” BRICS nations have decided to set up a $100 billion Contingency Reserve Arrangement to tackle financial crises in the emerging economies”….
At a summit in South Africa on Wednesday, Vladimir Putin likened the BRICS nations – Brazil, Russia, India, China and South Africa – to Africa’s “Big Five” game beasts of trophy hunting lore – the lion, elephant, buffalo, leopard and rhinoceros.
The Russian president’s comparison captures the dilemma of these muscular emerging global powers, which together present a formidable potential economic and political counterweight to the developed West, but individually could hardly be more different.
The question is whether the BRICS five can run as a herd or hunt as a pack on the global stage, transforming their diverse but collective strength into real institutions and coordinating structures to project their voice in the world.
At a two-day summit in Durban, South Africa, the leaders of countries that make up more than 40 per cent of the world’s population and a fifth of global GDP seemed to have little concrete to show from their mostly closed-door deliberations.
After mooting plans for a BRICS development bank at a summit in New Delhi a year ago, the leaders in Durban were only able to announce the start of formal talks on the constitution of the bank, a lumbering pace even for a group as diverse as the BRICS.
“We have decided to enter formal negotiations to establish a BRICS-led new development Bank based on our own considerable infrastructure needs, which amount to around $4.5 trillion over the next five years,” the host, South African President Jacob Zuma, told the summit.
He added the bank aimed to cooperate in the future with other emerging markets and developing countries, but revealed little about the structure of a world institution pitched as a potential complement, if not rival, to the IMF and World Bank.
A separate statement from the “FIVE Heads of state” blandly hailed the development bank plan as “feasible and viable”.
Russian Finance Minister Anton Siluanov had said on Tuesday that BRICS ministers in Durban seeking to thrash out the technicalities of the bank had not been able to agree yet on details of its funding or its location.
“It cannot be done overnight. We just used one year since the New Delhi summit to complete a feasibility study and now we are at a very different stage where, as always, the devil is in the details,” Russia’s deputy foreign minister Sergey Ryabkov told Reuters on Wednesday.
Zuma also announced the group’s “resolve” to set up a $100 billion foreign exchange reserves pool, again indicating little real progress on creating another financial coordination tool.
Born in a research paper :
That the BRICS have come even this far could be seen as surprise. The group began as an idea in a 2001 research note by a Goldman Sachs banker, who coined the term BRIC to refer to fast-growing big countries Brazil, Russia, India and China, on a path to overtaking the world’s rich nations in economic power.
Those four are the only developing countries that number in the world’s top 10 by GDP, and each is a giant in its region, but they have little else directly in common. Yet they share a sense that institutions set up by the West are ignoring their interests, and in 2009 they held a summit in Russia, announcing their goal of joining forces to counterbalance the West.
They have held annual summits since, in 2010 adding South Africa, the largest economy on its continent, although it barely cracks the global top 30 and is a twentieth of China’s size.
“We have firmly established BRICS as a credible and constructive grouping in our quest to forge a new paradigm of global relations and cooperation,” Zuma said on Wednesday.
At the Durban summit, the South African hosts announced the signing of two multilateral agreements, one on “green economy co-financing”, the other on infrastructure co-financing for Africa, but no figures or details were immediately given.
Bark, but no bite? :
Seasoned BRICS observers said they were not surprised by the lack of concrete institution-creating results from the summit.
“I think there was too much hype around it,” said Martyn Davies, chief executive of the Johannesburg-based Frontier Advisory consultancy that focuses on emerging markets.
“They are still battling to create the economic institutions to back their geopolitical rhetoric … the rhetoric is not supported by the substance,” he told Reuters.
Just as lions, elephants and rhinos are not natural allies, Davies saw the BRICS countries as “very disparate, with no political commonality”.
After only a few hours of plenary talks at a Durban conference centre, the BRICS heads of state retreated to a nature reserve lodge on Durban’s outskirts for a closed-door dialogue with a score of African presidents about “unlocking Africa’s potential” by supporting infrastructure construction.
Led by China, the BRICS are now Africa’s largest trading partners and its biggest new group of investors. BRICS-Africa trade is seen eclipsing $500 billion by 2015, with China accounting for 60 per cent, according to Standard Bank.
African governments and leaders broadly welcome the multi-billion-dollar Chinese-led BRICS trade and investment influx.
“You have to put money into development. The West has not put money in. This is what China does,” Congo Republic’s Transport Minister Rodolphe Adada told Reuters in Durban.
He said Africa could only benefit from the eventual creation of the BRICS development bank: “What we already do individually (with BRICS members), we can multiply if we have this instrument,” Adada said.
Signals to the west :
Bala Ramasamy, economics professor at Shanghai’s China Europe International Business School, said that despite kindred statements about rebuilding the world’s financial architecture, the BRICS nations have struggled to find a common identity.
“The BRICS as a group does not mean much. They mean something individually. This is not an alliance of equal partners. China is the dominant player here,” Ramasamy said.
“If you think about BRICS as a balancing power to the US and the EU, this is not one entity. So how do you expect them to counterbalance the United States?” he added.
The World Bank has always been led by an American and the IMF by a European since both bodies were founded in 1946. Last year, the BRICS failed to agree on a developing world candidate to be the new World Bank president and could not stop the appointment of another US citizen, Korean-born Jim Yong Kim.
Frontier Advisory’s Davies said he believed the only emerging power which presents a real substantive challenge to the existing world political and financial status quo is China. But he added Beijing seemed unwilling to shoulder this burden alone and sought company in the BRICS group.
In Beijing, the influential Chinese tabloid the Global Times acknowledged the BRICS would face some problems when seeking to deepen their multilateral cooperation.
“But they are at least encouraging each other and increasingly distancing their interests from Western ones. This will further define fairness and justice worldwide.”
In the absence of concrete institutions to consolidate and leverage their clout on the global stage, Davies said the BRICS should consider widening their organization. “What about new members … Turkey, Indonesia, Mexico, Nigeria?” he said.
Ramasamy said the BRICS summits served as “a signal to the developed world that the emerging markets are getting their act together one way or the other”.
“Whether they do it or not is a separate question, that time would speak of “.