Leaders
of the major developing countries met in Cannes on Thursday to forge a united
front ahead of the G20 summit.
Addressing a meeting of leaders from the
BRICS, that also groups Brazil, Russia, India and South Africa, Chinese
President Hu Jintao said that as the EU is the largest economy in the world,
global recovery is dependent on a European recovery.
Stressing China's confidence in the EU's
ability to solve the debt problem, Hu said that the "international
community should provide support and help" to the debt-ridden eurozone,
urging all countries to unify their approach.
Hu also suggested that the financial
departments of the BRICS should consult closely to keep track of the changing
situation and enhance coordination.
Indian Prime Minister Manmohan Singh,
Brazilian President Dilma Rouseff, Russian President Dimitri Medvedev, Chinese
President Hu Jintao and South African President Jacob Zuma are all in Cannes
for the summit.
Medvedev was quoted as saying that the meeting
discussed "the difficulties in the eurozone" and "the necessity
for the BRICS to come up with a common stance".
No details of the meeting, or any possible
measures to be taken on the EU debt crisis, have been revealed.
The Cannes summit, slated for Thursday and
Friday, will address major problems facing the world economy and the stability
of the global financial markets.
Issues to be discussed at the summit include,
among others, the eurozone debt crisis, reform of the international monetary
system and the strengthening of financial regulations.
European leaders hoped other countries,
especially some emerging economies, would buy European Financial Stability Fund
(EFSF) bonds, by injecting capital in the region's financial markets.
The EFSF was one part of a three-pronged
rescue plan put together to solve the eurozone debt crisis.
Last week, eurozone leaders agreed to boost
the EFSF capacity to 1 trillion euros (US$1.38 trillion).
Agence France-Presse (AFP) cites figures
saying that Asian countries already hold 40 per cent of EFSF debt, in testament
to the BRICS' huge reserve stockpiles.
Zhu Guangyao, Chinese vice-minister of finance,
said on Wednesday that "the fund has not established details of its
investment options so we still can't talk about the issue of investing".
Brazilian government officials last week said
they would consider using a portion of Brazil's US$350 billion in foreign
reserves to help aid the EU through bilateral agreements at the International
Monetary Fund (IMF). Russia has also reportedly decided to offer US$10 billion
through the IMF.
Top Kremlin economic adviser Arkady Dvorkovich
told a news conference in Moscow on Monday that the BRICS would continue to
lobby for wider clout in international financial institutions such as the IMF
and the World Bank.
Leaders of the BRICS agreed that their finance
ministers and officials should work out a common position on the eurozone
crisis, Dvorkovich said.
He also said in a statement to Russian media
that the BRICS agreed to carry out regular consultations in the IMF and other
forums.
An agreement was reached at the 2009 G20
summit to grant emerging markets increased voting rights at the IMF, but
progress has slowed due to the financial turmoil.
Since the financial crisis, the IMF has
implemented two rounds of reform, in 2008 and 2010, to boost the emerging
economies' quota shares and voting shares. Yet so far the US still holds veto
rights, and the combined quota shares of the BRICS are still less than that of
the US.
The AFP reported that this G20 summit could
mark a shift in economic power.
"If other BRICS come into the deal (of
helping the eurozone), it would only make the shift more momentous."
Daniel Bradlow, a law professor at American
University in Washington, called it "a first in modern history" that
developing countries would be directly bailing out their advanced counterparts.
"Formally, they don't get anything in
return," Bradlow told AFP.
"Informally, I suspect there must be
discussions about what the quid pro quo would be," he said, such as
possibly a greater role in running the IMF.
Some Chinese experts remain cautious on the
BRICS' role in helping the EU.
Xia Zhanyou, professor of Beijing-based
University of International Business and Economics, said there were legitimate
concerns.
"Honestly, I don't think we should get
involved too much. The chances of us getting our money back are relatively low,
it's a dangerous game," Xia said.
But it is also unlikely for a responsible
China to just stand by and watch, he said.
"We should help at the right time in an
appropriate way. Actually the crisis also presents an opportunity for the BRICS
to fight for a larger say at the IMF."
Under such circumstances the BRICS should
develop clear lines of communication, among themselves, to ensure the best
outcome, he added.
Su Hao, director of the Asia-Pacific Research
Center at China Foreign Affairs University in Beijing, said Europe has asked
emerging economies for help behind the scenes.
But to reduce risk, China should ask for
financial reform in Europe which will enable future bonds to be guaranteed by
the EU instead of a single government, he said.
Wu Jiao
China Daily
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