The president of Brazil, Dilma Rousseff, on Wednesday told the United Nations that fast-growing emerging economies can play a vital role to help stem the global economic crisis, marking the latest move by developing countries to become the equals of the world's traditional powers.
Rousseff, the first woman to open the UN General Assembly, said there is still time to stop the crisis from spreading further if emerging and developed countries work together, saying that the emerging economies are able and willing to help solve the crisis.
This crisis is too serious to be managed by a small group of countries, she said. Their governments and central banks continue to bear greater responsibility in taking the process forward. Yet as all countries suffer the consequences, all of them have the right to participate in the solutions.
Brazil, one of the world's fastest-growing economies, is part of the BRICS group of emerging market powers, which also includes Russia, India, China and South Africa. Brazil earlier this month moved to spearhead an effort by the BRICS group to support the crisis-hit euro zone by making coordinated purchases of euro zone government bonds.
Early this summer, the growing dissatisfaction by emerging countries that they remain relegated to peripheral roles in world affairs was highlighted by the jockeying over the naming of a new head to the International Monetary Fund. The developing countries expressed strong displeasure with the IMF's tradition of having a European at its helm, although the appointment of Christine Lagarde upheld that tradition.
Rousseff on Wednesday called for greater cooperation between countries. She urged countries to stop what she termed a currency war and to fight protectionism, saying that mutual scrutiny of fiscal and monetary policies would help to avoid fallout that then sparks a vicious circle of defensive reactions.
Brazil and other developing countries have long complained about the easy monetary policy of the United States, which has resulted in massive dollar inflows into fast-growing emerging markets that offer investors much higher yields. The appreciation in Brazil's currency, the real, has hurt exports and sparked complaints by business that there ability to create jobs has been hurt.
But Rousseff also lambasted the use of fixed-exchange rates that lead to currency manipulation -- a veiled criticism of China.
Controls must be imposed on the currency war through the adoption of floating exchange rate regimes, Rousseff said. That means putting an end to exchange rate manipulation both by excessively expansionary monetary policies and by the stratagem of fixed exchange rates.
Failure to coordinate efforts between members of the United Nations and other multilateral institutions such as the IMF could cause a grave political and social rift that would engulf even more resilient economies, she warned.
Like other emerging countries, Brazil has thus far been less affected by the global crisis. But we know that our capacity to resist it is not unlimited, Rousseff said, highlighting the growing anxiety among developing countries about the escalating debt crisis in the euro zone.
In a meeting on Tuesday, U.S. President Barack Obama and Rousseff agreed to deepen discussions about the European debt crisis in the next few days.
That discussion will be carried on by U.S. Treasury Secretary Timothy Geithner and Brazil's finance minister, Guido Mantega, in Washington, on the sidelines of the IMF meeting, Brazil's Foreign Minister Antonio Patriota said.
Rousseff said developed countries need coordinated policies to stimulate their crisis-weakened economies.
The solution of the debt crisis must be combined with economic growth, she said. There are glaring signs that many advanced economies are on the threshold of recession, which will significantly hinder the solving of their fiscal problems.
Along with the pressure by Brazil and other key emerging market countries for a bigger role at the IMF, they have pressed for permanent seats at the UN Security Council as part of a bid for a greater say in world affairs.
Rousseff on Wednesday said the legitimacy of the Security Council hangs on its reform. With each passing year, she said, it becomes more urgent to solve the Council's lack of representativeness, which undermines its credibility and effectiveness.
(Editing by Leslie Adler)