BRICS emerging powers sought a deal on setting up a development bank that would rival Western-backed institutions, trying to iron out significant differences ahead of a leaders’ summit in Durban.
The grouping of Brazil, Russia, India, China and hosts South Africa are racing to elaborate on proposals for an infrastructure-focused lender that would challenge seven decades of dominance by the World Bank.
Just hours before leaders kick off the summit at 17:30 GMT on Tuesday, finance ministers were still working to agree key elements of the plan.
Disputes remain over what the bank will do, with each side trying to mould the institution to their foreign or domestic policy goals and with each looking for assurances of an equitable return on their initial investment of about $10bn.
Failure to secure a deal would be a major embarrassment for many of the participants and would play into the hands of those who argue that the BRICS have little to bind them together.
Xi Jinping, who has underscored the growing importance of the group by making Durban his first summit as China’s president, earlier expressed hopes for “positive headway” in establishing the bank.
In a keynote speech in Tanzania on Monday Xi pledged Beijing’s “sincere friendship” with the continent, and a relationship that respects Africa’s “dignity and independence”.
Meanwhile, host President Jacob Zuma has lauded the summit as a means of addressing his country’s chronic economic problems including high unemployment.
“BRICS provides an opportunity for South Africa to promote its competitiveness” Zuma said in a speech on the eve of the summit.
“It is an opportunity to move further in our drive to promote economic growth and confront the challenge of poverty, inequality and unemployment that afflicts our country.”
A failure to take concrete steps would raise questions about whether the BRICS grouping can survive.
“Ironically it may be the cleavages within the BRICS grouping that more accurately hint at the future of the global order: tensions between China and Brazil on trade, India on security, and Russia on status highlight the difficulty Beijing will have in staking its claim to global leadership,” said Daniel Twining of the German Marshall Fund.
But if the leaders succeed it would be the first time since the inaugural BRICS summit four years ago that the group matches rhetorical demands for a more equitable global order with concrete steps.
That would send a loud message to the US and European nations that the current global balance of power is unworkable.
Together the BRICS account for 25 percent of global GDP and 40 percent of the world’s population.
But members say institutions such as the World Bank, the International Monetary Fund and the United Nations Security Council are not changing fast enough to reflect their new-found clout.
Diplomats say it could start with $10bn seed money from each country, but the exact role of the bank is up for debate.
Economic data shows that the grouping of Brazil, China, India, Russia and South Africa now account for 25 percent of global GDP and 40 percent of the world’s population.
China has become the informal leader of the group. With a GDP of $8.25 trillion in 2012, the IMF
estimates that the Chinese economy will climb by a whopping 8.2 percent in 2013.It remains the globe’s most-populated country, with 1.34 billion inhabitants.
Brazil: With a GDP of $2.425 trillion in 2012, Brazil is the world’s seventh largest economy. It holds only a modest place in world trade activity, however, and experienced sluggish growth of one percent last year.
Russia: Ranking ninth on the list of the world’s biggest economies, Russia accumulated a GDP of $1.953 billion in 2012, boosted mainly by its gas exports, making it the world’s eighth largest exporter.
India: Despite its population of 1.24 billion, India remains a smaller player among the world’s economies, falling into a 10th place with a GDP worth 1.946 trillion.
South Africa: Smallest of the BRICS economies is South Africa. Placing 41st world exporters, the country has a GDP of $390 billion and a population of 50.5 million.