BRICS Summit and Beyond – An Assessment

General

For the premier emerging economies of the World, BRICS as they have been categorised by Goldman Sachs a decade ago, the Third Summit in Sanya though some tend to categorise it as the First as South Africa was included for the first time was symbolic in many ways. This was the first Summit hosted in Asia with second largest global economy China holding the event thereby indicating that even in this sphere Beijing has arrived on the multilateral stage. Inclusion of South Africa in the grouping was also a landmark though many feel it does not belong to this category in terms of economic or political clout.

The back drop of NATO intervention in Libya, the tsunami and related nuclear hazards in Japan and decline of the dollar were also key events which required some deliberation. Summits also provide a good backdrop for bilaterals. In Sanya, the main focus was on the meeting between Sino-Indian leadership as the relationship has become testy at times. While not much was anticipated in the Summit per se, as the group is still evolving it is also evident that BRICS except for Russia are new to multilateral diplomacy as well as cautious in their approach.

In the political spectrum the Sanya declaration very clearly highlighted the core political and economic objective of BRICS, “establishing a more equitable and fair world”. This is envisaged through support for multipolar, equitable and democratic world order, mutual respect, cooperation, coordinated action, and collective decision-making of all states. Expansion of the UN

Security Council and related reforms is a corollary to this which has been seen as a positive development by three of the BRIC countries who are not a permanent member there. BRIC nations have spoken in one voice so far be it on the UN SC resolution on Libya or on Iran, it is South Africa which has been the lone dissenter. Will it act in tandem now remains to be seen. The immediate political challenge before BRICS politically is Libya while all countries have called for a negotiated settlement, the new stand by the US, UK and France for a change of regime has seen much resistance though this came after the BRICS summit was over.

Given that two countries of the coalition, India and Russia face major threats from terrorism the early conclusion of negotiations in the UN General Assembly of the Comprehensive Convention on International Terrorism can be used by India to take this forward in the UNGA.

On the economic front it was agreed that coordination of macroeconomic policies at G 20 will be carried out before. G 20 is one forum where the BRICS were possibly feeling marginalised so far and have now made a bloc that would have a strong voice. The WTO is another field where there is likely to be some convergence. The trade ministers of BRICS had a pre Summit meet in Sanya therefore it is likely that this may now become routine in the days ahead. For Russia the support of Brazil, India, China and South Africa to an early accession to the World Trade Organization will be important for there have been many challenges faced so far.

The call for reform of the International Monetary Fund agreed to at previous G20 Summits is also welcome and is in line with the current expectations and happenings. Establishment of a broad-based international reserve currency system to provide stability and certainty was clearly a vote of no confidence against the US dollar. To increase their voice the first step to a new mechanism is the framework agreement to be signed by designated banks on financial cooperation including grant of credit in local currencies and cooperation in capital markets and other financial services. The currency mechanism is in a nascent stage and a number of proposals are likely to be floated including a broad-based international reserve currency in the form of Special Drawing Rights (SDRs).

There was also a statement on stability in commodity prices was perhaps interesting given that two of the BRICS are one of the largest importers of energy, China and India while Russia and to an extent Brazil is an exporter. Thus there is an apparent contradiction and approaches that these countries may take on energy trade.

Against the back drop of the Japan nuclear accident, seeking international cooperation in development of safe nuclear energy for peaceful purposes was also on expected lines. On Climate change again while there is an agreement in the group; Russia remains an outlier and has perhaps not taken the issue as one of the core national interest ones unlike the other BRICS particularly China and India. The support to implementation of the United Nations Framework Convention on Climate Change and its Kyoto Protocol should however send the right signals particularly to the United States. This is one area where there is a general consensus and where there may be greater coordination between the BRICS in the days ahead.

The call for infrastructure development in Africa and industrialization within framework of the New Partnership for Africa's Development (NEPAD) was certainly good news for the Chinese and their aim of having taken South Africa on board would have served its purpose. For China facing resistance in many African states such as Zambia now has a multilateral support and also a bilateral limb in South Africa to enable it to expand its reach.

On cooperation amongst the members it was generally felt that there should be greater coordination between the members at international forums and a permanent norm of consultations at major bodies as the UN Security Council, UN bodies in Geneva and other forums should be established so that the group can pose a common picture within these groupings. Given the lack of a permanent secretariat, this via media may prove to be most valuable.

