BRICS declaration challenges Dollar

Sanya, Apr 15: The BRICS leaders issued a joint statement marking the Sanya Decleration. The main focus of the declaration were changes in the structure of international organisations such as United Nations, Security Council and International Monetary Fund. There was also an impetus to bring out an alternative for the US dollar as an international currency, along with establishment of closer ties between the five countries -- Brazil, Russia, India, China and South Africa.

The Heads of State and Government of the Federative Republic of Brazil, the Russian Federation, the Republic of India, the People"s Republic of China and the Republic of South Africa, met in Sanya, Hainan, China for the BRICS Leaders Meeting on 14 April 2011.

An economist at Goldman Sach coined the acronym 'BRIC' in 2001 to describe the bright emerging economies of Brazil, Russia, India and China. The 'S' to denote South Africa was added this year.

At the summit, many topics were discussed under the theme “Broad Vision, Shared Prosperity". The joint communique stated that the world is undergoing far-reaching, complex and profound changes and this is marked by the strengthening of multipolarity, economic globalization and increasing interdependence.

Russia and China are among the permanent members of the Security Council, and as a matter of chance India, Brazil and South Africa are also part of the security council in 2011 as non-permanent members. This brings a unique opportunity for the five countries to work together and amend the Security Council.

Reform of the International Monetary Fund agreed to at previous G20 Summits and reiterate that the governing structure of the international financial institutions should reflect the changes in the world economy, increasing the voice and representation of emerging economies.

Recognizing that the international financial crisis has exposed the inadequacies and deficiencies of the existing international monetary and financial system, the call to support for reform and improvement of the international monetary system was stressed. Reflecting China"s reluctance to use the yuan as a global currency the declaration stated that the role of Special Drawing Right (SDR) in the existing international monetary system including the composition of SDR"s basket of currencies should be reconsidered. Another plan to make the system immune from dollar vagaries was to “grant credit in local currencies" between the five economies.

The risks of massive cross-border capital flows faced by the emerging economies was also aired. With the economy of the developed countries weak, it is natural that capital flows to emerging market will go through the roof. In this regard, the declaration stated that development of greater international financial regulatory oversight and reform to ensure sound development of global financial markets and banking systems was important.

Excessive volatility in commodity prices, particularly those for food and energy, pose risks for the ongoing recovery of the world economy. To control this volatility the BRICS called on the international community to come together for ensuring stability and strong development of physical market by reducing distortion.

The communique also stated: "The international community should work together to increase production capacity, strengthen producer-consumer dialogue to balance supply and demand, and increase support to the developing countries in terms of funding and technologies. The regulation of the derivatives market for commodities should be accordingly strengthened to prevent activities capable of destabilizing markets."

Stressing the need to share reliable information in a timely manner between the governments was also made. "All the countries should come together to address the problem of shortage of reliable and timely information on demand and supply at international, regional and national levels. The BRICS will carry out closer cooperation on food security."

The importance of renewable energy resources was also acknowledged by the forum, especially as a means to address climate change. "We are convinced of the importance of cooperation and information exchange in the field of development of renewable energy resources."

But this does not mean that nuclear energy will lose its importance or place. "Nuclear energy will continue to be an important element in future energy mix of BRICS countries. International cooperation in the development of safe nuclear energy for peaceful purposes should proceed under conditions of strict observance of relevant safety standards and requirements concerning design, construction and operation of nuclear power plants," was clear statement that the nuclear industry will have the patronage of leaders from the emerging market.

The focus on investment in Africa was crystal clear as the joint communique stated, "We support infrastructure development in Africa and its industrialization within framework of the New Partnership for Africa's Development (NEPAD)."

In the official press release Manmohan Sigh, Prime Minister of India, besides stating similar views, also said, "I have invited the BRICS leaders to India for the next BRICS Summit in 2012, and I am happy that they have accepted my invitation."

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