The start of a journey named "BRICS" !!
- The first formal summit meeting of the BRIC grouping was held in Yekaterinburg, Russia, in June 2009 with South Africa joining the group in December 2010, changing the nomenclature from BRIC to BRICS.
- The Yekaterinburg summit called for “a more democratic and just multipolar world order based on the rule of international law, equality, mutual respect, cooperation, coordinated action and collective decision-making of all States.”
Why was there a need for a BRICS and its RELEVANCE ?
- Since then the joint statements of the various BRICS summits have been repeatedly underscoring the need for a realignment of the post-World War II global order based on the untrammelled supremacy of the US.
- With the US under the Obama administration appearing preoccupied with internal troubles and the Eurozone mired in a debilitating economic crisis, a vacuum is increasingly being felt in the international system.
- This presents an ideal opportunity for the BRICS to finally emerge as major global players. Plans are underway for some joint projects.
The need of a DEVELOPMENT BANK
- The 2012 New Delhi summit resulted in a proposal to create a joint BRICS development bank that would finance investments in developing nations, and last year’s summit in Durban led to conclusion of negotiations for setting up this bank.
- This year’s summit saw the formal launch of this bank, which will be the first bricks-and-mortar institution to be set up by the BRICS grouping.
- Though it will initially be too small to rival the World Bank or the International Monetary Fund in terms of size and importance, it is aimed at challenging the extant global institutional fabric.
- The bank, to be controlled by Brazil, Russia, India, China and South Africa, started with capital of $100bn. (with itz HQ in Shanghai ,China and the first CEO- President position to India as a "CONSOLATION PRIZE").
But where lies the bone of Contention which stops
from BRICS to become a SUCCESS STORY ???
- The structural disparity between China and the rest of the BRICS members remains the core issue.
- China’s rise has been so fast and so spectacular that others are still trying to catch up.
- The dominance of China makes the very idea of a coordinated BRICS response to the changing global balance of power something of a non-starter.
- The Chinese economy is now not only the second largest in the world but also larger than the economies of all the BRICS together.
- The overweening presence of China makes the other members nervous, leading them to hedge their bets by investing in alternative alliances and partnerships even as China’s rapid accretion of economic and political power adds to its own challenges that has made it difficult for it to make friends.
- Given the leverage that China enjoys in BRICS, it should not come as a surprise that Beijing has suggested that IBSA – the grouping of democracies, comprising India, Brazil and South Africa – be shut down in favour of BRICS.
- China’s manipulation of its currency has resulted in significant problems for the manufacturing sectors of other emerging powers. India, Brazil and South Africa have all expressed their disenchantment with Beijing’s economic policies at various times.
- Chinese exports have decimated a number of industries in Brazil, South Africa and India with New Delhi even imposing anti-dumping duties on a range of Chinese goods.
- China’s dominance of the intra-South trade remains overwhelming with other emerging powers struggling to get a share of the pie. This, in turn, has stoked economic nationalism.
- Beijing's refusal to let the yuan appreciate has resulted in significant problems for the manufacturing industries of India, Brazil and South Africa.
- Central bankers from Brazil and India these countries spoke against the undervalued yuan in 2009 and 2010, but to little effect.
- The dominance of China makes most of the goals articulated by the BRICS States wobbly.
The entire point behind making BRICS getting lost !!
- The point of this coalition was always to show that the balance of power is shifting to emerging countries, away from the West’s historical dominance.
- But a multipolar world isn’t the same as China just trying to tilt the balance of power toward itself.
- New Delhi has done well to resist strongly Chinese attempts to contribute more than its share to the proposed BRICS bank, leading to greater control and influence of Beijing over its affairs. India had insisted that the five nations invest equal capital — $10 billion each — to create a $50 billion corpus (before the Summit).
Moral of the Story !!
- The growing fascination with BRICS is partly an offshoot of the discussion on the emerging so-called ‘post-American’ world, where many commentators argue that multipolarity is likely to be the norm.
- The narrative surrounding the rise of BRICS is as exaggerated as that of the decline of the US.
- The tectonic plates of global politics are certainly shifting, but their movements are not yet predictable.
- As a result, BRICS "may" remain an artificial construct, merely an acronym coined by an investment banking analyst, for quite some time to come.