Leader from Brazil, Russia, India and China — commonly referred to as the BRIC countries — will meet in Toronto Saturday evening to try and formulate their strategy for the G-20 Summit.
The biggest unifying force for BRIC and other developing countries is the demand for a greater say in the International Monetary Fund. While it was agreed in principle that there will be a five per cent increase in the quotas for developing countries, the modalities are yet to be worked out. In case of the World Bank, the reform process, which result in a 4.6 per cent increase in quotas for developing countries, is underway.
Cui Tiankai, China’s vice-foreign minister, has already said that G-20 members should push IMF to finish a new round of quota reforms to give more representation to emerging markets and developing countries before the Seoul summit in November.
Brazil, China and India are in favour of continuing the stimulus as they fear that a withdrawal in stimulus, and the problems in the Euro zone, could affect the demand for their exports. Similarly, they are not in favour of the proposed tax on banks to fund future bailouts.
The opposition to the bank tax comes from the fact that lenders in these countries have escaped largely unscathed. Last week, Brazilian President Luiz Inacio Lula da Silva had gone to the extent of calling the financial systems of developed countries “rotten”.
The other common thread is the fear of protectionism, especially in Europe. In a statement, Manmohan Singh said: “We need investment and capital flows, as well as an open and rule-based trading system that does not succumb to protectionist tendencies.”
