Do Asians See a Role in Solving the Eurozone Crisis?

Do Asians See a Role in Solving the Eurozone Crisis?

The Eurozone’s debt crisis has spurred talk about a possible role for BRIC countries to lend a helping hand through increased financing of the International Monetary Fund (IMF). While discussions are still under way over whether the IMF will even step into the euro crisis, rising powers such as China and Brazil continue to express interest. G20 finance ministers and central bankers met in Paris over the weekend and said they expected the October 23 European Union summit to “decisively address the current challenges through a comprehensive plan“. Today’s blog post highlights the views in China, India, and Russia on this issue:

CHINA

The mixed views in China indicate an interest to help the Eurozone in such a way that is both economically practical and politically beneficial to China-EU relations.

  • Ding Gang, a senior reporter with the People’s Daily, was more blunt about what China should expect in return: It is only “the most basic fair treatment” to ask that the EU recognize China’s market economy status and end the arms sale ban on China.
  • Specific policy recommendations came from a recently organized academic forum at Tongji University. It was reported that Qiao Yide, secretary-general of the Shanghai Development Research Foundation, recommended the following: 1) purchase bonds from multilateral institutions (the European Financial Stability Facility) instead of national bonds; 2) encourage Chinese businesses to expand in Europe; and 3) increase the euro’s weight in the currency basket of the Chinese yuan.

INDIA

Not much is being said in India about any role that the country could play in the EU financial crisis. This is not entirely surprising given India’s general reluctance to be out in front on controversial international issues. Finance Minister Pranab Mukherjee echoed the IMF’s general position that “the issue of sovereign solvency ought to be resolved by the Europeans themselves.”

In contrast, an op-ed in The Economic Times last month argued that, compared to Brazil’s pro-activeness, India is missing out on a diplomatic opportunity to assert itself in the politics of global finance.

RUSSIA

Prime Minister Vladimir Putin has been particularly vocal in expressing his views on the European debt crisis, calling for an increased BRIC role in international financial institutions:

  • In an interview with Chinese state broadcaster CCTV, Putin emphasized that the BRIC group should lead the reform of international financial systems. “I think it’s time to talk about reforming existing institutions, and first of all I mean global financial institutions, such as the International Monetary Fund and World Bank. And here we agree that the role of the BRICS countries in those organizations must be enhanced, given the growing importance of our countries’ economies.” At the same time, Putin noted that “Europe’s heavyweights have enough resources to solve the problem,” and he did not foresee a large role for the BRICS in the euro crisis.
  • Regardless of the outcome of the crisis, Putin stated on Monday that Russia has a “high margin of safety to be ready for any turn of events in the global economy.”
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