UPA had already sold the HQ of New bank to China without putting up any fight, now it is upon NaMo to salvage the situation.

How many such sellouts did UPA already make under the table? And to think MMS was the most revered PM on a pedestal!!!

svinayak · Post by **svinayak** » 15 Jul 2014 21:46

Narendra Modi
Had a very fruitful meeting with Chinese President Mr. Xi Jinping. We discussed a wide range of issues

gunjur · Post by **gunjur** » 15 Jul 2014 23:36

http://webcast.gov.in/live/

Currently modi is making his speech.

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EDIT: Just before modi's speech began, a babu was still saying that we have put proposal for the bank to be HQ in india and we are hopeful of getting it.

gunjur · Post by **gunjur** » 15 Jul 2014 23:42

https://twitter.com/DDNewsLive/status/4 ... 7079117824

@DDNewsLive:: #BRICS Bank: First CEO- President to be from India. @MEAIndia

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EDIT: Modi finished his speech and now chinese president is speaking(not being telecast on DD). One thing i could get from modis speech is proposing a brics university with campus in each country along with virtual campus or somethig like it.

gunjur · Post by **gunjur** » 16 Jul 2014 00:05

Meanwhile putin who spoke 1st, it seems has proposed a brics energy association to increase the energy security of emerging nations or something like that.

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https://twitter.com/MEAIndia/status/489124446905856000

@MEAIndia :: .@imsachinraut @monsieur_inde 1st Prez of New Development Bank is for 6 years, after that 5 year terms

Rony · Post by **Rony** » 16 Jul 2014 03:59

The biggest challenge for BRICS success ? Big brother China

The Chinese initially wanted a bigger share of the bank that was formally launched on Tuesday by the leaders of the five BRICS countries in a direct challenge to the West's tightly-held grip over global finances, officials involved in talks said.

In the end, Brazil and India prevailed in keeping capital participation equal among members, but fears linger that China, the world's No. 2 economy, could try to assert greater influence over the $100 billion bank to expand its political clout abroad.

"It is inevitable that the Chinese will dominate the new bank," said Riordan Roett, a political scientist at Johns Hopkins University. "The Chinese don't get involved in these ventures unless they are going to have, not total control, but a significant amount of influence."

Internal discord became evident on Tuesday when the group struggled to overcome a last-minute stalemate in negotiations as China and India vied for the headquarters of the bank. To overcome the snag, Brazil withdrew its request for the bank's first presidency in favor of India, a senior official involved in the discussions said.

The bank will be based in Shanghai, China's business hub.

The objective of the bank is to break away from a model that gives little voting rights to emerging economies and perpetuates the dominance of the United States and Europe over the International Monetary Fund and World Bank.

"This is a big challenge for the BRICS. Sometimes when you get down to the actual negotiations and countries want more say, they forget about some of their lofty aspirations when they were criticizing the IMF and World Bank," said Kevin Gallagher, professor of international relations at Boston University.

The BRICS will hold a minimum stake of 55 percent at the lender, but some analysts say China could increase its hold by bringing in new member countries from its sphere of influence.

However, others argue that is in China's best interest to be a team player - at least for now.

"For China there is interest in making it look like this is not a Chinese dominated bank because that will allow it to finance projects that otherwise it couldn't," said Oliver Stuenkel, a professor at the Getulio Vargas Foundation in Sao Paulo. "The bank is a way to depoliticize Chinese credit."

Philip · Post by **Philip** » 16 Jul 2014 04:27

Putin's energy security for BRICS members is an excellent idea.It will stabilise energy supplies and rates for the members allowing them to plan their economic growth confidentally,safe in the knowledge that global crises will not affect their energy supplies or prices.Russia has signed a massive $400B deal with China and has proposed extending the pipeline to India.This should be accelerated asap,as well as entering into oil/energy supplies from Russia in a rupee-rouble deal if possible.The same could be done for military purchases as was done during the Soviet era.

http://rt.com/business/173008-brics-bank-currency-pool/
BRICS establish $100bn bank and currency reserves to cut out Western dominance
Published time: July 15, 2014

The group of emerging economies signed the long-anticipated document to create the $100 bn BRICS Development Bank and a reserve currency pool worth over another $100 bn. Both will counter the influence of Western-based lending institutions and the dollar.

