BUT THE WALL DOESN’T SIT ON MUCH OF A FOUNDATION

So the BRICs have become the BRICS.   The annual leaders meeting  – this is actually the third annual meeting of BRIC leaders – that originally included Brazil, Russia, India and China – has been enlarged this meeting with the addition of South Africa following the invitation to President Jacob Zuma by this year’s host, President Hu Jintao.

What then is the BRICs or BRICS or BRICSAM for that matter?  Some have suggested it is a rather cruel joke or no better than an artificial construct of the fertile mind of Goldman Sachs’s Jim O’Neill – today the Chairman of Goldman Sachs Asset Management.  Some ten years ago he invented the acronym  BRICs to signify a group of robust emerging market economies, growing rapidly and presenting attractive investment opportunities.  But these original four, and now apparently these five emerging market economies, appear to have taken on a life of their own.  So what do the annual gathering and the acronym mean in global governance?

Well first let’s remember that these emerging economies, notwithstanding the group identification, remain quite distinct.  Indeed, O’Neill takes some umbrage at the inclusion of South Africa in the original grouping and prefers to retain the original acronym.  O’Neill points out that the South African economy, which is $USD350 billion, is about 20 percent the size of the next smallest economies in the BRICs – Russia and India.  Thus the inclusion of South Africa suggests that the group is something other than an economic grouping.

Some experts see the BRICs as an emblem of how the informal global leadership lodged in the G7 for several decades is now being supplanted in part by a larger leadership that includes emerging market countries.  In this view, America’s moment of unilateralism in global affairs has now passed and the world is becoming more deeply “multipolar”.  As the BRICS leaders themselves declared in their closing communiqué this year – the Sanya Declaration:

We affirm that the BRICS and other emerging countries have played an important role in contributing to world peace, security and stability, boosting global economic growth, enhancing multilateralism and promoting greater democracy in international relations.

No emerging markets group seemed possible without including a member from Africa.  Yet it is not at all clear – as argued by Mzukisi Qobo his recent Feature of the Week on this website — that Africans view South Africa as an African representative, or for that matter that South African officials and politicians view themselves as representing anything beyond their own country.

For all of this, however, the BRICS do not seem to have yet become a new power balanced against the old.  And here is why.

In the Sanya Action Plan, a part of the Communiqué, the leaders promoted cooperation among officials. They want to see more meetings between their mid- level bureaucrats. They want to see more BRICS ‘caucus’ meetings when the G20 finance ministers assemble, and at other international for a.  But the five countries simply aren’t coordinating policy, at least not yet, even when they agree.  All seemed to oppose the use of force against Qaddafi, for instance. But when UN Resolution 1973 proposed multilateral action to support humanitarian intervention in Libya – neither China nor Russia, permanent members of the UN Security Council, vetoed the resolution; South Africa actually supported the resolution; and Brazil and India abstained.

And there are other puzzles in the BRICS equation. Russia, for its part, is in both BRICS and The G8. And the BRICS, at Sanya, supported for the World Trade Organization’s approach to international trade law – a position that is more characteristic of traditional G8 leaders, than of emerging markets bent on disrupting old rules:

We share the view that the world is undergoing far-reaching, complex and profound changes marked by the strengthening of multipolarity, economic globalization and increasing interdependence. ... Based on universally recognized norms of international law and in the spirit of mutual respect and collective decision making, global economic governance should be strengthened, democracy in international relations should be promoted, and the voice of emerging and developing countries in international affairs should be enhanced.

And while the ‘loose’ monetary policy, including low interest rates, engineered by the United States Federal Reserve has provided a convenient policy target for the BRICS members to castigate, the United States at least, many also oppose China’s policies undervaluing its own currency.  Indeed, many BRICS members suffer from economic imbalances against their co-member China – just as the United States does.

So, while the BRICS may be a rhetorical chorus against traditional powers, the BRICS themselves don’t seem to be singing from the same sheet.

 

RELATED MATERIAL FOR THE WEEK OF APRIL 25

BACKGROUND

Together, the BRICs account for 40 per cent of the world’s population and about 25 per cent of global GDP. With a combined GDP of USD $8.7 trillion in 2010, the BRIC economies have accounted for 30 percent of global economic growth since 2000 and 45 percent of global economic growth since the beginning of the financial crisis.

On June 16, 2009 the first BRIC summit was held in Yekaterinburg, Russia. At the summit, the leaders discussed the then current global financial crisis, global development, and further strengthening of the BRIC group. At the conclusion of the first summit, the BRIC leaders issued a joint statement calling for increased economic reform and demanded that developing economies have a ‘greater voice and representation in international institutions.’

On 16 April 2010, the second BRIC summit was held in in Brazil in Brasilia. The leaders discussed and issued a joint statement on a common vision on global governance, international economics and trade, the fight against poverty, terrorism, climate change and other important social, political and economical issues.

On 14 April 2011, the third BRIC summit was held in Sanya on the island of Hainan, China. The summit was attended for the first time by five heads of state/heads of government of the newly created BRICS, which includes South Africa as a permanent member. In a joint declaration, the five leaders called for a reform of the UN and global monetary and financial institutions, urged a peaceful resolution to the conflict in Libya, and pledged greater cooperation amongst themselves.

On April 12 2011, the IMF predicted robust growth for the BRICS countries in 2011. China’s growth is expected to remain at a ‘heady’ 9.6 per cent this year and an expected 9.5 per cent in 2012. India’s output is projected to grow 8.2 per cent in 2011 and 7.8 per cent in 2012. Russia’ s output is expected to grow 4.8 percent this year and 4.5 percent in the next year. South Africa is projected to rise 3.5 percent in 2011 and 3.8 percent in 2012.

RELATED MATERIALS

  • Xinhua commented thoroughly on the BRICs leaders’ meeting last week, noting its reception by experts as well as President Hu Jintao’s speech.
  • Bloomberg reported last week that BRIC leaders, as well as leaders from South Africa, had expressed reservations about reforms proposed by the IMF that would put limits on capital inflows to emerging economies.
  • Goldman Sachs’ website on BRICs features reports, charts, graphs, and videos about the BRICs, including forecasts for their continued growth.
  • The Brookings Institution’s website on the BRICs provides commentary and reports on the BRICs as well as on economic and political issues impacting individual BRIC member states.
  • The Higher School of Economics in Moscow, Russia, has complied documents on BRICs Summits and Ministerial Meetings, as well as other documents related to the BRICs. These documents can be found on their BRICs portal.
  • Dr. Alan Alexandroff, Director of Online Research at the Munk School of Global Affairs, writes regularly on news and issues related to the BRICs on his blog, RisingBRICSAM.
  • Goldman Sachs has embarked on a new project, whose aim is to draw investors to the “next eleven” (after the BRICs) emerging economies. These economies have been designated the N-11, and the Goldman Sachs report titled “N11 – More than Just an Acronym” features analysis and statistics on their past growth and their prospects for the future.