BRICS reach deal on development bank

The BRICS grouping of emerging powers reached a deal on Tuesday to establish a development bank that would rival Western-backed institutions, South Africa's finance minister told AFP.

"It's done," minister Pravin Gordhan said after meeting with his counterparts from Brazil, Russia, India and China.

"We made very good progress, the leaders will announce the details," he added, just hours before a summit in the South African port city of Durban was set to begin.

The bank is likely to focus on infrastructure financing, a direct challenge to seven decades of dominance by the World Bank.

It is 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.

Together the BRICS economies account for 25 percent of global output and 40 percent of the world's population.

But members say institutions like the World Bank, the International Monetary Fund and the United Nations Security Council are not changing fast enough reflect their new-found clout.

BRICS negotiators had been under pressure to come up with an agreement that proves the grouping is relevant and sends a strong message to the United States and Europe that the current balance of power is untenable.

But an Indian diplomat involved in the talks told AFP many of the details are likely to be left for another day, allowing leaders to announce a deal, however vague.

The bank is not likely to be up and running for years but South Africa's trade minister Rob Davies said the details were "being hammered out."

Indian officials have long pressed for a BRICS-led South-South development bank that would recycle budget surpluses into investment for developing countries.

Many emerging nations both inside and outside BRICS also hope the bank will be a way to tap China's vast financial resources.

Brazil's central bank chief told AFP progress was also being made on a deal to establish currency swap lines that would encourage trade, which is likely to be worth in the region of $100 billion.

Members could also draw on the funds during a liquidity crunch or other crises.

"We are working on it," said Alexandre Tombini.

The currency swaps would also open the door for BRICS countries to tap some of China's massive $3.31 trillion foreign reserves, the world's largest.

Securing both deals is meant as a thumb in the eye to those who argue the BRICS is little more than a talking shop for disgruntled nations.

Xi Jinping has underscored the growing importance of the group by making Durban his first summit destination as China's president.

In a keynote speech in Tanzania on Monday, Xi vowed Beijing's "sincere friendship" 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, such as unemployment, poverty and unemployment.

"BRICS provides an opportunity for South Africa to promote its competitiveness" Zuma said on the eve of the summit.

But the BRICS nay-sayers are unlikely to be dissuaded and stress differences dividing members instead of common interests.

"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.

Leaders will try to counter that view when the summit begins at 17:30 GMT, when more details of the BRICS development bank are likely to be known.

Diplomats say it could start with $10 billion seed money from each country, but the exact figure is still unknown and could be smaller.