Why Russia needs the BRICS

Why Russia needs the BRICSBack in 2001, Goldman Sachs’ Jim O’Neill coined the term BRICs to describe the key fast growing developing economies of Brazil, Russia, India and China. But a dozen years later, is the focus on the BRICs misplaced? Indeed, is the group “broken,” asMorgan Stanley’s Ruchir Sharma has suggested?“Although the world can expect more breakout nations to emerge from the bottom income tier, at the top and the middle, the new global economic order will probablylook more like the old one than most observers predict,” Sharma wroteearlier this year. “The rest may continue to rise, but they will rise more slowly and unevenly than many experts are anticipating. And precious few will ever reach the income levels of the developed world.”

Each day this week, beginning with Russia, a leading analyst will assess the prospects of a BRIC nation and weigh in on whether it still deserves its place in agroup of economic high flyers.By William Pomeranz, Special to CNNEditor’s note: William Pomeranz is deputy director of the Kennan Institute for Advanced Russian Studies of the

Woodrow Wilson Center in Washington, D.C. The views expressed are his own.

Created by bankers as a catchy acronym to entice foreign investors, the BRICS – first Brazil, Russia, India, China and then South Africa – have subsequently morphed into a loose association of countries with an emerging global view. The group now gathers annually to discuss its common aspirations, yet it still has few underlying structures.

In light of its origins and inchoate organization, the BRICS could be accused of being a Potemkin village – all show and no substance. Russia, of course, invented the Potemkin village and knows how to exploit its practical – and symbolic – uses. As a result, Russia highly values its BRICS membership and wants to deepen its cooperation even as the economic dynamism behind the original concept has begun to run out of steam.

To the extent that the BRICS have a common core, it unites a group of emerging market countries that had no input in drafting the rules of global commerce. Russialacks the economic clout to revisit these conventions, so it needs its fellow BRICSmembers to change the rules of the game – or at least create alternative institutions that get around these rules.

Russia has used its influence to push the BRICS in the latter direction, in the process giving some shape to this amorphous association. In particular, the BRICS have called for the creation of a development bank that would aid emerging market countries in times of economic crisis as well as fund major infrastructure

projects. The BRICS also want to establish its own credit rating agency, thereby breaking the monopoly that the western agencies possess in evaluating potential projects.

But the BRICS provide Russia with geopolitical cover, as well. Putin’s foreign policy is based on one overriding principle: national sovereignty. No country or international organization has the right to interfere in another nation’s internal affairs, a viewpoint largely shared among the BRICS countries.

The BRICS approach also coincides nicely with Russia’s vision of a multipolar worldand further holds out the prospect of increased multilateral trade between its members. So from Russia’s perspective, the BRICS remain a highly valuable concept that has already produced some tangible results.

Russia’s problem, as it were, is that it believes in the BRICS too much, and wants to give this still nascent grouping of nations a more defined institutional structure.  On the eve of the March 2013 meeting of BRICS leaders in Durban, President Putin talked of transforming the BRICS from a dialogue forum to a “full-scale strategic cooperation mechanism that will allow us to look for solutions to key issues of global politics together.”

Any attempt at a more integrated union, however, could negatively impact the organization’s long-term prospects. Commentators have long highlighted not only what unites the BRICS but also what divides it: entrenched historical animosities, distinct political systems, unequal economic resources, etc.

Russia has always been the odd-man out of the BRICS, with a more traditional economy based on raw materials extraction as opposed to economic innovation, high-tech manufacturing, or the provision of services. Russia’s current economic troubles will invariably renew the debate as to whether Russia even belongs in the emerging market category – and the BRICS – at all.

All the BRICS countries face major economic headwinds that could in and of itself doom the enterprise.  China remains the key player; its status as the second largest economy in the world makes its relevant, with or without the BRICS, and it could walk away from the project at any time.

