BRICS urge careful US tapering

The world's leading emerging economies urged the United States on Thursday to show caution in any tapering of its economic stimulus, as Russian President Vladimir Putin hosted a mini summit of the BRICS states ahead of the G20 meet. In a demonstration of their importance despite worries about developing economies, Putin held talks with five BRICS states before the G20 summit proper got underway. The BRICS group of Brazil, Russia, India, China and South Africa were for years seen as the new hungry tigers of the global economy. But each of the states is going into the G20 meeting outside Saint Petersburg with a degree of economic trouble. The currencies of Brazil and India have been under serious pressure due to expectations that the US Fed will taper its stimulus programme while growth has been slowing even in China's powerhouse economy. The US stimulus freed up money that investors then ploughed into emerging markets. But now the risk that this liquidity may recede is triggering major outflows and sharply depreciating BRICS currencies. Putin told President Jacob Zuma of South Africa, Dilma Rousseff of Brazil, Prime Minister Manmohan Singh of India and Chinese President Xi Jinping that such meetings were a "good habit" ahead of major global summits. "We will discuss our common approaches at the G20 summit," Putin said. "I am sure that we will have positive talks." In their final communique, the leaders said they were concerned about the "negative spillovers of unconventional monetary policies of certain developed economies". "They emphasised that the eventual normalisation of monetary policies needs to be effectively calibrated and clearly communicated," it added. Although the United States was not singled out, the leaders were clearly targeting the tapering of its quantitative easing policy that helped their economies swell. In a sign that the five states would be adopting joint positions at the G20, the statement said that "major economies, including the G20, could do more to boost global demand and market confidence". Putin said that a priority for the BRICS states was discussing ambitious projects to create a development bank with a capital of $50 billion (38 billion euros) and a reserve fund with a capital of $100 billion. The communique said that the BRICS states expected "tangible progress" on the creation of both funds by the time of their next summit. The BRICS meeting showed the growing ability of the grouping to speak with one voice on financial issues, a capacity some feel may one day be transferred to political topics. Kremlin spokesman Dmitry Peskov said that the BRICS leaders did not "hide their displeasure" at electronic espionage on its member states, in a clear reference to the United States. China's huge economy and population makes it the dominant player in the BRICS, even if Beijing is often happy to let Russia make the most vocal statements. "The US should be mindful of the spillover effect of its policies and shoulder the responsibility of maintaining stability and steady growth in the global economy," said Vice Finance Minister Zhu Guangyao. Symbolically, Putin's first bilateral meeting on the sidelines of the G20 earlier was with President Xi of China, which has stood shoulder to shoulder with Moscow in its opposition to Western policy on Syria. In guarded comments typical of the Russia-China relationship, both men praised the state of ties but gave little away. "Relations between our countries are developing consistently," said Putin. However Russia's Gazprom and China's state energy firm signed an agreement on the "fundamental conditions" of a long-discussed mega gas deal for Russia to pump 38 billion cubic metres of gas annually to China from 2018.