The new areas for cooperation identified are that of culture, sports, green economy, science and technology particularly pharma and a BRICS UNESCO grouping will facilitate developing common strategies in this sphere.

On the whole the deliberations be it on the political, economic or sustainability front were on expected lines and denote that level of coordination is increasing a detailed analysis of the achievements and challenges is as per succeeding paragraphs.

Retrospect and Prospects

In a short span of a few years since the first Summit in 2009, BRICS has come a long distance. Inclusion of South Africa is symbolic as well as increasing the overall span of BRICS for this will include the African continent’s largest economy. More over this may to an extent end the ambivalence that South Africa has demonstrated over the past few occasions in the UN Security Council where for instance it choose to support the UN SC Resolution on Libya. Will South Africa now join the non Western Non interventionist camp led by China and India remains to be seen? Inclusion of South Africa has provided an outreach for the BRIC countries to that continent. While IBSA was a forum of three now it has been broadened. Effectively many see this as an attempt by China to undermine the grouping, if that is the aim than it may have succeeded in some ways. Though, a MEA spokesman considers IBSA to be different because it is a grouping of democratic countries.

A broad consensus on strengthening BRICS cooperation as well as on promoting coordination on international and regional issues of common interest has also been reached. Coordination of approach in political and economic groupings starting with the UN, G 20, UNESCO, IMF and so on would be immensely beneficial to BRICS as a whole. The voice of the five can hardly be ignored once they jointly sponsor an issue. The challenge is how this will be coordinated as so far there have been more disputations rather than convergence between the BRIC, now with South Africa which has a some what different world view having joined coordination would be a difficulty.

How far this will be implemented on the ground is also questionable, for other bilateral and multilateral pressures such as Japan and the United States on India or the latter on Brazil are likely to create challenges for decision making.

With three members of the BRICS out of the UNSC permanent system the reaffirmation for reform of the UNSC in a comprehensive manner must have been sweet music to Brazil, India and South Africa, particularly to New Delhi with the acknowledged by Beijing of India’s aspirations to play a greater role in the UN being interpreted as an oblique approval of membership. Though it is unlikely that the path ahead will be smooth or without obstructions. India knows that China’s shadow group, uniting for Consensus (UfC) or the Coffee Club with Pakistan as one of the prominent members will create enough challenges to ensure that the proposal is stymied to the extent possible.

Greater coordination of the BRICS in the UN Security Council in 2011 will be a given in the days ahead, how this can manifest positively may depend on a case to case basis. In Libya for instance the stand has been some what weak and quite the opposite of the assertion to avoidance of force expressed in the Declaration. Mention of resolution of the Libyan crisis through peaceful means was almost immediately countered by the Statement by the US, UK and French governments laying out the intention of removal of Mr Gaddafi. This very clearly highlighted the challenges that BRICS will be facing in exercising its political clout in the days ahead.

In the economic sphere the focus on the G 20 to play a larger role in economic governance was on expected lines. With the Russian offer to host the G 20 in 2013, it may provide BRICS an opportunity to coordinate their policies and present a common front to pose a challenge to the West. Again this may or may not happen given the lack of effective mechanism for coordination of activities of BRICS. The combined strength of BRICS will come in very handy in forums as the World Bank and the IMF. BRICS will be able to have more number of directors on the boards and have equal voting powers for developing countries thereby expanding their economic as well as political clout. Here numbers may make as much difference which was possibly lacking so far and thus would add to the clout.

Challenges

The peculiar configuration of BRICS which has two other groupings RIC and IBSA within it may lead to either dilution of some of the agenda of each of these coalitions or undermine these altogether. What is however noteworthy is that the Indian Prime Minister along with the South African and Brazilian President have reiterated continuance of IBSA during their bilateral meet in Sanya. It is also seen that India is the only common factor in all the three coalitions demonstrating its growing political clout. But what role these organisations will play separately is some what fuzzy. This however appears to be the manner in which global polity non-polar order is emerging wherein countries group together differently for different purposes.

While economy and trade may be the main vector for BRICS, there are inherent contradictions. China and Russia have large trade surpluses in hundreds of billions of dollars while India and South Africa are laggards in this sphere. How will this contradiction be resolved remains to be seen?