Brazil, India, and South Africa could, for their part, survive the breakup of the BRICS as well, especially since they already have an organization (the IBSA Dialogue Forum) to fall back on.   Russia is not so fortunate. Indeed, its other major international trade initiative – the Eurasian Union – may soon come crashing down if Ukraine signs its association agreement with the European Union. So, in many ways, Russia is more invested in the BRICS than its fellow members.

The global economy may well be moving to a post-BRICS world, with a declining interest amongst investors in emerging markets. But even if that is the case, it isprobably too early write off the BRICS. At this stage, the BRICS has ceased to be just a collection of disparate countries at various stages of economic development but has evolved into something more tangible. It specifically provides Russia with an important platform that supports the country’s broader geostrategic interests.

The ties that bind the BRICS, however, remain tenuous at best.If Russia pushes further integration too hard, the BRICS couldeasily unravel, and Russia would have nothing to replace it with.Post by:CNN's JasonMikshttp://globalpublicsquare.blogs.cnn.com/2013/09/03/why-russia-needs-the-brics/

Washington afraid of BRICS, needs to spy to maintain hegemonyAmerica needs to spy on BRICS countries to exercise its new form of imperialism aroundthe world and stay in control of economic trends as America’s economy gets weaker, geopolitical analyst Eric Draitser told RT.RT: What impact will the NSA surveillance revelations have on US ties in the region? 

Eric Draitser: It is not going to necessarily have a direct impact, at least not in the way we might traditionally understand it. Where the impact will lie isbehind closed doors. The revelations

particularly from the perspective of the Brazilians about spying and surveillance, Ithink it was not necessarily news in Brazil. What was interesting to them was that surveillance was targeting economic interests and business interests. This addsentirely new dimensions to the story. As weall know, Brazil is one of the world’s leading emerging economies. And because theUS is the number one trading partner in Latin America, ties between Washington and Brasilia are very, very important.  So froma political as well as economic perspective, the Brazilians must be asking themselves, “Should we be questioning this relationship we have with Washington?” 

U.S. Secretary of State John Kerry offers a press conference at Narina Palace in Bogota on August 12, 2013 during his one-day official visit. (AFP Photo / Luis Acosta)RT: Would you expect a tough reception from Brazil, given that the country is seeking to strengthen its position as a key player in the region? 

ED: It would depend how we would define a “tough reception.” For all appearances sake, it would go off as it normally would when a Secretary of State visits a foreign country. But as I’ve mentioned, behind closed doors, Brazilians are upset particularly with the regional perspective.We know that much of the surveillance was focused on the Organization of American States and some of the other regional groupings in which Brazil plays a key role and the US is attempting to use its surveillance and intelligence gathering as a way of leveraging the Brazilians as well as their regional partners in terms of their relations. So from a Brazilian perspective, they are asking, “Can we actually trust our American partners not only on the political level, but also on the economic level and simply in terms of international relations?” Remember Brazil has made tremendous strides in improving its relationship with countries like

Argentina, Colombia, Venezuela, Chile and elsewhere; so for them to be put in jeopardy by this sort of program, I think is very troubling for the Brazilian side. 

RT: How would you explain the fact that the highest-profile targets on the US spying list are Brazil, Russia, and China - all members of the BRICS bloc? 

ED: It is the ruling class in the US that is tremendously fearful of the rising economic power of BRICS grouping. It is notjust a formality that we use this term BRICS. It represents a shift in the global economic balance of power - and the US, knowing that its economic power is waning, is using alternative means to exercise hegemony and project its own power and the surveillance that the NSA operates with andother agencies as well. That is the fundamental part of that. Whether it gives the US the upper hand in negotiations, whether it allows them to use blackmail andother forms of leverage – all of this is part of a toolkit of US imperialism in Latin America and around the world. http://rt.com/op-edge/us-brazil-brics-spy-scandal-415/

