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Big 4 emerging economies meet for 1st summit

Posted on: June 16, 2009


AFP – Wednesday, June 17

YEKATERINBURG, Russia (AFP) – – Leaders from the world’s leading emerging powers meet Tuesday to show their unity amid the economic crisis and coordinate strategy for increasing their influence.

Presidents Dmitry Medvedev of Russia, Hu Jintao of China, Luiz Inacio Lula da Silva of Brazil and Indian Prime Minister Manmohan Singh were in the Russian city of Yekaterinburg for their first official four-way meeting.

Dubbed the BRIC (Brazil, Russia, India, China), the group will be seeking to show that their ambitions for growth to rival established economic powers like the United States remained intact despite the global crisis.

Russian Deputy Foreign minister Sergei Ryabkov said the group would seek at the meeting to formulate principles to further develop global financial architecture.

“A baby has just been born, essentially it’s only in a crib yet,” commented.

In an apparent reference to the United States, he added the forum was not aimed against any other nation and was “not an attempt to compete with anybody.”

The idea for the BRIC grouping was spawned after research by US investment bank Goldman Sachs suggested the four economies were developing at such pace they could be amongst the world’s strongest by 2050.

It remains to be seen whether the quartet will agree to create a more official format for the grouping, an idea that was never anticipated when the original research was undertaken.

The summit was to begin just after Russia ends a meeting of the Shanghai Cooperation Organisation (SCO) — which is dominated by Moscow and Beijing — in the same city.

Russia has taken a leading role in promoting BRIC, which remains an economic force despite seeing its high growth of recent years savaged by the worst global economic crisis since the 1930s.

Analysts say that despite the economic crisis, BRIC nations are displaying a growing willingness to coordinate efforts to counter US global domination through the dollar.

The BRIC states are expected to be major buyers of the very first bonds that the International Monetary Fund (IMF) is working to issue.

This is in line with commitments by developed and developing economies to provide 1.1 trillion dollars to the IMF and other global bodies to help the poor through the crisis.

China has said it is considering buying up to 50 billion dollars’ worth of the new instrument, while Russia and Brazil could buy up to 10 billion dollars each.

Russia and China have in recent months come out in favour of revamping global financial structures, saying there is a need for a new supra-national currency besides the dollar to prevent a repeat of the global economic crisis.

Moscow in particular has sharply criticised the dollar’s role as the dominant global reserve currency.

The Kremlin’s chief economic aide, Arkady Dvorkovich, said Russia could consider investing its reserves not only in the United States and Europe countries but also in the financial instruments traded by BRIC states.

He cautioned, however, that none of these proposals were targeted at undermining the dollar which has been hit by noises from Russia about the greenback’s status as a reserve currency

“There is an understanding that the last thing we need now is turmoil on financial markets,” Dvorkovich said.

Of the major economies, China is seen as having the best shot at eclipsing the United States as the world’s largest market.

Chinese President Hu Jintao flaunted his country’s influence at the Shanghai meeting, saying Beijing would extend a 10 billion dollar credit to member states help them overcome the financial crisis.

Poorer members Uzbekistan, Kyrgyzstan and Tajikistan have been hit hard by the crisis and analysts believe China is seeking to increase its influence in impoverished but highly strategic Central Asia.

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