Despite all the rhetoric about shared economic interests, the summit meeting of leaders of Brazil, Russia, India, China and South Africa (Brics), at Sanya in China last week, stood out for the shared concern of these countries about the ‘new assertiveness’ of western Europe and the United States, as witnessed in West Asia and North Africa. The Libyan intervention and talk about a ‘new great game’ in Africa and the fear of rising oil prices (not shared by Russia) seem to have created enough chemistry between the Brics heads of government. The Brics statement on Doha also papers over internal differences between Brics members on what they hope to achieve from the round (here again Russia is an outlier since it is not yet a member of the World Trade Organization). Among the other issues flagged at the summit — concern about the dollar’s preeminence as the international reserve currency, particularly in how it delayed global economic balancing, the impact of uncontrolled capital flows and rising commodity prices on developing countries and the need for more representative leadership of multilateral financial institutions, such as the World Bank and the IMF — these issues have been on the table for some time now, and it would be interesting to see to what extent the BRICS as a collective entity can effect substantive change. Arguably, the potentially most significant outcome of the summit was the decision to extend intra-member loans, grants and transact some dealings in member currencies. Realistically, it is hard to see this move having global ramifications, given that no member currency is anywhere close to replacing the US dollar as an international currency. Even talk of the renminbi as a substitute to the dollar proved to be short-lived, given the absence of well-developed financial markets in China and its reluctance to make its capital account fully convertible. Thus, rhetoric aside, this decision is largely a signal of growing impatience and frustration with the United States’ inability to rein in its budget and trade deficits, rather than a sense of ‘shared prosperity’, as the Sanya Declaration states.
The effectiveness of BRICS as a pressure group depends on the cohesion with which they can work together, in the days to come. Relationship management will be vital because expectedly, the interests of the five countries converge on some issues and diverge on others. For example, the group as a whole would stand to gain from standing up to Western pressure on opening up domestic agricultural markets, while simultaneously resisting attempts to impose non-tariff barriers on exports from these countries. Unbridled capital flows, especially of the portfolio variety, are also a common concern. However, on issues such as commodity prices, the interests of the countries could diverge, given that Russia, Brazil and South Africa are largely commodity exporting countries, while China and India are relatively resource scarce. A Prisoner’s Dilemma like situation could see the group unravel as rapidly as it came together. However, if the bonhomie seen at Sanya translates into coordinated action, BRICS can be a truly effective agent of much-needed global transformation. According to current projections, the collective BRICS GDP is expected to equal or exceed that of the United States by 2020. It follows that the group potentially wields considerable global influence.