March 22, 2012

BRICS Push for Political Clout

Brazil, Russia, India and China have become powerful engines of global economic growth over the past decade.  The economist who first named these diverse emerging economies the "BRIC" nations, says their growth will continue, and may spread to some other emerging economies.Leaders of the BRICS are gathering in India on March 28 for a summit that oneexpert says will "make or break" their efforts to build political clout to match their economic power.Brazil and three other large developing nations caught the atttention of a Goldman Sachs economists more than a decade ago, prompting him to preeict they had the key ingredients for powerful economic growth.These so-called BIRC nations - Russia, India and China are the others - are now joined by South Africa.That Goldman Sachs economist, Jim O’Neill, says the BRICS grew even faster than he expected.  He says they far outpaced the rate of expansion in Europe and the United States."These guys [nations] have come to be the marginal, critical player of virtually everything in the world economy," he said.  "They were not so important collectively, and other than China, hardly relevant individually; today they are nearly 25 percent of global GDP about 10 percent more than I thought would have been likely 11 years ago."While the rate of growth is slowing in China and Brazil, O’Neill says BRIC expansion is nowhere near finished.The head of a company that operates more than 37,000 restaurants in 117 nations, David Novak agrees.  His firm runs Pizza Hut and Kentucky Fried Chicken restaurants around the globe."Look at China for example. There are 300 million people in the consuming class in China. Most experts say in eight years it will be 600 million," Novak said.  "So there is a tremendous tail wind just in terms of population growth in these countries."Novak says his company is also placing "big bets" on India and Russia, while working to expand in Brazil, Vietnam and some African nations, even though some other analysts say there may be faster economic growth in smaller emerging nations like Mexico, Indonesia, South Korea and Turkey.While BRIC countries have the respect and attention of business leaders, the co-director of the BRICS Research Group, University of Toronto Professor JohnKirton, says these major emerging nations want to convert their economic gains into greater political influence."This is really a wake-up call for the West and Japan," he said.  "I think wewill see from Delhi, this is not just an idle threat."Kirton says the BRICS are fed up with Europeans and Americans always taking the top post at the World Bank and the International Monetary Fund.  He says the major emerging nations have the financial clout to start their own globalfinancial institutions and pick a new generation of leaders.Skeptics say the BRICS may share skills in manufacturing and exporting, but are so diverse in culture, language and politics that it will be difficult for them to unite and form effective international institutions.  But Kirton says they are united by their annoyance at an established order that gives them too little respect.

http://www.voanews.com/content/brics-push-for-political-clout-144036116/180506.html

March 28, 2012

For Group of 5 Nations, Acronym Is Easy, but Common Ground Is HardBy JIM YARDLEYNEW DELHI — As the shock waves of the global recession convulsed Europe and the United States three years ago, the leaders of Brazil, Russia, India and China gathered for a meeting that seemed to signal a new era. They had global buzz as rising economic powers, a catchy acronym, BRIC, and an ambitious agenda to remake an international monetary system long dominated by the West.

The new BRIC era has yet to arrive.

When the group’s leaders meet in New Delhi on Thursday, their biggest achievement will have been adding an S: they took on South Africa last year. Thefive BRICS nations still rank among the fastest-growing economies in the world, and, even if growth has slowed, individually, their global influence continues to rise. But they have struggled to find the common ground necessary to act as a unified geopolitical alliance.

“The real issue for them is to come up with agreed objectives, and also agree on common actions,” said Brahma Chellaney, a foreign affairs analyst withthe Centre for Policy Research in New Delhi. “That isa tough nut.”

The BRICS are still a new group, and some analysts argue that with time they could become a more cohesive alliance. But for now, they are troubled by

internal rivalries and contradictions that have stymied the group’s ability to take any significant action toward a primary goal: reforming Western-dominated international financial institutions.

Since its inception, the group has discussed creatinga development bank to rival the World Bank, and on Wednesday a Chinese official expressed hope that a breakthrough might come this week. Yet to date the proposal has been stalled, partly over worries that China would dominate the new institution.

