Since the inception of the term “BRIC” nations
was invented by a Goldman Sachs employee back in 2003, there has been a lot of
hoopla about the rise of the emerging BRIC nations viz. Brazil, Russia, India
and China. A new member to this club – South Africa, was added a few years ago
to make the club sound even stronger as “BRICS”, the S standing for South
Africa.
These nations stand out as different from the
other emerging nations primarily because of their rapidly rising populations
(except Russia which actually faces a decline), high growth rates as compared
to the developed nations and most importantly their newly found economic
dynamism. There is no doubt that these five emerging nations have done pretty
well for themselves in the first decade of the 21st century and
still continue to do so, albeit at a comparatively slower pace. They also share
a more or less similar timing at which they started on this rapid rise. Russia
adopted market based capitalism after the fall of its predecessor state – The Soviet
Union in 1991, China really picked up its already liberalized market to a pace
of progress previously unheard of after the Tiananmen Square massacre of 1989,
India let go of its self-imposed shackles after the Balance of Payments crisis
of 1991, Brazil re-structured itself after the currency crisis of the early 90s
and South Africa was finally accepted back into the international fold after
the end of apartheid in 1994.
Despite so many common factors and similar
historical incidents shared by these nations and the escalation of their
impression as an “emerging” power bloc on the world stage to counter the
historical dominance of the western powers the BRICS countries still remain a
loose and ragtag sort of coalition of nations brought together by global media
hype rather than common interests. This weakness was evident when these
countries were unable to come to a consensus on nominating a candidate for the
presidency of the World Bank, a position on which America’s hegemony reigns
supreme.
At a recent BRICS summit in New Delhi, the
BRICS leaders made a call for a new BRICS bank which would aid development in
these countries as well as other poor nations of Asia, Africa and Latin
America. This announcement rekindled media speculation about the BRICS emerging
into a power bloc to counter the west.
In my opinion, this is more wishful thinking
than anything else. Let us go a bit deeper into the actuality of this situation
and forget the media hype for some time.
First, let us consider the basic definition of
a power bloc. A power bloc is basically an association of nations that project
their combined political, economic (and in some cases even military) power as a
single unifying force in order to achieve a common advantage. By this metric US-NATO
and the former Warsaw Pact nations of the Eastern Bloc can be considered to be
power blocs. Another property shared by most power blocs is that most nations
in these blocs are neighbors or in the same region. Bloc members have
intertwined economic interests, similar cultures and very little (if any) internal
animosity amongst themselves. Moreover, a power bloc generally has only one (or
rarely – two) major power leading the rest. The US-NATO relationship has the
USA has the major power and the Warsaw Pact was led by the erstwhile Soviet
Union. All these features are clearly absent in the BRICS at this point of
time.
I agree that the manifold increases in
bilateral trade amongst the BRICS have brought about an unprecedented integration
of these economies compared to say 20 years ago. But, the level of integration
in terms of economic interests is still not mature enough. Each of these
countries has extremely distinct cultures and “ways of life”. Each nation is in
geographically diverse regions in the world (even though India and China and
China and Russia share common borders they are in distinct geostrategic regions
of the world).
With the difference in geostrategic regions
come differences in geostrategic and long term interests. For example, Brazil
would not be too keen or interested in the solution to the India-Pakistan
Kashmir dispute, nor would Russia be too interested in increasing racial
harmony between blacks and whites in South Africa.
Another impediment to closer integration would
be internal disputes between bloc members. Classic cases within BRICS include
the Siachen and Arunachal Pradesh border issues between India and China and the
mini Cold War going on between Russia and China about the “Great Game” in
Central Asia which has historically been Russia’s backyard but now is slowly
becoming China’s. Inevitably, such conflicts of national interests supersede
the supranational interests of a BRICS body if it would ever come into
existence. China would definitely not be happy (or agree) with India’s
application for a loan to build infrastructure in Arunachal Pradesh which China
considers its sovereign territory. Issues over Tibet would assume similar
proportions on the supranational scene.
At the other end, if these countries do become
somewhat idealistic, rise to the challenge and think long term the BRICS Bank
could actually become a tremendous step towards development throughout the
world and actually have a shot at challenging western dominated global
institutions like the World Bank and IMF. The development of such a body would
also shoot countries like India and Brazil which (rightly) deserve a permanent
berth at the UN Security Council to their goal in the right direction. A BRICS
bank would also increase by leaps and bounds the social, political (and even
military) integration of these nations on an unprecedented scale. A BRICS bank
would also facilitate to shift the dependence of developing nations worldwide
from the US Dollars to something like a basket of BRICS currencies.
For all this to happen, disparities in economic
conditions have to be reduced to a point where such a structure is actually
feasible. Brazil, Russia and South Africa are middle income nations in terms of
per capita GDP whereas China and India are middle income countries at best.
Brazil and Russia are net commodity exporters whereas India and China import
the same commodities in large quantities. Synergies between such situations can
also be engineered, but for that to happen a lot of political courage is
required on part of all these countries. Sadly, political courage is lacking
everywhere these days.
To summarize, conventional wisdom is against
the formation of a BRICS bloc or a BRICS bank, but if it indeed does
materialize, then we can look forward to a golden era of integration between
these countries which ultimately benefits its citizens the most. For nearly 40
percent of the world’s population, that would not be a bad deal.
Mitul Choksi
23-April-2012
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