News / Economy

Analysts: BRICS Unlikely to Rush to Europe's Aid

William Ide

Members of the global grouping know as the BRICS -- Brazil, Russia, India, China and South Africa --- will meet in Washington this week to talk about ways they can help Europe with its debt crisis.  The chance for emerging nations to lend the developed world a hand is a unique opportunity, and a sign of their growing influence on the global stage.

Europe is in turmoil over its beleaguered economy and so austerity measures meant to resolve its debt crisis have met with public backlash.  

European Union finance ministers met in Poland last week in search of answers, joined by U.S. Treasury Secretary Timothy Geithner.

“Europe’s obviously under a lot of pressure, and they face a lot of challenges and it’s affecting us.  It’s affecting confidence here and around the world; not just in Europe,” Geithner said.

And that’s where the BRICS come in.  China and other emerging nations have weathered the global financial crisis and have deep pockets of foreign currency reserves.

Chinese economist Luo Xiaopeng says there is no doubt China will offer to help.

“They have to do this for many reasons.  One is the Chinese economy is still really reliant on exports,” Luo said.

Europe is China’s second largest trading market and the euro accounts for nearly 30 percent of China's $3 trillion in foreign reserves.  And China wants to shift more of its reserves to the euro to reduce its reliance on the U.S. dollar.

“Now if for some reason the eurozone collapses because of Greece, Italy, Portugal or Spain go down in a chain, this would be what I call a global financial crisis.  It will drag everybody down,” said Yukon Huang, a senior associate at the Carnegie Endowment for International Peace.

But, it is unlikely China or others will lend Europe a hand, he says, until Europe has a solution to its debt crisis in place.

“Right now there’s no such agreement.  So China is not going to put its money into a situation where there are, in fact, enormous risks and only downsides,” Huang said.

If China does step in to help, some analysts and Chinese state media suggest that China could use its aid to Europe to try to get earlier recognition of China as a full-market economy, or an economy that operates according to market forces.  It's a status China has long viewed as offensive.

“After so many years of humiliation [from Europe], there is kind of a kneeling down to beg from us.  So this kind of a thing you cannot underestimate the satisfaction and joy of those Chinese politicians,” Luo said.

For now, the uncertainty in Europe and what is being done to address the eurozone's debt crisis will be front and center when BRICS finance ministers meet in Washington Thursday.

You May Like

Ukraine Purges Interior Ministry Leadership With Pro-Russian Ties

Interior Minister Avakov says 91 people 'in positions of leadership' have been fired, including 8 generals found to have links to past pro-Moscow governments More

US Airlines Point to Additional Problems of any Ebola Travel Ban

Airline officials note that even under travel ban, they may not be able to determine where passenger set out from, as there are no direct flights from Liberia, Guinea or Sierra Leone More

Nigerian President to Seek Another Term

Goodluck Jonathan has faced intense criticism for failing to stop Boko Haram militants More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Talks to Resume on Winter Gas for Ukrainei
X
Al Pessin
October 25, 2014 4:21 PM
Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Talks to Resume on Winter Gas for Ukraine

Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7893
JPY
USD
107.68
GBP
USD
0.6238
CAD
USD
1.1214
INR
USD
61.185

Rates may not be current.