Last year, the five countries could not agree on a new leader for the International Monetary Fund. Nor have they endorsed a candidate to replace Robert B. Zoellick as head of the World Bank. (President Obama recently proposed Jim Yong Kim, president of Dartmouth College.)

In other spheres, the group has been splintered. National security and terrorism are common concerns, yet the members are not always in alignment, the mostrecent division being Iran’s nuclear ambitions. (Reports in the Indian news media this week indicatedthat the group might try to carve out a joint position on Syria.) India is actively lobbying for a permanent seat on the United Nations Security Council, a move China has resisted endorsing.

“It’s not a policy bloc at all,” said Yasheng Huang, a professor of global economics and management at theMassachusetts Institute of Technology. “It’s really aphoto op. It is really this idea that the West is no longer or should no longer be viewed as the only center of gravity.”

Deep internal political and economic differences complicate the prospects for unity. India, Brazil and

South Africa are democracies and have already used their own separate trilateral group, IBSA, as a primary platform for coordinating positions on several major diplomatic issues.

Russia, however, has drifted away from democracy toward strongman rule under Vladimir V. Putin. China is the world’s largest authoritarian state and has byfar the largest and most powerful economy in BRICS, which creates a complicated dynamic. China is the heavyweight, and thus the natural leader of the group, except that it is the political outlier.

As such, distrust is high between India and China, whose border dispute, which goes back decades, is fueling a quiet military buildup on both sides. The two countries differ sharply on Pakistan and the Dalai Lama, the exiled Tibetan spiritual leader. Trade is growing rapidly, but India complains that China has done too little to open its market to Indian firms. China, meanwhile, is suspicious that India is pursuing a containment policy, in league with the United States, through its diplomatic outreach to East Asian nations like South Korea, Japan, Australia and Indonesia.

“The real story is there is a contradiction between China and India,” said  C. Raja Mohan , a leading strategic affairs analyst in New Delhi. “As long as you don’t solve that, what collective rhetoric you talk about will have limited value.”

The BRICS alliance has existed as a concept since 2001, when Jim O’Neill, a Goldman Sachs economist, identified Brazil, Russia, India and Chinaas rising economic powers and argued that they shouldplay larger roles in global economic policymaking, perhaps by joining the established Group of 7.

Earlier, in the 1990s, Russia had already organized atriangular group with India and China — known as RIC — but the attention generated by Mr. O’Neill’s formulation apparently prompted these three to add Brazil and create a new political club.

The first BRIC summit meeting was held in Yekaterinburg, Russia, in 2009, amid the uncertainty of the global economic downturn, with subsequent meetings held in Brazil and China. Last November, Mr.O’Neill predicted that the group’s combined economies, now worth almost $13 trillion, would double in the coming decade, eventually surpassing the size of the economies of both the United States and the European Union.

A consistent theme has been to push for changes in the monetary system, including advocating an alternate global reserve currency to reduce the dominance of the dollar. China in particular has usedthe group as a platform to promote its currency, the renminbi, as an international currency.

After arriving on Wednesday, leaders of the five nations held bilateral talks before attending a statedinner. At Thursday’s summit meeting, they are expected to announce agreements that would enable thenations to extend each other credit in local currencies while conducting trade, sidestepping the dollar, a substantive move if not yet the kind of game-changing action once expected from BRICS.

Sreeram Chaulia, an international affairs analyst in India, said many smaller, poorer developing countries, especially in Africa, are watching to see if the five nations can evolve into true advocates for non-Western interests or if BRICS merely becomes a platform for the interests of a new elite.

“At the end of the day, they will have to get into coordinating their positions on international security and global political issues,” said Mr. Chaulia, who teaches at the Jindal School of International Affairs in Sonipat, India. He said manydeveloping countries want a multipolar world, rather than one dominated by the United States “or, for thatmatter, by China.”

