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Briefing by Secretary (Economic Relations) in Sanya on BRICS Summit

April 14, 2011

Official Spokesperson (Shri Vishnu Prakash): A very good afternoon to all of you. You are aware that the BRICS Summit this morning started with a restricted session of the leaders followed by the plenary meeting, next there was a Joint Press Conference, and President Hu Jintao also hosted a banquet lunch for the leaders and other distinguished invitees. Prime Minister addressed the plenary session and I am sure you have copies of the address of the Prime Minister at the plenary. You have also received the address of the Prime Minister at the joint media event, and you have the Sanya Declaration with you.

Secretary (ER) is here to brief you about India's participation in the BRICS Summit. He is joined by our Ambassador to Beijing Dr. S. Jaishankar. I will request Secretary (ER) to make an opening statement, and thereafter he will be happy to take a few questions.

Secretary (ER) (Shri Manbir Singh): Thank you, Vishnu. Thank you all for coming here and for your enthusiasm and interest in what have been happening since the morning.

As we had briefed you in Delhi and NSA and Minister for Commerce and Industries briefed you, there was a theme for the meetings and there were mainly four agenda items. These agenda items were: (1) international situation; (2) international economic, financial and trade issues; (3) challenges of sustainable development; (4) cooperation amongst the BRICS. Today morning, after the photo session of the five BRICS leaders, President Hu Jintao addressed himself first on the four issues, and gave his views. Thereafter he invited the other Presidents and our Prime Minister to give their views in the order of the BRICS countries - Brazil, Russia, and then India and South Africa.

The discussions and the meeting took place in an extreme atmosphere of friendliness and understanding. It was apparent that on almost all the world views, and we had a very rich agenda covering almost all political issues that face the world today, economic issues, monetary, financial issues, climate change issues, piracy, terrorism, reforms of the UN, reforms of the International Monetary Fund. So, there was a huge gamut of issues and as the leaders spoke one after another what was very apparent was that there was a complete harmony of views. I will not use the word almost but I would say the complete harmony of views because they all echoed each other's views. That is why I feel that the BRICS as a grouping is very important because all these emerging countries, major countries, almost have the same views on major issues that confront the world. There was also a great spirit of understanding, bonhomie and support to the idea of the BRICS grouping and that we must take it forward.

You have the statements made by the five leaders before the press at the plenary, which essentially covers major part of the discussions that took place; and you have our Prime Minister's statement as well; and then we have the Sanya Declaration which goes in detail of all the issues that were covered. So, I will just mention one by one the various issues on which the leaders spoke up.

There was strong desire for peace, security, development and cooperation. I think this is a very common desire for all these countries because they are all developing countries. And what developing countries need is peace, a facilitative environment for growth and development. So, all the leaders came up very strongly that there should be peace, security and there should be cooperation for development and growth. Also, this is a time in our world situation where there are complex changes taking place. These BRICS powers are emerging, they are called emerging powers because their growth rate is very high, and they are overtaking some of our long established economic powers of the world. So, it is in their interest and it is as well in the interest of the world that most of the world institutions reflect the changes that are taking place. So, they all spoke about establishing a more equitable and a fair world.

Again peace, harmony, cooperation, scientific development, economic, financial and BRICS serves as a major platform for dialogue and cooperation, they reaffirmed it. Global economic governance should be strengthened. Democracy in international relations, voice of emerging and developing countries to be strengthened, these are the themes that I was just now talking about. All the BRICS countries affirmed the central role of the United Nations. They wanted the United Nations strengthened. It should be able to face global challenges and threats. And they spoke about comprehensive reforms of the United Nations including the UN Security Council. As all of you know, India is an aspirant for the UNSC permanent seat. We already have a temporary, rotating seat for 2011-2012. And we have been saying that the UN now reflects the realities of the post World War II and that it should reflect the realities of the contemporary world. So, earlier the BRICS formulation on this issue has been reforms of the UN, but now there is an added dimension – including the UN Security Council.

There was concern over the turbulence in the Middle East and North Africa. There was also mention of terrorism as a scourge and also cyber crime. It was felt that the major economies should coordinate macroeconomic policies. You would recall that after the recession in 2008, the G20 came into being. Previously we used to have G8 and then we had Special Invitees which included India as well. But it was felt that for the economic governance of the world, there should be a bigger number of countries which had economic strength. So, the G20 came into being and they had a number of meetings on which they coordinated their macroeconomic policies which were very helpful in overcoming the recession. But it was felt that this recession, though it has been overcome, the growth and development is still uneven; there are areas where there would be concern, there is greater consolidation required in Europe. There are some countries which are facing very serious fiscal deficits there. Therefore, there should be more engagement, more discussions on the international monetary situation, and there should be coordination on the macroeconomic policies.

