New BRICS bank to be based in China, First President from India

Leaders of the BRICS
group of emerging powers on Tuesday created a Shanghai-based development bank
and a reserve fund seen as counterweights to Western-led financial
The leaders of Brazil,
Russia, India, China and South Africa agreed to launch the institutions to
finance infrastructure projects and head off future economic crises.

“These initiatives
show that, despite our diversity, our countries are committed to a solid and
productive association,” Brazilian President Dilma Rousseff said at a
summit in the northeastern seaside city of Fortaleza.
Russian President
Vladimir Putin hailed the agreements as “a very powerful way to prevent
new economic difficulties.
The five emerging
nations first unveiled their plans last year. The New Development Bank aims to
rival the Washington-based World Bank while the reserve is seen as a
BRICS leaders have
pressed for reform of the International Monetary Fund to give developing
countries more voting rights.
“The IMF urgently
needs to review its distribution of voting power in order to reflect the
unquestionable weight of emerging countries,” Rousseff said.
The development bank
will have initial capital of $50 billion that could rise to $100 billion,
funded equally by each nation.
To ease worries of any
nation getting more power than the other, BRICS leaders agreed to put the
bank’s headquarters in Shanghai. The first president will be Indian while the
first board chair will hail from Brazil.
An Africa Regional
Center will be based in South Africa. The bank will help emerging and
developing nations mobilize resources for infrastructure and sustainable
development projects, the summit declaration said.
China is expected to
make the biggest contribution, $41 billion, followed by $18 billion each from
Brazil, India and Russia and $5 billion from South Africa.
The summit comes as the
economies of some BRICS countries, which together represent 40 percent of the
world population and a fifth of the global economy, are cooling down, with
Russia and Brazil expecting just one percent growth this year.
For Putin, who visited
Argentina and Cuba before coming to Brazil, the trip gives him a chance to
hammer home his calls for a “multipolar” world amid tensions with the
West over the Ukraine crisis.
The meetings give Putin
his first international summit since being kicked out of the G8 group of
industrialized nations over the Ukraine crisis.
The United States is
threatening to impose new economic sanctions on Russia over accusations that it
is backing pro-Moscow separatist rebels in eastern Ukraine.
The BRICS summit
declaration voiced “deep concern” over the situation in Ukraine and
called for “comprehensive dialogue, the de-escalation of the conflict and
restraint from all the actors involved, with a view to finding a peaceful
political solution.”