Last week marked a decade since the term BRIC was first coined by Goldman Sachs economist Jim O’Neill. BRIC became BRICS in December 2010 when Brazil, Russia, India and China invited South Africa to join their group. With around 40 per cent of the world’s population and nearly a quarter of its economic output, the BRICS countries came together earlier this year on China’s southern resort island of Hainan to show off their growing global heft.
Their joint statement underscored the need for a realignment of the post-World War II global order. The governing structure of international financial institutions, it said, “should reflect the changes in the world economy, increasing the voice and representation of emerging economies”. It also calls for “comprehensive reform” of the United Nations to make the body “more effective, efficient, and representative”. This was interesting, as China is today the biggest obstacle to changing the permanent membership of the Security Council.
Among the more specific actions and recommendations were an agreement for development banks in BRICS countries to open mutual credit lines denominated in local currencies; a warning over the potential for “massive” capital inflows from developed nations to destabilise emerging economies; and support for “a broad-based international reserve currency system providing stability and certainty”. There was an implicit challenge posed to the status of the US dollar as the leading global reserve currency. The Sanya summit came weeks after Brazil, Russia, China and India abstained on the United Nations Security Council resolution that authorised a no-fly zone over Libya and “all necessary measures” for protecting civilians there from Colonel Muammar Gaddafi’s forces.
It could be argued that there is an attempt by these emerging powers to coordinate their efforts on the global stage, and as the US under the Obama administration looks perpetually preoccupied with its internal troubles, a vacuum is being felt in the international system. This presents an ideal opportunity for these emerging powers to finally emerge as major global players.
But great power politics is a murky business. For all the bonhomie at the Hainan summit, there are serious differences among the BRICS themselves. First, there is the structural disparity between China and the rest. China’s rise has been so fast and so spectacular that others are still trying to catch up. Its dominance makes the very idea of a coordinated BRICS response to the changing global balance of power something of a non-starter. The overweening presence of China makes others nervous, leading them to hedge their bets by investing in alternative alliances and partnerships.
Moreover, there are significant bilateral differences among the BRICS. Brazil is worried about the influx of Chinese investment and cheap Chinese imports and has been very vocal in criticising China for its undervalued yuan. Brazilian manufacturers are losing market share to their Chinese counterparts. Brazil is also wary of China’s growing economic profile in South America.
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Russia too is worried about its growing economic disparity with China. Russia's failure to develop its Far East has allowed China not only a toehold in this strategically important region but has also pushed Beijing into the driver’s seat in defining the Asian security landscape. Russia’s Finance Minister Aleksei Kudrin has openly warned that if Russia fails to become a “worthy economic partner” for Asia and the Pacific Rim, “China...will steamroll Siberia and the Far East.” And, even though China is the largest buyer of Russian conventional weaponry, many in Russia see this as counterproductive because China might emerge as the greatest potential security threat to Russia, worse than what the US could ever become.
The saga of the recent decline in Sino-Indian ties is well-known. Despite the rhetoric of Asian solidarity, New Delhi remains sceptical of Chinese intentions. The prime minister himself has acknowledged that “China would like to have a foothold in South Asia and we have to reflect on this reality...It’s important to be prepared.” India’s trade imbalance in favour of China went up to $20 billion out of an overall bilateral trade of $55 billion as of December 2010, from $16 billion in 2009.
It is thus difficult to see a productive future for BRICS together. Even on western intervention in Libya, there were significant differences in their approaches. In China’s and Russia’s case, abstention actually meant a yes, as their veto would have killed any UN action. The fact that they abstained meant that they are willing to let the West proceed against Libya, albeit with limits. As non-democracies, they can’t be expected to champion the democratic aspirations of the Arab street. The actions of India and Brazil, however, underline the real challenges of the emerging global order.
The rise of BRICS is as exaggerated as the decline of the US. The tectonic plates of global politics are certainly shifting —but not yet in easily predictable ways.
The writer is a professor at the Defence Studies department of King’s College, London