Brazil will have a tough time convincing its risk-averse fellow BRICs to bankroll a European rescue no matter how the aid is structured.
Funneling the money through the International Monetary Fund instead of buying European debt directly offers a layer of protection against default. But India, China and Russia have already pledged a combined $70 billion to augment the IMF's lending power, and may be reluctant to do more.
A Brazilian official said that Finance Minister Guido Mantega would propose that the BRICs bloc of fast-growing economies make billions of dollars in new funding available to the IMF. The BRICs are scheduled to meet in Washington on Thursday, ahead of the IMF's twice-yearly gathering.
With more than $4 trillion in reserves all together, it is not surprising that China, Brazil, India and Russia have been cast in the role of Europe's potential saviours should the debt crisis there deteriorate dramatically.
They may be financially able, but their willingness is in doubt.
"It would be extraordinarily difficult for officials managing the overseas assets of what are still relatively poor developing countries to justify putting those assets at risk if Europe fails to get its own act together," said Julian Jessop, chief international economist with Capital Economics in London.
Even if Brazil got all the BRICs on board, the funding would probably amount to only a tiny portion of the IMF's worst-case scenario lending needs. The Brazilian official suggested Brazil might be able to provide $10 billion to help Europe.
IMF staff members estimated the fund had about $390 billion it could comfortably lend now, but might need to lend as much as $840 billion, Reuters reported on Sept. 9.
This is not the first time Brazil has tried to rally its BRICs brethren around a cause. Earlier in September, Brazil's call for the big emerging markets to buy more European debt drew a lukewarm response from Asia.
"Brazil has the tradition of coming up with catchy headlines," said Wei Yao, an economist with Societe Generale in Hong Kong, adding that Brazil's latest proposal may not be politically practical in China.
HISTORY OF FRICTION
Beijing has had some friction with the IMF, particularly over the fund's assessment of whether the yuan currency is substantially undervalued.
There is also the matter of clout within the fund. China secured its first top IMF management post just two months ago, even though it is the world's second largest economy.
All of the BRICs fought hard for greater IMF voting power and more say in decision making. Last year, they won at least some of the additional power they sought. Ironically, it was Europe that put up the biggest objections and now finds itself needing emerging market support.
Much of Asia remains leery of the IMF and its advice, a hangover from the 1990s Asian debt crisis when IMF loans came with tough conditions that forced sharp government spending cuts. That is a primary reason why many emerging economies built up vast reserves -- as a form of self-insurance so that they would never again have to rely on the IMF.
Funneling the money through the International Monetary Fund instead of buying European debt directly offers a layer of protection against default. But India, China and Russia have already pledged a combined $70 billion to augment the IMF's lending power, and may be reluctant to do more.
A Brazilian official said that Finance Minister Guido Mantega would propose that the BRICs bloc of fast-growing economies make billions of dollars in new funding available to the IMF. The BRICs are scheduled to meet in Washington on Thursday, ahead of the IMF's twice-yearly gathering.
With more than $4 trillion in reserves all together, it is not surprising that China, Brazil, India and Russia have been cast in the role of Europe's potential saviours should the debt crisis there deteriorate dramatically.
They may be financially able, but their willingness is in doubt.
"It would be extraordinarily difficult for officials managing the overseas assets of what are still relatively poor developing countries to justify putting those assets at risk if Europe fails to get its own act together," said Julian Jessop, chief international economist with Capital Economics in London.
Even if Brazil got all the BRICs on board, the funding would probably amount to only a tiny portion of the IMF's worst-case scenario lending needs. The Brazilian official suggested Brazil might be able to provide $10 billion to help Europe.
IMF staff members estimated the fund had about $390 billion it could comfortably lend now, but might need to lend as much as $840 billion, Reuters reported on Sept. 9.
This is not the first time Brazil has tried to rally its BRICs brethren around a cause. Earlier in September, Brazil's call for the big emerging markets to buy more European debt drew a lukewarm response from Asia.
"Brazil has the tradition of coming up with catchy headlines," said Wei Yao, an economist with Societe Generale in Hong Kong, adding that Brazil's latest proposal may not be politically practical in China.
HISTORY OF FRICTION
Beijing has had some friction with the IMF, particularly over the fund's assessment of whether the yuan currency is substantially undervalued.
There is also the matter of clout within the fund. China secured its first top IMF management post just two months ago, even though it is the world's second largest economy.
All of the BRICs fought hard for greater IMF voting power and more say in decision making. Last year, they won at least some of the additional power they sought. Ironically, it was Europe that put up the biggest objections and now finds itself needing emerging market support.
Much of Asia remains leery of the IMF and its advice, a hangover from the 1990s Asian debt crisis when IMF loans came with tough conditions that forced sharp government spending cuts. That is a primary reason why many emerging economies built up vast reserves -- as a form of self-insurance so that they would never again have to rely on the IMF.
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