Brazil, Russia, India, China and South Africa’s leaders meet on March 26 and 27 at the fifth BRICS summit. The gathering of the world’s leading emerging economies, which account for a fifth of global GDP, comes as their developed counterparts are visibly struggling to recover from the Great Recession that followed the 2008 global financial crisis. Momentum abides with the BRICS.
It is a time to be seized. Yet while the BRICS have evolved from an acronym into an informal alliance since the term was coined by Jim O’Neill, an economist at Goldman Sachs’ global economics research team, in 2001, it remains a disparate grouping. Geographically, the five BRICS countries come from four continents. They are spread across the political spectrum from democracy to single-party rule. All embrace state capitalism with differing degrees of fervor, competency and success. All have rivalries with each other. All things considered they still share common ground, presented as the BRICS’ ultimate goal: to forge a non-Western based economic order.
Dilma Rousseff, Vladimir Putin, Manmohan Singh, Xi Jingping — in his first international outing as China’s paramount leader — and host Jacob Zuma need an actual project to start turning that aspiration into reality if the bloc is to have global influence that is more than the sum of its parts. As the leaders convene in Durban, South Africa, they know they must present something concrete. Expect a development bank and a foreign exchange reserve pool.
The South-South model of aid seems a logical consequence of the bloc’s commitment to ease the economic dependency on Western-based institutions such as the World Bank and the International Monetary Fund. The BRICS are seeking greater influence over them, as they believe such organizations mainly reflect the interests of the rich countries.
The idea of a joint development bank was the main outcome of the previous summit held in New Delhi a year ago. Little progress has been made since, largely because India has been concerned that it would fall under China’s sway. That is one reason that it has become a priority on the Durban agenda. It needs a green light for at least some basics such as its scale, functions, and governance — even for where the infrastructure bank would be based (India has shot down China’s offer of Shanghai.) If not this time, then probably never.
Another plan that could be presented is a joint foreign exchange reserves pool, intended to provide a capital security network among BRICS that could be tapped to stabilize economies during periods of global financial crisis or outbreaks of currency wars. The reserve could initially be up to $120 billion. For now, it’s likely that China and Brazil will go ahead with a $30 billion currency swap.
No matter what comes from these two plans, the BRICS are likely to approve a research and analysis center, which would be a first step to move towards both bigger projects. That may be the Durban summit’s most concrete achievement, though there are rumors that O’Neill, who announced he would retire as chairman of Goldman Sachs Asset Management earlier this year, could take a BRICS post such as secretary general (the probability of that being announced this week is low).
It’s not only economic matters that will determine the long-term viability of the BRICS as a bloc. It also needs to take on global issues that its members have been reluctant to address as individual nations. Syria, where the stance of two of its member countries have — in some part — limited international action, is the most pressing of these, but the BRICS must build common and coherent positions on global issues.
Cooperation between BRICS countries and Africa is also high on the summit’s agenda with the theme being “BRICS and Africa: Partnerships for integration and industrialization.” It comes at an important time as China, the economic bigfoot among the bloc, is seeing its relationship with Africa disturbed, and as its fellow informal alliance members begin to realize how the equitable relationships that the BRICS concept is founded on are not necessarily that evenhanded.