Siddharth Varadarajan

Journalist | Writer | Analyst

BRIC is not a bloc but a soft balancer

Brazil, Russia, India and China will make their debut as a joint political act next week. Here’s why the world may never be the same again…

13 June 2009
The Hindu

BRIC is not a bloc but a soft balancer

Brazil, Russia, India and China will make their debut as a joint political act next week. Here’s why the world may never be the same again.

Siddharth Varadarajan

Fresh from my first visit to Brasilia and bang on the eve of the G8 summit in Heiligendamm for which the Indian Prime Minister was preparing to travel as an ‘outreach partner,’ I wrote an article for The Hindu in June 2007 called “Forget the G8, it’s time for a BRICs summit.” The reaction in Delhi was positively underwhelming. A senior Indian official who read it poured cold water on the idea and said the last thing the coun try or the international system needed was more alphabet soup.

Those were the heady days of the Bush era when Indian elites thought their strategic partnership with the United States meant the end of history, and of diplomacy. A lot of water has flowed down the Amazon, the Volga, the Ganges and the Yangtze since then. On June 16, leaders of the four countries dubbed ‘BRIC’ by Goldman Sachs because of their rising economic weight will meet in the Russian city of Yekaterinburg for their first-ever standalone summit. The meeting will take place against the backdrop of the severest financial crisis the world has seen in several decades, caused by the actions and inactions of the U.S. and other leading western economies known collectively as the G7. Together with Russia, an outlier among advanced market economies, the G7+1 or G8 have tended to act as if they are the ultimate arbiters of the world’s economic fate. At the best of times, their ability to “manage” the world economy was simply an illusion; today, when their greed, incompetence and dogmatism have brought the global economy to a standstill, the idea that they should set the agenda on behalf of the rest of the world is preposterous.

During the Heilegendamm summit itself, the Outreach countries invited from the four corners of the world for a glorified photo-opportunity with the G8 got to reflect on the irony that collectively, they, plus Russia, had equal or arguably greater system-shaping power in the world than the U.S., Britain, France, Germany, Italy, Canada, and Japan.

Taken together, the BRIC countries account for a substantial share of world growth and output. By 2020, their output will be 40 per cent of global GDP. They account for 25 per cent of the earth’s land mass and 40 per cent of its population and will play an ever increasing role in strategic sectors such as energy. And yet, when it comes to working out the future rules of the global game, it is the G8 that sets — or tries to set, or believes it sets — the agenda and priorities.

Since June 2007, when President Lula of Brazil floated the idea of a BRIC meeting, the BRIC foreign ministers have held their first standalone meeting. More importantly, the BRIC finance ministers met last November and again this March in the context of the world financial crisis and the G-20 stabilisation process. And now, a full-fledged summit will be held.

After a hesitant, somewhat tentative, start, then, BRIC can be said to have arrived on the world stage. But there is not enough clarity about how it should evolve and grow, what issues it should take up and what form its future interactions should take. Each of the four countries comes to BRIC with differing levels of disaffection with the global system as it exists today. And that is why identifying a common denominator is essential.

Russia’s disaffection is largely security-centric and it would like BRIC to play the role of a strategic counterweight to the U.S. and NATO. China’s disaffection is with its lack of representation in the global circuits of economic decision-making. For Beijing, therefore, BRIC is most useful as a platform to raise the profile of the country as a setter of global economic norms. India’s disaffection with the world is economic and status-centric, for it finds no place at either the political or economic high tables of the world order. Brazil’s source of disaffection is, like India’s, both political and economic.

Given these different agendas, the key to working out the future role and structure of BRIC institutional engagement lies in correctly understanding what BRIC is and what it is not.

First, Yekaterinburg must demonstrate that BRIC is not ‘SCO-plus-minus’ or ‘RIC-plus-1.’ In diplomacy, the physical proximity of meetings can sometimes convey the wrong impression. The fact that BRIC foreign ministers met last year on the sidelines of the Russia-India-China (RIC) trilateral and that the BRIC principals are meeting on the same day as the Shanghai Cooperation Organisation next week has led to some confusion about whether the three groupings are similar. RIC and SCO may have similarities but BRIC and RIC are totally different in geographic and strategic scope. RIC and the SCO are the best forums for Asia’s big powers to discuss political and strategic issues relating to the Asian land mass. BRIC, on the other hand, is best suited to dealing with issues of global architecture that are geography-neutral. And the most important issue there is the global economic and financial system, including trade, credit, capital movement, currency flows, millennium development goals, and migration.

