BRICS Summit In Russia Is Putin's Opportunity To Show It Is Not Isolated

The BRICS summit, taking place in Russia on July 8, is expected to launch a development bank, which President Vladimir Putin hopes will reduce "Western dominance" in global financial institutions. The two-day BRICS summit will be taking place in Russian city Ufa, which is 1,170 km southeast of Moscow. The city was originally built as a fortress by Tsar Ivan the Terrible. BRICS has been conceived as the economic club of Brazil, Russia, India, China and South Africa and in the sumit the members are expected to give finishing touches to a $100-billion contingency currency reserves pool.

Significant Bloc

BRICS accounts for a fifth of the world's economic output and represents 40 percent of the global population. The projects from BRICS, including the currency pool and New Development Bank of $50 billion as corpus will be central to reshaping the Western-dominated financial system, according to Russian sources. For Mr Putin, who turned focus to emerging economies, after being spurned by the West with sanctions as a penalty for annexing Crimea, the BRICS summit is a chance to do some power play and show that Russia is not in isolation, adds the Reuters report.

The potential of BRICS as a club of second line world powers was rightly highlighted by Russian foreign minister Sergei Lavrov, who said, "The BRICS, in addition to their economic and pragmatic agenda, have become an influential factor in world politics," He denied the five country club joining forces is aiming at anyone else and praised the bloc for the positive contribution in “stabilising " international affairs.

The unity of the BRICS nations is important for Russia as stands expelled from the Group of Eight or G8 industrial powers over the Ukraine issue. At the same time, many independent foreign policy experts see BRICS group still in the formative stage and has a long way to go before it achieves the main goals. Secondly, Russian ties with China are still less developed than Moscow would like it to be. Other emerging markets such as Turkey, Mexico, Indonesia and Nigeria may join as partners in the BRICS bank, later. The contingency reserves will operate immediately to help members if they are hit by any exigency or sudden exodus of foreign capital.

Shanghai Cooperation

The BRICS summit also coincides with a meeting of the Shanghai Cooperation Organisation known as SCO, which is a security bloc comprising China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, in which India and Pakistan are also joining. During the SCO summit Mr Putin will meet with Iranian President Hassan Rouhani, as Iran is an observer in the SCO.

Meanwhile, there is speculation that Greece may apply for accession to the New Development Bank. Yury Ushakov, President Putin's aide said, “we know of these assumptions, but so far no one has officially discussed such an option with us.” He revealed that the upcoming discussions will touch the “parameters of the practical operation of the BRICS' New Development Bank and currency reserve pool.”

The Russian official noted that the potential of the bloc is hard to underestimate. The five countries from four continents account for 27 percent of global GDP. Ushakov pointed out that 20 years ago, many of these countries were uncompetitive with industrialised G7 countries. But today, many BRICS states have outgrown G7 economies and are exercising a big impact on the world economy.

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