The new bank will provide money for infrastructure and development projects in BRICS countries, and unlike the IMF or World Bank, each nation has equal say, regardless of GDP size.

“BRICS Bank will be one of the major multilateral development finance institutions in this world,” Russian President Vladimir Putin said on Tuesday at the 6th BRICS summit in Fortaleza, Brazil.

The big launch of the BRICS bank is seen as a first step to break the dominance of the US dollar in global trade, as well as dollar-backed institutions such as the International Monetary Fund (IMF) and the World Bank, both US-based institutions BRICS countries have little influence within.

“In terms of escalating international competition the task of activating the trade and investment cooperation between BRICS member states becomes important,” Putin said.

Russia, Brazil, India, China and South Africa account for 11 percent of global capital investment, and trade turnover almost doubled in the last 5 years, the president reminded.

Each BRICS member is expected to put an equal share into establishing the startup capital of $50 billion with a goal to reach $100 billion. The BRICS bank will be headquartered inShanghai, India will preside as president the first year, and Russia will be the chairman of the representatives. Each country will send either their finance minister or Central Bank chair to the bank’s representative board.

Membership may not just be limited to just BRICS nations, either. Future members could include countries in other emerging markets blocs, such as Mexico, Indonesia, or Argentina, once it sorts out its debt burden.

BRICS represents 42 percent of the world’s population and roughly 20 percent of the world’s economy based on GDP, and 30 percent of the world’s GDP based on PPP, a more accurate reading of the real economy. Total trade between the countries is $6.14 trillion, or nearly 17 percent of the world’s total.

The $100 billion crisis lending fund, called the Contingent Reserve Arrangement (CRA), was also established. China will contribute the lion’s share, about $41 billion, Russia, Brazil and India will chip in $18 billion, and South Africa, the newest member of the economic bloc, will contribute $5 billion.

The idea is that the creation of the bank will lessen dependence on the West and create a more multi-polar world, at least financially.

“This mechanism creates the foundation for an effective protection of our national economies from a crisis in financial markets," Russian President Vladimir Putin said.

The group has already created the BRICS Stock Alliance an initiative to cross list derivatives to smooth the path for international investors interested in emerging markets.

Russia has also proposed the countries come together under an energy alliance that will include a fuel reserve, as well as an institute for energy policy

"We propose the establishment of the Energy Association of BRICS. Under this ‘umbrella’, a Fuel Reserve Bank and BRICS Energy Policy Institute could be set up,” Putin said.

Documents on cooperation between BRICS export credit agencies and an agreement of cooperation on innovation were also inked.

Bringing emerging economies closer has become vital at a time when the world is guttered by the financial crisis and BRICS countries can’t remain above international problems, said Brazil's President Dilma Rousseff.

She cautioned the world not to see BRICS deals as a desire to dominate.
“We want justice and equal rights,” she said.

“The IMF should urgently revise distribution of voting rights to reflect the importance of emerging economies globally,” Rousseff said.

