Five-nation summit fails to start development bank

The leaders of the five BRICS nations stopped short of establishing a highly-touted development bank at this week’s summit in South Africa, instead saying they would enter formal negotiations on the issue.  But the summit did yield some agreements, including big-money bilateral trade deals.

The main objective of this year’s BRICS summit was to be the establishment of a development bank.  South Africa’s finance minister said the negotiations were done the night before the summit — but that was clearly not the case.

South African President Jacob Zuma said Wednesday morning that the five nations — Brazil, Russia, India, China and South Africa — would enter formal negotiations to establish the bank.

That moves the issue slightly forward, but still does not address where the bank will be, or how much money each nation will contribute.  Several experts and officials have said the bank will start with $50 billion, divided equally.

“Following the report from our finance ministers, we are satisfied that the establishment of a new development bank is feasible and viable.  We have agreed to establish the new development bank,” said Zuma. “The initial capital contribution to the bank should be substantial and sufficient for the bank to be effective in financing infrastructure.”

South African Finance Minister Pravin Gordhan told journalists that the lack of agreement on details was not a failure. “The fact that in one year, you can initiate an idea and bring it to the point where you have five different countries saying, ‘we agree, let’s establish it,” and having established its feasibility and viability, I think is phenomenal progress,” he stated. “Which you rarely see around the world moving at that kind of pace.”

He acknowledged, however, that the leaders have not agreed where the bank will be.  His choice?  South Africa, of course, he said with a smile.

The summit also yielded some more concrete deals, including a sheaf of agreements between South Africa and Russia and a multibillion dollar bilateral deal between South Africa and China to build ships in the port city of Durban.

The nations will hold their next summit in Brazil.

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