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Finance & Economy

BRICS countries find it hard to run as a herd: Brazil, Russia, India, China, South Africa


(L-R) Indian Prime Minister Manmohan Singh, Chinese President Xi Jinping, South African President Jacob Zuma, Brazilian President Dilma Rousseff and Russian President Vladimir Putin pose for a family photograph during the fifth BRICS Summit in Durban, March 27, 2013. Credit: Reuters/Rogan Ward

(L-R) Indian Prime Minister Manmohan Singh, Chinese President Xi Jinping, South African President Jacob Zuma, Brazilian President Dilma Rousseff and Russian President Vladimir Putin pose for a family photograph during the fifth BRICS Summit in Durban, March 27, 2013. Credit: Reuters/Rogan Ward

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 percent 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 percent, 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 U.S. 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 U.S. 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.”

Source: Reuters – “BRICS “Big Five” find it hard to run as a herd”
 

About chankaiyee2

Author of the book "Tiananmen's Tremendous Achievements" about how with the help of Tiananmen Protests, talented scholars with moral integrity seized power in the Party and state and brought prosperity to China. The second edition of the book will be published within a few days to mark the 25th anniversary of Tiananmen Protests All the parts in the first edition remain in the second edition with a few changes due to information available later and better understanding. There are also some changes for improvements of style. The new parts are Chapters 12-19 on events in China after the first edition was published: The fierce power struggle for succession between reformists and conservatives; Xi Jinping winning all elders’ support during his mysterious disappearance for 2 weeks in early September, 2012; and Xi Jinping Cyclone. Chan Kai Yee's new book: SPACE ERA STRATEGY: The Way China Beats The US An eye-opening book that tells the truth how the US is losing to China. The US is losing as it adopts the outdated strategy of Air-Sea Battle while China adopts the space era strategy to pursue integrated space and air capabilities: It is losing due to its diplomacy that has given rise to Russian-Chinese alliance. US outdated strategy has enabled China to catch up and surpass the US in key weapons: Hypersonic weapons (HGV) that Pentagon regards as the weapon that will dominate the world in the future. Aerospaceplane in China’s development of space-air bomber that can engage enemy anywhere in the world within an hour and destroy an entire aircraft carrier battle group within minutes. Anti-satellite (ASAT) weapons, anti-ASAT weapons, stealth aircrafts, drones, AEW&C, etc. The book gives detailed descriptions of China’s weapon development based on information mainly from Chinese sources that the author monitors closely. U.S. Must Not Be Beaten by China! China is not a democracy. Its political system cannot prevent the emergence of a despotic leader or stop such a leader when he begins to bring disasters to people. A few decades ago, Mao Zedong, the worst tyrant in world history did emerge and bring disasters to Chinese people. He wanted to fight a nuclear war to replace capitalism with communism but could not bring nuclear holocaust to world people as China was too weak and poor at that time. If a despot like Mao Zedong emerges when China has surpassed the US in military strength, world people will suffer the misery experienced by Chinese people in Mao era. China surpassing the US in GDP is not something to worry about as China has the heavy burden to satisfy its huge population, but China surpassing the US in military strength will be world people’s greatest concern if China remains an autocracy. US people are of much better quality than Chinese people. What they lack is a wise leader to adopt the correct strategy and diplomacy and the creative ways to use its resources in developing its military capabilities. I hope that with the emergence of a great leader, the US can put an end to its decline and remain number one in the world. China, US, space era strategy, air-sea battle, space-air bomber, arms race, weapon development, chan kai yee

Discussion

One thought on “BRICS countries find it hard to run as a herd: Brazil, Russia, India, China, South Africa

  1. Tough task to get individualistic countries together

    Like

    Posted by travtrails | April 1, 2013, 10:59 pm

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