There was a great support for the Group of 20 countries. It was felt that the Group of 20 countries is very essential, it should be strengthened. The BRICS gave their support. They said that it should become the main instrument for the economic governance of the world. They spoke about the reform of the International Monetary Fund. They also spoke about a broad-based international currency, it should be examined, the idea of a broad-based international reserve currency should be examined including that of the Special Drawing Rights (SDRs). They expressed concern on cross border capital flows because this is what they call hot money these days because it has become very easy to transfer large amount of funds from one country to another country. It creates volatility in foreign exchange. So, there is this gamut of issues, capital inflows, fluctuations in foreign currency, etc., this all comes under the broad rubric of international monetary and financial governance. So they felt that this needs to be strengthened.

They also expressed concern on volatility in commodity prices. The prices of food, the prices of energy products have been fluctuating very violently, going up, then slightly going down, then going up. So, it was felt that this is not conducive to good economic growth, and therefore all the countries should study how this volatility in commodity prices needs to be controlled.

Then there was some discussion on the nuclear energy and everybody felt that nuclear energy is very essential but strict observance of safety standards must be resorted to in the light of what had happened I think in Japan. Though nobody specifically mentioned Japan - everybody expressed their condolence on the loss of life there and the loss suffered by that country - but the nuclear energy discussion I want to say that the background was what has happened in Japan. And they confirmed that nuclear energy is required, is essential, but that the safety norms need to be strengthened.

There was support for South Africa's having UN Conference on Climate Change in 2011, and there was support for the Conference on Sustainable Development that Brazil is going to host in 2012. We are going to host a Conference of the Parties to the Convention on Biological Diversity and Cartagena Protocol on Biosafety in 2012. That was also mentioned.

There was a very strong resonance and all the Presidents and Prime Ministers agreed that the Doha Round should have a conclusion which is comprehensive and balanced; and they felt that in the interest of the world trade which needs to be strengthened especially when there are still elements of recessionary trends that we should guard against any protectionist measures by any countries.

Then they spoke about BRICS cooperation and everybody was very keen and they felt very happy, they were satisfied, I would use the word satisfied, that since the time the BRICS has started convening regularly after Yekaterinburg, that there has been a large number of forums and meetings where they have an exchange of ideas, views and they put some more ideas on how to exchange and the cooperation, and this is included in the action plan along with the Sanya Declaration.

There was a strong sentiment for cooperation in science, technology and innovation and it was felt that for a very meaningful poverty eradication and improving the living standards of the people education, good quality education is a must, as well as research work and cooperation in science and technology.

The Prime Minister offered to host the next Summit of the BRICS in India in 2012 and the other countries welcomed this and were very supportive that India should.

There is one statement that our Prime Minister made that I want to quote to all of you. "In the context of what is happening in the Middle East, North Africa, he said, "There is a shift of power towards the ordinary citizens” - which I felt sums up the situation there, it is a tragic situation but it is summed up very well by the Prime Minister - "People determining their own future. People determined to take their own decisions”.

This is what I want to say in the beginning. If there are any questions, I will be happy to take them.

Question: In the Joint Declaration, the names of India, Brazil and South Africa are mentioned and the Declaration says that the BRICS support their aspirations to play a greater role in the UN. Since it is practically impossible for all the three countries to get a permanent seat, do you think that will slow down the process of India getting a seat in the near future?

Secretary (ER): You know that all the three countries are aspirants. It may well be possible to accommodate all three and perhaps even more. So, I do not rule it out. I have not seen any papers or I have not received any signals or indicators which would suggest that accommodating all three would be difficult. I think all the three countries have their merits. South Africa which is the latest entry into the BRICS countries is also, as you know, a country with a lot of influence, with a sound political system, and in contributes towards peace and stability in Africa. It is trying to participate in peace activities in Libya, in Cote d'lvoire. So, you cannot say that. South Africa with India with Brazil is a possibility, and all three are aspirants.

Question: The Joint Declaration refers to a kind of an agreement that there have to be coordinated macroeconomic policies on the BRICS countries. I assume that this is in the context of the overall view also taking the G20 and the need for a calibrated pullout or bail out of the stimulus measures that were introduced post 2008 crisis. While G20 has taken a clear stance that these stimulus policies need to be phased out over a period of time, the Declaration here does mention about economic overheating and asset bubbles. My question is that if you are talking about coordinated macroeconomic policies, are you suggesting a new timeframe for the kind of … pullout of the stimulus packages?

Secretary (ER): The statement just says ‘coordination on macroeconomic policies'. Coordination can only occur after discussions. So, unless there are discussions, how would you coordinate your policies? You have mentioned some of the concerns. There are other concerns as well because they are saying that because of very expansionary monetary policies it is having an adverse effect on commodity prices. Other countries say that if they have a tighter monetary policies, already the manufacturing is suffering, so it may suffer more. So, these are issues that need to be talked about. But it is important that these issues are underlined and the perspective of every country is taken on board, and then some via media can be found.

Question: Sir, on the issue of these…local currencies, have you achieved any final resolution on inter-currency acceptability?

