Andrea Goldstein - 30/04/2012

     Had it not been for the BRICs (Brazil, Russia, India and China), the global recession since 2008 would have been far deeper. When the BRIC term was coined in 2001, it was little more than a vision of an uncertain future, populated by large countries with vast pockets of poverty. The first Summit took place in 2009 in the midst of the global economic crisis and with the fourth Summit held in India on 29 March 2012, each of the original BRICs has hosted one. In the meanwhile the grouping has become the BRICS with the membership of South Africa, covering an hitherto unrepresented continent. In the last decade, global wealth and global power have shifted from the Atlantic to the Pacific, from West to East, from North to South.

     Not by chance, this accelerated transition has also changed the way in which emerging economies view themselves. When they first met, Leaders mostly created a momentum to build a new global narrative. By the time China hosted the third Summit in 2011, both the idea of BRICS and the self-assurance that – though the BRICS nations have inherently different development and growth trajectories – they all stand at similar crossroads of policymaking had gained traction. The BRICS wish to develop new alteratives for differentiated policymaking, rather than follow the discredited Washington Consensus. The failure in financial governance and the resulting private and sovereign crises have encouraged the BRICS to defend their model of state capitalism and prudential regulation and press for the reform of international financial institutions.

     But can the BRICS claim to be doing more to solve global challenges and improve global governance than their Old World peers and oft-time competitors? On paper at least, the BRICS share similar positions on many issues: they push for greater weight within the Bretton Woods Institutions, for the conclusion of the Doha Development Round, for more resources to achieve the MDGs. The agenda of BRICS meetings has considerably widened to encompass global issues such as international terrorism, Weapons of Mass Distruction, climate change, food and energy security, international economic and financial situation etc. More broadly, they support the transition towards a multi-polar, equitable and inclusive world order and wish to protect the political sovereignty of the states.

     In practice, however, there are many areas where individual national interests collide and the BRICS find it difficult to agree, or in fact clearly disagree. The 2011 Summit took place at a time when all five BRICS countries were together in the UN Security Council (UNSC) and Leaders dutifully called for its reform to give developing nations a greater say in global issues. And yet when it comes to specifics there are deep divergencies. Permanent veto-holding members China and Russia have repeteadly worned the other three against any haste in the UNSC expansion. Deeply-rooted suspicion between BRICS themselves is well exemplified by longstanding border disputes between Beijing and New Delhi. Another well-known example of differences is the exchange rate policy of China and the perceived undervaluation of the renminbi.

     Guido Mantega, Brazil’s Finance Minister, coined the term “currency war” to refer to monetary and exchange rate policies designed to lower the value of one’s currency to gain competitive advantage on global markets. Mantega’s opening salvo targeted both a depreciating US dollar and an undervalued renminbi, but when he later said the WTO should consider more measures that allow countries to defend themselves against “currency dumping” China finds herself at the bull’s-eye. Against this background of no strong agreement on the governance of international institutions and the mechanics of international finance, it is no surprise that the BRICS have failed to wake up from their diplomatic slumber and present common candidates for the management positions at the IMF and the World Bank.

     In 2012 they called for a fair and competitive selection of the next the World Bank chief, but proved unable to back an emerging economy’s candidate, let alone to identify a common one in the BRICS ranks. Last, but certainly not least, the BRICS and the G8 – despite the membership overlap (Russia) – harbour different views on how to respond to political crises. In 2011 South Africa was the only BRICS nation to approve UNSC 1973, which established a no-fly zone over Libya and authorized “all necessary measures” to protect civilians, thus paving the way for international air strikes and ultimately to regime change. The others abstained (along with Germany) and the BRICS have predictably become even more skittish at the idea of sanctioning yet another foreign humanitarian intervention in Syria.

     Different arguments are recurrent: that national dialogue is the best way to solve one country’s problems, that non-ingerence in domestic affairs and national sovereignty are absolute principles, and that international interventions are akin to Western colonialism. The Delhi Declaration proposes to create “a new development bank mobilising resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries”. Such a bank could play a strong role in rebalancing the world economy by channelling hard-earned savings in emerging markets and developing countries to productive uses. If they make progress on this front, the BRICS will have shown their maturity.

Andrea Goldstein
United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)