While the declaration stated that BRICS has played a great role in global, “peace, security and stability, boosting global economic growth, enhancing multilateralism and promoting greater democracy in international relations” there are no clear indications that this has happened. Though the BRICS did believe that non intervention was the best policy in Libya, neither China nor Russia which have the veto felt that this was in their core interest for exercising the same, thereby indicating ambivalence.

The challenge from the currency mechanisms is likely to take some to unravel. India is possibly the last to shift to an alternative currency as it is felt that the dollar or the euro or the yen are freely exchangeable and currencies of the BRICS countries are still in a nascent stage of evolution.

Lack of an institutional mechanism to take forward the agenda of the grouping is likely to be a serious challenge. A secretariat will take some time to be established and as was highlighted this was not forthcoming in the 2011 summit. As the interaction grows a need may be felt at a later stage. Till then BRICS will have to function in a some what disjointed way and that will mar coordination as has already been brought out. The first step in this direction is likely to be BRICS think tanks networks as it was seen that this has now become the order of the day with each summit having parallel track II dialogue in the backdrop.

BRICS will also have to meet the challenge from developed countries, USA, Japan and the European Union which will not allow or attempt not to allow such a strong grouping to emerge on the World stage which may upset their pre-eminence. The strategies used for this purpose have been time tested in breaking such groupings and that is bilateral engagement. This is evident with the partnership that the USA is building with Brazil and India and the relations it has now with Russia as well as China despite the differences. Thus India will have to walk a tight rope to balance its interests in furthering its strategic partnership with the US while at the same time pursuing its interests within the BRICS grouping. It is also quite evident that other BRICS members would also pursue their bilateral relationship with the US in consonance with their national interests. Dissonance with India may only occur when China or the US pursue their interest very vigourously without being sensitive to India’s interests.

The Way Ahead

The original projections by Goldman Sachs predict BRICS coming into their own after 2025 or 2030, thus expecting that this formulation will deliver a decade or two before may be far too optimistic. What is encouraging and may be alarming for the developed World is the rapid coagulation that has been ongoing over the past few years between Russia, China and India in particular and now being joined by Brazil and South Africa, if this is the trajectory that would be adopted how so ever slow or tardy it may seem, BRICS will be the voice of the future in the global order by the middle of the century.

The plan to enhance engagement and cooperation with non-BRICS countries of the developing World may take the form of absorption of some as Indonesia as proposed by India in BRICS or having mechanisms as observers for devoid of a secretariat how will this be actualised remains to be seen.

At the Track II meeting in Beijing suggested that BRICS should now consider having a regular Secretariat. However the leaders possibly felt that the current mechanism is working and working fine and therefore there was not much traction towards a Secretariat per se. The mechanisms being used as indicated by Dr Man Mohan Singh to an interview in Xinhua are, “meetings of Foreign Ministers, Finance Ministers and Central Bank Governors, Agriculture Ministers, National Statistical Authorities and other sectors which touch upon the economic well-being of our people”

Given that BRICS does not have a formal secretariat the measures outlined in the action plan particularly related to coordination at various levels such as the High Representatives for Security Issues or Ministers of Foreign Affairs during the 66th Session of the United Nations General Assembly will contribute to coordination on political front. Informal meetings of the representatives in the UN and at Geneva should also provide for coordination. The meetings of the Ministers of Finance and Governors of Central Banks meet under the G20 framework and during the annual meetings of the World Bank and International Monetary Fund.

Maintaining this momentum would therefore be important, lack of formal mechanisms for the same are certainly an hindrance, this and the likely blocks by countries as the United States which has all the technology wherewithal would be the BRICS problems in the years ahead.

On the economic front the common currency platform may take some time to fructify, On the trade front BRICS members can go in for a CEPA (closer/comprehensive economic partnership agreement) if they really want to expand trade. China is already looking for extending Chinese-built Tazara Railway to Johannesburg. That the South Africa connection will be beneficial to China is evident with the trade and investment profile of Beijing in the country. China is looking for joining Brazil and South Africa in their cooperative ventures in automobiles and mining or with Russia, Brazil and South Africa on space exploration and so on. Similar explorations can be made by other countries.

The establishment of BRICS Think-tank Symposiums, and establishing a network of research centres of all BRICS countries once it fructifies will add to the quality and value of the groupings deliberations. All in all it appears that BRICS has a bright future but from the long term perspective rather than the short to medium term, will it be able to sustain the momentum till then remains to be seen.

