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A Productive and Promising Performance:
The 2013 BRICS Durban Summit

John Kirton, Caroline Bracht and Julia Kulik, BRICS Research Group
March 27, 2013
[see also Official Documents from the Durban Summit]

The fifth annual gathering of BRICS leaders, held in Durban, South Africa, on March 27, 2013, has proven to be a productive event in several ways. It made many useful moves across a broad range of subjects, but few breakthroughs or major deliverables overall. This performance was sufficient to show that South Africa is a full member of the BRICS, able to produce a summit that was as successful as, if not better than, the average of the four produced by its fellow members before.

On its centrepiece subject of creating a BRICS-led development bank, the Durban Summit, in a significant step, gave formal birth in basic principle to such an institution. In their concluding eThekwini Declaration the leaders proclaimed: "We have agreed to establish the New Development Bank. The initial contribution to the Bank should be substantial and sufficient for the Bank to be effective in financing infrastructure" (BRICS 2013). As summit host President Jacob Zuma (2013) of South Africa put it, leaders agreed "to enter formal negotiations to establish a BRICS-led new development Bank based on our own considerable infrastructure needs, which amounts to around USD 4,5 trillion over the next five years, but also to cooperate with other Emerging Markets and Developing Countries in future."

However, the leaders fell short of outlining the expected roadmap of how long it would take to produce a physical, functioning bank, what the timeline and stages on the journey would be and what shape the central architectural features would take. The promise to enter formal negotiations without an end specified suggests that bringing the bank to life could be a slow process indeed, especially given the many serious issues about it that remain unresolved. On the key issue of the bank's overall capital, the promise of an initial contribution "sufficient" enough to be effective in financing infrastructure was vague and seemed small, relative to the large need that Zuma had identified. There was no word about from where the supply of funds would come. There was a clear signal about where the money would flow, with Zuma's declaration of a BRICS-first-and-only approach as the destination for the bank's money, with merely cooperation with outside emerging and developing countries left to a later stage. This suggests economically that the bank and the BRICS as a whole will be an inward-looking, self-interested club, rather than an outward-looking, broadly supportive one. It will be a disappointment for the first BRICS summit hosted by an African, held in Africa, thematically oriented toward Africa, and featuring a BRICS-Africa Dialogue Forum with African leaders brought from throughout Africa for a dialogue with their BRICS peers.

On its second key subject of establishing a financial safety net by pooling foreign exchange reserves to protect themselves from financial crises that could break out at any time anywhere in the world, leaders agreed, in a substantial step, to create a Contingent Reserve Arrangement (CRA), and that "an initial size of US$ 100 billion is feasible and desirable subject to internal legal frameworks and appropriate safeguards. We direct our Finance Ministers and Central Bank Governors to continue working towards its establishment" (BRICS 2013).

But as with the bank, this was an agreement in principle, with no timeline or key features defined and the actual size not guaranteed. Moreover, even at an initial $100 billion the CRA remains a modest, compared to the recent half a trillion dollars mobilized by BRICS members and others for the new firewall fund at the International Monetary Fund (IMF), the new crisis-fighting funds raised by the European Union in recent years and even the Chang Mai Initiative and mechanism in Asia.

On a third key subject, leaders signed two agreements under the BRICS inter-bank cooperation mechanism: a multilateral agreement on infrastructure co-financing for Africa and a multilateral agreement on green economy co-financing. These are welcome extensions of the BRICS commitments to assist Africa, enhance the natural environment and control climate change. But they are modest moves, where the still undefined details and delivery matter, before their real impact can be assessed.  

More precise performance assessments also suggest a productive event in line with the annual BRICS summit evolving norm (see Appendix). In its domestic political management, the summit continued its perfect attendance record, as all leaders felt it was in their domestic interest as well as the international interest to attend and stay for the entire event. In its deliberations, the concluding communiqué contained 4,395 words, almost as many at the previous year's summit and much higher than the previous four-year norm. The communiqué also contains more commitments than were made the year before, even if many of them merely reaffirm and agree to continue what the BRICS leaders had agreed to before.

In all this was a productive performance. It was also a promising one for the future, if the process mandated for the BRICS development bank and financial safety net can be brought to a big, successful end soon.

References

BRICS (2013), "BRICS and Africa: Partnership for Development, Integration and Industrialisation – eThekwini Declaration," Durban, March 27, 2013 <http://www.brics.utoronto.ca/docs/130327-statement.html>.

Zuma, Jacob (2013), "Addressing the Summit Theme 'BRICS and Africa: Partnership for Development, Integration and Industrialisation," plenary session statement at the BRICS Durban Summit, March 27, 2013 <http://www.brics.utoronto.ca/docs/130327-zuma-address.html>.

Appendix: BRICS Performance

Notes:
Domestic Political Management is leaders' attendance record.
Deliberation is number of words, identified by Madeline Koch.
Decisions identified by Jenilee Guebert and Caroline Bracht.
Delivery data done by BRICS Research Group compliance reports available at <http://www.brics.utoronto.ca/compliance>.
Development of Global Governance data compiled by Julia Kulik.

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