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Mainstream, Vol XLIX, No 19, April 30, 2011

From Bric To Brics: Thinking Big?

Tuesday 3 May 2011, by Ash Narain Roy

The 21st century is witnessing new paradigms of power. The topology of power has undergone a sea-change. The tectonic changes in the international system are creating major shuffling in the global power structure. BRICS (Brazil, Russia, India, China and South Africa) is not simply a new gathering place for the world’s emerging powers, but reflects a new global power structure.

While for India, democracy or, what Michael Mandelbaum of the John Hopkins University calls, ‘democratic exemplarism’ is a currency for its global influence, China’s and Russia’s power projections are based on economic and military powers respectively. Brazil is the country of the future. And South Africa is an aspirational power. Together, BRICS is in the process of building parallel international systems and networks. With the centre of the world moving East, many Western geopolitical sages are wondering whether the “rest needs the West”.

Over the past few years the world has changed beyond recognition. With the US in constant decline, the focus has shifted to ‘chindia’. But Brazil too has a story to tell. Both NAM and SAARC, where democratic India figured promi-nently, were derided and viewed by the Western world with contempt. However, when democratic India and ‘authoritarian China and Russia’ joined hands with Brazil to form BRIC, the West was in awe.

At the same time, the world’s political and strategic elites feel assured if India is part of a formation where China and Russia too figure. They see India as muscular, but also predictable and stabilising. Indian politics and society seamlessly meet regional and global standards of modern and legitimate social and political systems unlike China’s intolerance for trans-parency and pluralism and Russia’s unpredic-tability. The international community feels reassured that India will seek a multilateral order based on the equality of sovereign nations, large and small, rather than a future hierarchical order based on size and power.

The BRIC countries are growing in strength by the day. The centre of global economic activity is gradually shifting from the industrialised nations to the emerging economies of Asia, Africa and Latin America. In 2000, the BRIC countries along with Indonesia contributed just 18 per cent of the global GDP, while the industrialised nations contributed about 65 per cent. By 2010, this pattern saw a near-reversal—BRIC countries providing more than a quarter of the world’s GDP, while the share of the industrialised countries shrank to 56 per cent. During the same period, BRIC’s GDP grew by 92.7 per cent, compared to a global GDP growth of just 32 per cent, with the industrialised economies having a very modest 15.5 per cent.

Now that South Africa too has been included in this grouping, BRICS will become even stronger. Bringing South Africa into this important organisation of rising global powers from Asia, Latin America and Europe makes a lot of sense. This is a development of geopolitical significance, and it will no doubt cause some frustrations in Washington. The US has been concerned about the growing economic and political clout of the BRIC countries for several years. It has been India’s desire to see that it along with Brazil and South Africa occupies a seat at the international high table.

The addition of South Africa, some analysts believe, “is a deft political move that further enhances BRICS’ power and status”. The new member is Africa’s largest economy. At the same time, as number 31 in the global GDP economies, South Africa is far behind its new partners, nearly by 20-1 in China’s case. It’s also behind such other emerging countries as Turkey, Mexico and South Korea.

China is South Africa’s largest trading partner, and India wants to increase commercial ties to Africa. There is a perception that South Africa would gain more from being in BRIC than the BRIC members would from South Africa.

THE recent BRICS summit in Sanya in China’s Hainan province only further underscored the growing importance of the emerging economies. While BRICS’ vision of common development and shared prosperity can be seen as a noble intent and somewhat platitudinous, what they put forward in terms of initiatives for global economic governance merits serious attention.

India and China and, to some extent, China and Russia, both compete and cooperate with each other for greater influence. But they realise that unless they join hands, they cannot hope to shape the new international political and economic order. They have come out with some kind of broad blueprint for a more just and equitable international political and economic governance system. Hence a long-term development strategy. The world is perhaps not yet ready for a brand new governance system. BRICS has no intention to replace the existing system; it only wants to make it more balanced, equitable and sustainable.

The strategy that the summit drew out has the intended objective of bridging the South-North gap. By drawing a shared vision which is non-confrontational, the BRICS nations have inspired confidence among the wider inter-national community. Global issues like food security, climate change, environmental protection and energy security can be handled only in coope-ration with the rest of the world. The real challenge before BRICS would be to lead the world by their own example. How India and China work together and how China and Russia deal with their democratic deficits will be the real test. Then alone BRICS could serve as a new model of global economic cooperation. No doubt, it has a broad vision for international economic cooperation and interaction, but what happens if countries like India and Brazil join the UN high table. Will they still stick together?

By demanding certain changes in the global financial system and a call for the International Monetary Fund to expand its use of Special Drawing Rights (SDRs), which are used as a quasi-currency to transfer funds between member governments, the summit conveyed a no-non-sensical business-like approach to global governance.

BRICS also called for a broad-based inter-national reserve currency system “providing stability and certainty”. In a move designed to signal another type of move away from dollar-dependency, the development banks of the five nations agreed in principle to establish mutual credit lines denominated in their local currencies.

No less significant was the BRICS leaders’ intensified call to expand the use of national currencies in bilateral transactions. Similar calls had been made during the summit in Russia.

Till recently the thinking was that notwith-standing its strategic attraction, expanding BRIC could distract it from its agenda and undermine its cohesiveness. It could complicate the agenda by burdening the group with contentious issues. Now that BRIC has been expanded, its further expansion will become inevitable. There are indications that India will be too happy if Indonesia joins the group.

In fact, some voices are being raised that it is time to take the ‘c’ out of the acronym. China is no longer an emerging economy. It has arrived. It may not be a super in the sense that the US is and the USSR once was. But China is a great power which is more important in the global pecking order than Europe and Japan. Hardly any global decision can be taken or a consensus built on any issue without China’s cooperation. In the global political power and economics clout, Brazil, Russia and India remain also-rans.

At some stage India itself could feel uncom-fortable about China’s strategic expansion. In fact, as former Foreign Secretary Kanwal Sibal argues, Russia’s decline has “facilitated China’s rise which is against India’s long-term interests”. India favours Russia’s resurgence which “will create a greater balance in global affairs.”

The author is the Director, Institute of Social Sciences, New Delhi.

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