g.sarkar · Post by **g.sarkar** » 16 Jul 2014 07:38

http://www.telegraphindia.com/1140716/j ... 8XnDrFuBCw
Modi flies into niggling air pockets
- Meeting with Putin missed, many meanings read by others
CHARU SUDAN KASTURI
New Delhi, July 15: Serial scheduling glitches and suggestions of diplomatic coolness have hit Prime Minister Narendra Modi’s first transatlantic visit.
Modi and Russian President Vladimir Putin had to postpone their first meeting last evening at Brazil’s Fortaleza on the margins of the BRICS summit because of a programming overlap. But some in Moscow and New Delhi are also trying to read diplomatic tea leaves.
The meeting with Putin was scheduled a day after Modi landed in Berlin on his way to Brazil, for a prescheduled dinner with Angela Merkel that had to be aborted because the German chancellor chose a date with the World Cup final in Rio de Janeiro. Her country won the cup.
Modi’s attempted meet with Merkel, after he had written to Japan Prime Minister Shinzo Abe of his intent to make Tokyo his first overseas visit, has triggered concerns among the Japanese.
Many South American diplomats are wondering whether Modi’s unusual decision to travel 27,000km between India and their continent for just one visit, to Brazil, is indicative of a depleted interest in the region — a perception Indian officials and former diplomats reject.
“These things happen,” said a retired Indian diplomat who has served in the foreign office’s protocol division. “But rarely do you see four of what appear to be potential goof-ups on one trip.”
Modi was supposed to hold back-to-back meetings with Chinese President Xi Jinping and Putin last evening. But after the meeting with Xi, which stretched for 80 minutes instead of the scheduled 40 minutes, Modi was left waiting for Putin.
The Russian President was still flying the 1,600km distance from Brasilia, where his meeting with his Brazilian counterpart Dilma Rousseff extended two hours beyond what was scheduled.
By the time Putin landed in Fortaleza, it was time for a scheduled meeting between the Russian President and Xi, sandwiching out his meeting with Modi.
Putin met South African President Jacob Zuma, as Russian and Indian officials hastily tried to reschedule a meeting between their leaders for this evening. It is usual for meetings between leaders to stretch beyond their scheduled time and officials usually plan for delays.
The schedules of Modi and Putin didn’t allow enough of buffer time to accommodate a rescheduled meeting the same day.
Sections in India’s foreign policy establishment are wondering whether the avoidable delay in Putin’s landing in Fortaleza — where he knew the Indian Prime Minister was waiting for him — represents a signal from Moscow that New Delhi needs to decipher.
Others are calling this section paranoid, but accept that the schedule for the Putin-Modi meeting could have been managed better, not just by Russia, but by a little foresight from India, too. “A little flexibility in scheduling on July 14, that’s all that was needed,” one official said.
In Berlin, Modi and the Indian team were greeted by images of Merkel cheering her team at Rio’s Maracana stadium. Germany had proposed a dinner meeting between Merkel and Modi on the night of July 13 in Berlin.
But Germany had already reached the Round of 16 at the World Cup in Brazil. India, some officials contend, should have foreseen the possibility of Germany reaching the final on July 13.
“To think that the German Chancellor would skip a World Cup final in which her country is playing, for any visiting leader, is not smart,” another official said. “In the process, you’ve possibly unsettled another ally in Japan.”
Modi, who was to visit Japan at the start of this month, postponed the trip citing the budget session of Parliament. But in a letter to Abe, he assured the Japanese Prime Minister that Tokyo would stay his first bilateral “overseas” destination.
Several South American diplomats indicated that Modi’s decision to skip other bilateral visits on his trip to their continent had also left them puzzled, and just a little concerned.
Because of the long travel time and distance involved, Indian Prime Ministers and other senior leaders rarely travel to South America. When they do, they almost always visit at least two nations to maximise opportunities to build ties with the continent.
Modi’s predecessor Manmohan Singh, when he first travelled to Brazil in September 2006, also visited Cuba. In 2012, Singh visited both Brazil and Mexico.
Putin visited Argentina — where he signed a nuclear deal with the uranium-rich nation — and Cuba before arriving in Brazil. Xi will visit Venezuela, Cuba and Argentina......"
Gautam

chanakyaa · Post by **chanakyaa** » 16 Jul 2014 07:39

Rony wrote:The biggest challenge for BRICS success ? Big brother China

The chinese involvement is definitely going to be interesting to watch. For the Chinese initial investment of $50-100 billion is not a big deal, considering its growing foreign reserves. They can create their own development bank at any time with lot more capital. FT.com reports that

China’s foreign exchange reserves rose to just shy of $4tn in the first quarter of 2014

So, what does Chinese want out of this deal? Wouldn't be surprised if they need/use this platform to project Renminbi as an alternate reserve currency down the road.

Austin · Post by **Austin** » 16 Jul 2014 08:22

udaym wrote:So, what does Chinese want out of this deal? Wouldn't be surprised if they need/use this platform to project Renminbi as an alternate reserve currency down the road.

They are already moving in that direction for Renminbi to be capital account convertable and use of Renminbi in trading has increased.

Hari Seldon · Post by **Hari Seldon** » 16 Jul 2014 08:28

Modi should've flown to brazil via japan (the pacific route) instead of via germany.

Fire (or transfer out) the darned MEA team responsible for these serial 'goofups'. Like they say, "once is happenstance, twice is coincidence, thrice is enemy action - take cover!" And this has happened 4 times already...