Can Brics aid eurozone?

Sao Paulo - Brazil's proposal for Brics (Brazil, Russia, India, China and South Africa) countries to come to Europe's rescue by buying bonds is a well-intentioned but largely self-serving initiative that will enhance its own global profile without risking enough money to make a major difference in the eurozone crisis.

Brazil aspires to become the world's fifth-biggest economy sometime this decade, and senior officials in President Dilma Rousseff's government see the financial crisis in Europe and the United States as an opportunity to push for a role in global affairs commensurate with their country's rise.

Brazil's proposal for members of the Brics group of emerging markets to make coordinated purchases of bonds of eurozone countries, which will be discussed next week in Washington, allows it to portray itself as a diplomatic bridge between the West and the rising economies of Asia - a role it has long sought.

It also reinforces Brazil's role as a mature voice of reason, and a net foreign creditor, in the crisis - a sharp contrast to just a decade ago, when Brazil had to negotiate its own bailout with the International Monetary Fund to avoid default.

By floating the proposal first in the news media, Brazilian officials have ensured themselves maximum exposure despite growing evidence on Wednesday that the idea may not get support from their Brics partners.

The money on the table appears to be largely symbolic, and insignificant compared to Europe's financing needs. Brazil, for example, would not make its $352bn in foreign reserves available for European bond purchases, relying instead on a sovereign wealth fund that as of August totalled only about $9bn, an official told Reuters.

The bottom line is that, rather than providing a major lifeline to Europe as some investors had originally hoped, the bond-buying proposal may ultimately end up advancing Brazil's interests as much as anyone else's.

The idea first appeared on Tuesday in media reports attributed to unnamed Brazilian officials. An Indian official confirmed on Wednesday that the proposal was the brainchild of Finance Minister Guido Mantega.

Mantega has become a prominent voice in the global crisis. He was the first senior official to use the term "currency war" to describe countries' efforts to keep their currencies weak to favour exports. He has also repeatedly criticised expansive monetary policy in the United States, saying it has a negative effect on emerging markets.

Brazil has long sought other ways to substantiate its higher profile, including a permanent seat on the United Nations Security Council - a proposal which has met resistance from the United States and others.