The leaders of Brazil, Russia, India, China and South Africa – emerging economies that collectively are referred to as BRICS – announced Wednesday the creation of a development bank to fund infrastructure projects in developing nations.
"We have decided to enter formal negotiations to establish a BRICS-led new development bank based on our considerable infrastructure needs, which amounts to around $4.5 trillion for the next five years, but also to cooperate with other emerging markets and developing countries in future," South African President Jacob Zuma, the meeting's host, said Wednesday in Durban.
He added that the nations would also establish a "BRICS contingent reserve arrangement," which The Associated Press calls "a pool of money to cushion member states against any future economic shocks and further lessen their dependence on Western institutions" such as the World Bank.
Four of the five nations have been meeting since 2009 to discuss issues of mutual economic interests. South Africa began attending two years ago.
The bank would be the first institution set up by the informal grouping. But the leaders of the five nations failed to agree on just how much capital such a bank would need amid fears that China would play a dominant role in the institution, much as the United States and Europe do at the World Bank and International Monetary Fund.
Here's more from The New York Times about the grouping and the differences among individual members:
"For all the talk of solidarity among emerging giants, the group's concrete achievements have been few since its first full meeting, in Russia in 2009. This is partly because its members are deeply divided on some basic issues and are in many ways rivals, not allies, in the global economy.
"They have widely divergent economies, disparate foreign policy aims and different forms of government. India, Brazil and South Africa have strong democratic traditions, while Russia and China are autocratic.
"The bloc even struggles to agree on overhauling international institutions. India, Brazil and South Africa want permanent seats on the United Nations Security Council, for example, but China, which already has one, has shown little interest in shaking up the status quo."
The five nations make up more than 40 percent of the world's population and account for nearly a fifth of global trade. Still, trade among the members is small — just 2.5 percent of foreign investment by BRICS countries is in other members of the grouping, according to a U.N. report released this week. (That's up from 0.1 percent a decade ago.)
The meeting in Durban comes amid the backdrop of Chinese investment in Africa, and grumbling among some African leaders about China's role in the continent.