The leaders of the BRICS nations—Brazil, Russia, India, China and South Africa—agreed in principle on the broad outlines of a much-anticipated new development bank that would serve the same purpose as the World Bank. But they said they needed to conduct further talks in order for the idea to actually materialize.
The BRICS meeting took place in the South African port city of Durban on Wednesday.
“We are satisfied that the establishment of a new development bank is feasible,” said host President Jacob Zuma, in remarks that hint at little progress beyond an agreement reached in the Indian capital, New Delhi, a year ago.
“We have decided to enter formal negotiations to establish a BRICS-led new development bank,” he added.
The hope was that the leaders would be able to formally launch a $50 billion infrastructure fund at the two-day summit, which would give them a way of gaining influence on the world stage, countering Europe’s dragging economic crisis and address the $4.5 trillion in infrastructure spending the BRICS are estimated to need over the next five years.
Instead of a $50 billion fund, BRICS leaders agreed only that the initial capital contribution would be “substantial and sufficient for the bank to be effective.”
One of the key sticking points was where the bank would be based, according to diplomats.
“First of all, China wants it in China, and President Zuma wants it in South Africa,” said Tania Page of Al Jazeera. “Another problem would be dealing with exactly how much each country would invest in it and how much control each would have over it.”
Russian envoy to Africa, Mikhail Margelov, said to AFP news agency that his country had pushed for an incremental approach to establishing the bank.
“We believe in a step by step way of doing business,” he said. “We better talk about projects and then we talk about needed amounts of money.”
The next BRICS summit will be in Brazil in 2014, though the leaders will meet in Russia during the G20 summit in September.