Cementing the BRICS: Collective action will determine its success

Cementing the BRICS: Collective action will determine its success

New Delhi is hosting the 4th BRICS summit on March 28 and 29 of this month. The theme of the summit will be the ‘BRICS partnership for global stability, security and prosperity’ The five member grouping consists of Brazil, Russia, India, China as well as South Africa, which was admitted at the last BRICS summit in Sanya in April last year.

The importance of the grouping can be gauged from the fact that they together constitute 25.9 per cent of the world’s geographical area, 43 per cent of the global population, 18 per cent of global trade and 25 per cent of the global gross domestic product in terms of purchasing power parity.                      
The group as a political entity acquired resonance and its acronym after the prediction of investor banker Jim O’Neill of Goldman Sachs in 2001 that the emerging economies of the countries would propel the trajectory of world growth and development in 21st century.

Later the predictions were fine tuned and packaged in the much touted GS’ report which said by 2039 the combined GDP of Brazil, Russia, India, and China would exceed that of the US, Britain, France, Germany, Italy and Japan (the G6). In 2050, the study predicted, China’s GDP would be $44.5 trillion and India’s $28 trillion. The report also forecast that China would be the world’s largest economy, and India the third largest.

An important challenge before the BRICS is the reform of the global financial institutions like the World Bank and the International Monetary Fund (IMF). At the last BRICS summit in April, the Sanya Declaration called for a quick achievement of the targets for the reform of the IMF agreed at the G-20 summits, and reiterated that the governing structure of international financial institutions should reflect the changes in the world economy, increasing the voice and representation of emerging economies and developing countries.

 The developing economies of the BRICS, therefore, have been urging for strengthening the regulatory frameworks of these financial institutions and allowing them to have a greater say in the running of these institutions being among the top 10 shareholders of the IMF.

It is against this backdrop that when Strauss-Kahn left IMF, the covetous position was offered to Christine Lagarde of France, who subsequently appointed the Chinese economist Zhu Min as the deputy director, giving long awaited recognition to China’s huge power in the global economy. Besides Zhu Min, Lagarde also appointed White House aide David Lipton to the IMF’s number-two position. The two were Lagarde’s first appointments.

Follow the process

The post of World Bank chief will be falling vacant in June, when the outgoing president Robert Zoellick demits office. Beijing last week said that the World Bank members should strictly follow the process decided by the bank on selecting its chief, and pay attention to the concerns of emerging markets and developing countries.

Recently Ms Lagarde visited Beijing and New Delhi and presumably discussed about the appointment of World Bank chief and immediately thereafter president Barack Obama announced the name of Korean-American Jim Yong Kim for the high profile job. The choice of  Kim, who has a doctoral degree in anthropology from Harvard University, is only a symbolic shift of the economic power from Atlantic to Asia-Pacific. Considering India’s stature and profile India deserves to be represented in such financial institutions to give representation to a large chunk of the world’s population.

A significant and tangible outcome of the New Delhi summit could be the fruition of prime minister  Manmohan Singh’s brainchild – the BRICS Bank forging South-South cooperation. At the G-20 summit held in Seoul in November last year Singh had pleaded that multilateral development banks have an important role to play in recycling of global savings.

The summit is also expected to articulate is position and express concern on major international issues posing challenges to peace, stability and security in the region and world at large. In general BRICS maintains the position that the use of force should be avoided and that the independence, sovereignty, unity and territorial integrity of each nation should be respected.

Both Russia and China have vetoed UN resolutions in October last year and in February this year for regime change in Syria. Voting in favour of the resolution, India said it supported the Arab League for a peaceful resolution of the Syrian crisis.
New Delhi BRICS summit will also provide yet another platform to Manmohan Singh to share and exchange notes on bilateral issues with the BRICS leaders on the margins of the meeting.

His meeting with Chinese president Hu Jintao will be watched with avid interest by all concerned. Hu and Manmohan Singh enjoys a close affinity with each other. President Hu has been instrumental in giving contents and robustness to the relationship between the two countries.

As he would be demitting office in an year’s time, it is likely that he may come out with some deliverable to give a boost to the relationship between the two countries. The success of the summit depends on political convergence and genuine goodwill, and not rhetoric or pious platitude. China being the larger and a more powerful country should show magnanimity.

(The author is a senior fellow at the Institute for Defence Studies and Analyses, New Delhi)