Download USI Library News Information Service Pioneer 11-07

USI Library
News Information Service
Pioneer 11-07-2015
BRICS IS COMING OF AGE BRICK BY BRICK
Sanjay Kumar Pandey
With the seventh BRICS summit, held in Ufa, Russia, on July 9 & 10, the grouping has come a long way
from 2001, when Goldman Sachs economist Jim O’Neill who coined BRIC (Brazil, Russia, India and
China) predicted that the four countries would be fastest growing economies and attractive investment
destinations in the new century.
Starting in 2006, the foreign ministers of BRIC countries started meeting on the sidelines of the UN
General Assembly to discuss issues of common concerns. The global financial crisis of 2008, which badly
affected the developed countries but left China and India relatively unscathed, brought a sense of urgency
and also boosted the confidence of these countries to come to the forefront. In November 2008 at Sao
Paolo, Brazil, the finance ministers of the four countries met and released a communiqué expressing their
commitment to work together to deal with the financial crisis. In the same month, Brazil and Russia
agreed to arrange the first BRIC summit.
Russia hosted the first BRIC summit in June 2009 at Yekaterinburg. The leaders discussed the global
financial crisis and felt the need for a more diverse international monetary system with diminished role
for dollar as the global reserve currency. The second summit in 2010 in Brazil was attended by the South
African President as an invitee. The summit also discussed cooperation in areas such as energy and food
security, and Iran’s nuclear programme. BRIC formally and finally became BRICS with the inclusion of
South Africa at the third summit at Hainan, China, in April 2011. This gave the grouping representation
from the African continent. The fourth summit in New Delhi saw the bloc demanding expanded voting
rights at the International Monetary Fund (IMF). They also demanded that the heads of IMF and the
World Bank should be selected through an open and merit-based process, and candidates from
developing world should be considered for these positions. In this regard the Ufa Declaration says, “We
remain deeply disappointed with the prolonged failure by the United States to ratify the IMF 2010 reform
package, which continues to undermine the credibility, legitimacy and effectiveness of the IMF.”
The BRICS bank (called New Development Bank or NDB) which was launched during the Ufa summit was
proposed by India during the New Delhi summit. This was formalised during the fifth summit in South
Africa in March 2013. The summit also agreed to establish the BRICS Business Council, with a rotating
chair among the five member-States. The Fortaleza, Brazil, summit of July 2014 witnessed the signing of
agreements to create BRICS Development Bank and Contingent Reserve Arrangement (CRA). The two are
on the pattern of World Bank and IMF, but aim to be more transparent and democratic in their
functioning. NDB has $100 billion as authorised capital for financing infrastructure and sustainable
development projects in the member-States and other developing countries. The CRA, a currency reserve
pool, has an initial subscribed capital of $100 billion and will act as a buffer for member-States facing
balance of payment problems. NDB is expected to approve its first investment projects in the first quarter
of 2016. It will work closely with the China-led Asian Infrastructure Investment Bank (AIIB) which was
launched some time back, thus allaying fears that the two can be competitors. All the five BRICS countries
are members of the AIIB.
BRICS has evolved from a group of rapidly developing economies which were attractive to western
investors, to a grouping of States which are not only united by their economic indicators but also, in
general, by their world views and similar approach to global issues. Their main grievance is about underrepresentation of developing countries in western-centric international organisations. Moreover they
want to follow their own independent line with respect to various global issues (e.g. environment and
trade negotiations) and regional problems/conflicts (e.g. Iran, Syria, Ukraine). The major objective of
these countries and of the organisation is to help create a multipolar world order and take a multilateral
approach to global and regional issues. These countries maintain that international organisations (i.e.
United Nations) and international law should be respected and form the basis for dealing with
international crises. Unilateral actions without proper UN mandate are unacceptable. Initially the goal
was not to establish alternative structures for global governance but to strengthen the existing ones. But
since these are seen as lacking in responding to the needs of the changing world and in meeting the
aspirations of emerging countries, the need for new institutions, to fill the critical gap, was felt.
Future prospects
With more than 40 per cent of the world population accounting for 20 per cent of global GDP and
significant proportion of its growth rate, the importance of the grouping is beyond doubt. Experts are
already predicting that it will surpass group of seven developed countries (G7) in terms of GDP as well as
global influence. Countries such as Argentina, Mexico, Indonesia and Egypt are keen to become members
of BRICS. However the prospect of the bloc emerging into a full-fledged centralised organisation is slim. It
cannot, for example, be like the European Union. Lack of geographical contiguity, the fact that some of
the member-States are located at huge distance from each other, and their keen sense of sovereignty and
freedom of action prevents horizontal integration. Then there are bilateral issues between some memberStates (e.g. India and China). Therefore further institutionalisation is unlikely, but the forum is going to
continue with collective, consensus model of decision making and a rotating chairmanship. It is also
articulating alternative position (to those held by the US and its Western allies) on contentious global
issues.
The five countries are sensitive to each other’s positions and interests. The Ufa Declaration endorsed the
Russian and Chinese position on World War II and criticised the attempts by some countries to
“misrepresent the results of World War II”. On the other hand, China and Russia supported the UNSC
aspirations of Brazil, South Africa and India. The BRICS leaders vowed to work with the UN to uphold
international treaties, and criticised the adoption of “double standards” and attempts to place “interests of
some countries above others”. They have regularly criticised the interventionist foreign policy approach
and air strikes on countries like Syria and Iraq. They also rallied behind Russia by opposing the Western
sanctions against it over the Ukraine conflict.
To increase the effectiveness of the current format, the organisation should increase coordination in all
areas. The summit declarations reflect common concerns and stance on global issues. But plan of action
regarding some of these issues is lacking or tardy. On the positive side, there is progress with respect to
some old proposals. The question of trade in local currencies (instead of American dollar) has been under
discussion for some time. Russia and China have moved ahead in this direction. If that becomes the trend,
it will have far-reaching consequences. Similarly there are suggestions to coordinate the foreign policy
position of the member-States by signing a declaration on the guiding principles for BRICS countries,
something like the ASEAN Bali Concord. Forthcoming summits are likely to see forward movement on
many of these proposals. BRICS is indeed coming of age.
(The writer is Chairperson, Centre for Russian and Central Asian Studies, Jawaharlal Nehru
University, New Delhi)