Secretary (ER): The background of this is that at the last summit in Brasilia there was a very strong feeling. And you know at that time there were a lot of currency fluctuations that the banks of each of the BRICS countries should meet and work out some kind of a modality whereby trade, projects and loans can be encouraged. So, Exim Bank from India and the other banks have had I think two meetings over the last one year, and they have come up with what I would say a framework agreement. But in financial sector all these issues require a lot of clarity and lot of detailed work. So, the agreement which they have signed today, which is a framework agreement says it is subject to national laws. So, the national laws of each country are overriding, and they will within the national laws find out means to assist trade, investment and projects in each other's countries.

Question: Two questions. Talking about the framework agreement on local currency, is it one way to diminish the importance of the dollar as a trading currency in BRICS economies? Secondly, as far as the Special Drawing Rights (SDRs) are concerned, what is India's position, because we do not have much clarity on that, on the inclusion of Yuan in the SDR?

Secretary (ER): As far as the dollar is concerned I have not heard it said by anybody that it is their desire to diminish the value or the importance of the dollar. Dollar, as you know, is a reserve currency and most of the BRICS countries - whether it is India, China and the others - are holding large amounts of reserves in dollars at present apart from other currencies as well. So, trying to facilitate trade in their own currencies should not be construed as being something that would work against the value of the dollar. But at the same time you should look at what is happening in the international world today. The reserve currency dollar has necessitated for the USA to continue to have a deficit for a long time and this deficit continues. And there is now a strong public pressure within the US Government that this deficit should be brought to a stop or curtailed. And how will you curtail the deficit without actually stringing in the reserve currency? So, these are all things that are happening and in the background people are talking that this reserve currency is fluctuating, then we must have another reserve currency which may not be a substitute but is an alternative. Substitute would mean that you replace one by the other. But the alternative means they have a choice - you have dollar, you have SDRs. But what was felt today was that these are issues which are complex issues on which there should be studies and there should be detailed recommendations because you cannot go without studying what are the implications. You do not want to do something as a palliative to a certain issue and then find that on a score of other issues you are sorry. So, the decision that they are taking is that let us explore SDRs. SDRs have been a reserve currency since a very long time but it is not being expanded. So, let us see what can be done with the SDRs.

Question: Was inclusion of Yuan an issue?

Secretary (ER): That was never an issue. That never came up.

Question: But what is India's position?

Secretary (ER): This is very hypothetical. Because this issue has never come up we have never studied this issue.

Question: What is India's specific position in … What does India want?

Secretary (ER): We would like a very detailed study on it. We feel that the BRICS as such should do a detailed study on the implications of expanding the SDRs. We are not seeing SDRs as international reserve currency, but we are now talking about expanding the SDRs. You cannot expand the SDRs to double the amount they are in a year or two years. It will have to be over a period of five years or six years. But what are the implications, how can it be done, what would be the contribution of all the economic powers in the strengthening of the SDRs and expanding, these studies need to be done. This is what everybody wanted.

Question: My question is related to what you have mentioned about the nuclear energy and the safety. Was the decision of a general nature or was any specific programme or details discussed? Can you throw some more light on this?

Secretary (ER): These were the leaders of the countries who are discussing this issues, the nuclear safety, nuclear energy; and they were discussing a gamut of issues, development issues, they were discussing that fluctuation in energy prices. In this context the question of nuclear energy also came up; and it was felt that nuclear energy is something which is important but also that the safety norms should be strengthened. But there was no nuclear energy expert at the meetings to discuss the great details. Probably that is what you were asking. It was a general discussion.

Question: There are two permanent members in the BRICS on the Security Council and you have for the first time included reforms in the UN Security Council. At the same time the Declaration does not specifically endorse the candidature of the other three nonpermanent members – India, Brazil, South Africa. Was there any discussion at all on the matter of expansion of UNSC? And in particular what was the Chinese stand in this respect?

Secretary (ER): The only thing I can say is that this is a consensus statement. The two permanent members – China and Russia – are part of this consensus which the statement has. This statement is satisfactory as far as we are concerned.

Question: That is being seen as an endorsement for the three other nonpermanent members.

Secretary (ER): It is an endorsement. You have to study this. They have said, "Playing a larger role in the UNSC”. And if you see the previous line, they have talked about an expanded UNSC. You have to draw your own conclusions from that.

Question: Sir, the Action Plan mentioned that there will be a conference on security in China at the end of this year. Will this conference include the question of terrorism and cybercrime in the light of what has been mentioned in the Declaration?

Secretary (ER): This is a meeting of the National Security Advisors. The National Security Advisors usually include whatever is topical with regard to security. These issues of cybercrime and terrorism have been put on the agenda of BRICS. So, I have no doubt that it will come up in the NSA meetings.

There is another agreement that has been concluded today – it was separately done in the Business Forum – on the BRICS business focal points. So, the BRICS countries will have a focal point if they have any enquiries where to send it in the other country.

Official Spokesperson: Thank you.


Sanya (China)
April 14, 2011

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