How BRIC has changed the pecking order
Saturday, April 17
Seated inside the Itamarty Palace — a Cathedral-like complex complete with conference rooms and an auditorium — were four of the world’s most powerful leaders: Chinese President Hu Jintao, Indian Prime Minister Manmohan Singh, Russian President Dmitri Medvedev and Brazilian President Luis Inacio Lula Da Silva. They had got together under the banner of BRIC — a Goldman Sach’s terminology kicked off by a study it did in 2005 showing how Brazil, Russia, India and China (hence the acronym BRIC) were among the four fastest growing economies. Also, that their combined economies would by 2050 eclipse those of the current world’s richest ones, including the US.
Together these countries account for 40 per cent of the world’s population, 26 per cent of the world’s geographical area and 22 per cent of the world’s GDP. In the past two years, they contributed to 50 per cent of the world’s economic growth despite the recessionary conditions elsewhere. Two of them — Russia and Brazil — were among the world’s largest petroleum producers. And the other two — China and India — were the world’s biggest energy guzzlers.
They had their differences — India and China have a long-standing border dispute apart from being rival centres of power in Asia. Bilateral relations between Russia and China continue to be uneasy. And Brazil has its views on the WTO negotiations that are not in step with India. But when they held their first summit in Ekaterinaburg last year, it was apparent there was an extraordinary convergence of thinking on key issues confronting the world.
So when they met for the second time in Brazilia late Friday night, just days after the Nuclear Security Summit in Washington DC, the power that the four leaders exuded was palpable in the conference room. As a senior Indian official present in the room said, “They had done their bonding and there was a genuine good feeling around the table. They all were seasoned leaders and on top of the game. They were dealing with extremely complicated issues but were well versed in them and did so without reading from scraps of paper or prepared text.”
Clearly this was the new P-4 — a power grouping that is already challenging the US position as the dominant bull of the world. When they put their hands together — a show of solidarity similar to that of soccer that Brazil’s Lula genially insisted upon — the weight of the words in the joint statement they signed grew four-fold.
In that power-packed hour they dealt with the whole gamut of big issues confronting the world and came out with hard-hitting statements. Their message was clear: The old order had to change and in the emerging new one, the voices of these four would be among the most powerful. Their joint statement began with: “We share the perception that the world is undergoing major and swift changes that highlight the need for corresponding transformations in global governance in all areas. We underline our support for a multi-polar, equitable and democratic world order.”
It was their observations of the state of the world economy that were significant. When Manmohan spoke his opening remarks, the other three leaders listened avidly for the Indian Prime Minister is among the world’s most knowledgeable on the subject. Manmohan said: “While it appears that the immediate global economic and financial crisis is behind us, it is still too early to say that we are on the path of long-term recovery.” Apart from being dependent on how developed countries fare in the coming year, Manmohan said: “Sustainable recovery will also depend on several factors such as enhanced investment for infrastructure development, stable capital flows to developing markets, appropriate macroeconomic adjustments and avoiding complacency in the area of financial sectors reforms. Financial inclusion will be a major determinant of success.” The joint statement that was released reflected Manmohan’s assessment.
The BRIC summit overshadowed the summit of IBSA (India, Brazil and South Africa) leaders. Originally, the BRIC leaders were to meet a day after the IBSA summit but because of the earthquake in China, President Hu was forced to truncate his stay and so the other three leaders decided to meet an hour after the IBSA summit ended. One official joked: “It was like dropping a BRIC on IBSA.”
Though older to BRIC by several years — the first IBSA summit was held in 2006 — the trilateral forum has yielded mixed results. While trade between the three countries that represent three major continents — South America, Africa and Asia — has grown substantially to around $10 billion, the leaders are still groping around for hooks to strengthen ties between them and sustain the institution. For India, both Brazil and South Africa contribute barely three per cent each to its total international trade. Brazil alone does $ 43 billion trade with China.
When Manmohan was asked whether South Africa should be included in BRIC so that IBSA could be merged with it, he pointed out, “IBSA is a grouping of democracies from the South while BRIC is in many ways an artificial creation that emerged out of a research paper.” It was the enthusiasm of Brazil’s Lula who championed South-South cooperation that saw IBSA established itself as a power group that matters. The learning phase of IBSA is over and they have also demonstrated their clout in the multi-lateral forum. But there is an absence of concrete projects on the ground and the grouping still remains in its infancy.
The real worry is how Brazil will treat IBSA after Lula gives up his Presidency later this year after finishing his constitutionally permitted two terms in office. If his Workers Party wins, his successor may still give IBSA the time, attention and investment that Lula brought to it. But if the Opposition’s Social Democratic Party wins, with its inclination to favour relations with the West over that with the South, IBSA may begin to wilt. But it needn’t have to worry because BRIC is solid and if you add South Africa to it, the acronym could turn plural: BRICS, making it even stronger than before.