Bilaterals

For India the most important bilateral was between Indian Prime Minister Dr Man Mohan Singh and Chinese President Hu Jintao. The key issues were that of offsetting the adverse trade balance and evolving security concerns particularly on transgression on the border and sovereignty of Jammu and Kashmir’s accession to India in the light of the stapled visas being issued to citizens of these states by China.

The economic relationship was reviewed from the point of view of expanding two way trade to 100 billion dollars by 2015. On the security front establishment of an intermediate mechanism for resolving vexatious boundary issues relating to transgressions in the past has been encouraging. For China the possibility of resumption of defence exchanges and for India resolution of the stapled visa issue may be major gains though how these are actually implemented on the ground remains to be seen. The recent reports ascribed to key Indian military commanders of presence of Chinese troops on the Line of Control in Jammu and Kashmir have been discounted by both sides as they have taken a considered view of going ahead with the border mechanism.

With Russia the discussion has been mainly focused on cooperation in hydrocarbons, expansion of trade, safety of nuclear plants and research and development in the light of the events in Japan. In the field of hydrocarbons possibly cooperation in Sakhalin-III was flagged with participation by Indian company ONGC Videsh or others.

The bilateral between Mr Zumam the South African President and Dr Singh indicated strengthening of relations with plans to invite President Pratibha Devisingh Patil to South Africa in 2012 and UPA Chairperson Sonia Gandhi to attend the centennial celebrations of the African National Congress (ANC). The second round of Naval exercises of the two countries would be held during the year while bilateral trade targets have been set at $ 15 billion.

In the bilateral with Brazilian President Dilma Rousseff, it was decided that CEOs Forum composed of members of industry and trade representing the two countries should be activated so that bilateral trade between India and Brazil which is around only $8 billion could be enhanced. Indo-Brazilian joint ventures in information technology and high-technology areas are being planned.

Assuaging Concerns of Other Countries

BRICS members are aware of the wariness of others such as the United States and Japan or the EU who are seeing a non Western coalition of the developing World as a threat. All BRICS countries have been careful not to create an impression that this is a block directed against any particular country or grouping. Thus the BRICS countries were careful in indicating from time to time the grouping was not a competition with others. India has been particularly careful in ensuring that US and Japan did not see this as a shift by New Delhi from the long term strategic point of view.

To assuage the partners as Japan, India even send the Foreign Secretary Smt. Nirupama Rao with an agenda apart from other issues to discuss with Japan the contours of the BRICS as well as Sino Indian engagement. That the visit also was to express India’s concerns over the tsunami and nuclear accident provided the necessary camouflage. This was evident when the Foreign Secretary also talked about establishing an India-Japan-United States trilateral dialogue between the foreign ministers of the three countries on regional and global issues.Thus the message was loud and clear, India will play both the BRICS card as well as the trilateral strategic dialogue with US and Japan in tandem.
In addition it is evident that Japanese concerns on the yen would have also been understood better by the Indian side. This was certainly delicate balancing by New Delhi to ensure that Japan and the US were reassured even as the Prime Minister met with the other BRICS leaders on 14 April.

In terms of brass tacks it appears that India may have played the lead role in stymieing any Chinese efforts at expanding the currency debate thereby undermining the dollar and the yen. Thus proposals such as SDR and so on will be debated in the days ahead rather than having a scope for early implementation. More over with the next summit in New Delhi and thereafter most likely in South Africa, as both are not overly enthusiastic of delinking from the dollar, this may balance the US concerns.

Concluding Observations

The spotlight of BRICS is now on India with the Summit in 2012. BRICS so far have raised reasonable expectations and have been posing a limited common front in various forums, but this may see an increase in the years ahead though it may be a slow and steady process rather than any large leap. In the 2012 summit India is likely to pitch in for Indonesia. Whether China agrees to the same remains to be seen but given that Indonesia is a fast emerging economy located in South East Asia, it has the right credentials as far as New Delhi is concerned. India will also attempt to get in Indonesia to make BRICS less China centric as the large economic size of Beijing is certainly giving the impression. What ever it be, BRICS is emerging a bloc which is making others take notice.

----------------------------------------
Published Date : 27^th May, 2011