Second, BRIC must not be defined negatively as a club of countries which should be in G7/8 but which are not. It is not a halfway house for aspirants to the G8. BRIC needs to realise the geopolitical and domestic political realities and contexts of each of the four member countries place them in a position to provide non-dogmatic solutions to global economic problems. Brazil and India, for example, have already realised the need to look at the question of Intellectual Property Rights from the standpoint of effectively providing cheap treatment to millions of poor citizens rather than as a device for the enrichment of pharmaceutical companies. BRIC would also look at the issue of labour mobility and human development in a way that is fundamentally different from the G8.

Third, BRIC should not be seen as IBSA-plus-2. In many ways, India, Brazil and South Africa set the ball rolling in creating the first grouping to link three continents in the post-Cold War world. IBSA is, in many ways, the nucleus of a new Afro-Asian-Latin American solidarity, a reinvention of the Bandung process with the politics of the post-colonial era taken out and the globalised economics of the post-Cold War world brought in. IBSA and BRIC would complement each other but the unique geographic and political complementarity within IBSA means the trajectory of its development would be quite distinct.

Fourth, BRIC should not be seen as an adversarial “pole” in a multipolar world. The most important bilateral relationship each country in BRIC has is with the U.S. and that is unlikely to change in the near future. At the same time, this should not prevent the four countries from working together for better global outcomes in both the economic and political spheres, treading on American toes if need be. Though BRIC will not and should not develop as a ‘bloc,’ the U.S. may still view its evolution with wariness, especially as it moves in the direction of proposing financial solutions that could undercut American financial and political power. American pre-eminence today is partly the product of seignorage provided by the role of the dollar as primary reserve currency of the global system. With huge national dollar reserves, the BRIC countries will not want to undermine the value of the greenback. But an orderly move towards a new financial architecture is bound to be on the future agenda.

Fifth, BRIC cannot be a substitute for bilateral ‘outreach’ within and outside the group. The efforts of member countries to build a strong web of relationships with each other and the wider developing world — such as the China-Africa summit or the India-Africa summit — will complement BRIC outreach rather than hinder it.

In order to be successful, BRIC needs a combination of top-down and bottom-up initiatives: Summit level interaction is essential to send a signal globally and to all stakeholders in each of the respective member countries that the political leadership attaches great importance to the new grouping. For the immediate future, the ‘sherpas’ of this political interaction would initially be the finance ministers, who need actively to discuss a joint approach on the design of new financial architecture and regulations that can prevent a recurrence of the present crisis and not only mitigate its effects on the BRIC countries but actually see the latter emerge stronger. The BRIC finance ministers’ dialogue should be accompanied by interaction of trade officials, to deal with the threats of protectionism and curbs on labour mobility. Redefining globalisation to include the movement of labour should be a key strategic goal of BRIC.

Though BRIC is primarily geo-economic, the inability of the U.S. to lead, and of the G8 and the U.N. Security Council to stabilise world order, means the group could increasingly be called upon to shoulder global political responsibilities. Track-II interaction and political dialogue at the officials’ level focussing on issues of common concern such as terrorism, nuclear issues and disarmament, energy security, global rules on the use of force and intervention, U.N. reform should take place annually, but without the pressure to try and produce a comprehensive communiqué. Since differences exist between the BRIC members on questions like Security Council expansion — Russia and China are status quoist permanent members while Brazil and India are aspirants for a permanent seat — striving for conformity on positions where there are known and even sharp bilateral divergences at the BRIC may be counterproductive.

2 comments on “BRIC is not a bloc but a soft balancer

  1. Vikram
    June 14, 2009

    The economic health of the BRIC countries is measured by the huge dollar reserve at their disposal. Does this fact alone pose the biggest impediment in the creation of the new financial architecture ? In the end the proposed financial architecture will undermine the dominance of the dollar. it is far fetched a scenario that Asian economies will able to delink their economies from dollar unless US fails to come out from the present sub-prime crises leading to the total collapse of capitalist economies.

  2. chandrakant
    June 13, 2009

    happy to see that BRIC is finally formed as an entity but few thing must not get out of focus in this excitement.First permanent place for developing countries in UNSC.Second further reform in IMF and WB.Thirld proper terms for developing countries in WTO and Post Kyoto Agreements.
    India should lead the causes of countries of Africa and South Asia in various forums.And act as an visible body in international arena of Diplomacy.

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This entry was posted on June 13, 2009 by in Indian Foreign Policy, International Security, Political Economy.



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