Indeed, some analysts see BRICS mostly as an annual meeting between China and its most important suppliers. Brazil, Russia and South Africa all sell rising amounts of commodities to China. China lobbiedaggressively to include South Africa in the group at a time when state-owned Chinese firms were buying up raw materials across Africa.

“I see BRICS as more about China trying to have more ready access to commodities in Brazil and South Africa,” said Mr. Huang, the M.I.T. economist, addingthat the other countries were then trying to use the group “to exercise influence on China.”

Finally, even though the group was conceived as an alternative to American power, none of the five member nations are eager for confrontation with the United States. As their leaders, including President Hu Jintao of China, gather in New Delhi, the United States is also quietly in town. Commerce Secretary John Bryson spoke at a business round table on Tuesday, bringing along an American trade group to visit the vast industrial corridor under constructionbetween Mumbai and New Delhi.

“For all five of the BRICS countries,” said Mr. Chellaney, “their most important relationship is withthe United States.”

http://www.nytimes.com/2012/03/29/world/asia/plan-of-action-proves-elusive-for-emerging-economies-in-brics.html?pagewanted=print

BRICS nations try to boost economic clout(Courtesy of GCIS/ via European Pressphoto Agency ) - South African Finance Minister

Pravin Gordhan, center, with his counterparts, from left in front row, Chidambaram

Palaniappan (India), Xiaochuan Zhou (China), Guido Mantega (Brazil) and Anto Siluanov

(Russia) at the BRICS summit in Durban.

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By Howard Schneider, Published: March 27, 2013 E-mail the writerThe world’s major developing nations are laying plans to combine their economic clout in a challenge to the role that U.S.- and European-led institutions such as the World Bank andInternational Monetary Fund play in global economic affairs.

Meeting this week in Durban, South Africa, the loose consortium known as the BRICS nations — Brazil, Russia, India, China and SouthAfrica — are expected to approve establishment of a “BRICS bank” tofund infrastructure projects in poorer countries. They are also debating creation of a pool of funds to use in times of crisis, similar to what the IMF does with money from its member nations.

Graphic

The BRICS countries are growing in economic power.

Ahead of the meeting, Brazil and China agreed to a separate $30 billion currency swap that would allow much of the trade between the two nations to be financed without using dollars or euros as a common means of exchange.

The efforts are modest in relation to the size of the five economies involved and small compared with the world’s annual flow of trade and financing. The bank, for example, would start with an estimated $50 billion; the BRICS countries combined hold about $4.2   trillion in foreign reserves , most of it in China, and have a combined annual economic output of about $15 trillion, about 20 percent of the world total.

But it is the most concrete collective step yet from a group of nations that are expected to drive world economic growth in the coming century and that have developed a sharp sense of competitionwith the United States and Europe over global economic leadership.

Since 2008, the BRICS nations have been dragged down by a financialcrisis that started in the United States and been buffeted by a prolonged recession in Europe. They complain that central banks in major developed nations are setting policy with little regard to the rest of the world, and they have been frustrated over a stalledeffort to change the power structure at the IMF to better reflect their role in the global economy.

Documents distributed by Brazil ahead of the meeting spoke of an effort to foster “greater autonomy from the IMF.” In a conference call before the summit, Brazilian Foreign Trade Minister Fernando

Pimentel said the aim is not to displace organizations such as the World Bank but to show that there are alternatives to the institutions and financing regimes set up by the United States and Europe.

The proposed development bank, for example, “is not to be a rival to any existing multilateral organization. The objective will be to . . . offer the world economy a new financing tool, or an alternative financing tool, especially for developing nations,” Pimentel said. “The BRICS are an economic and a diplomatic bloc which has consolidated more and more at each summit it has had and each year that it has lasted, and we believe that it is now a permanent economic bloc in the international arena.”

Top officials in Washington have taken note.  At a seminar last week, World Bank chief economist Kaushik Basu said that the issues raised by the BRICS nations were in part “a comment on the World Bank” and that the response should be for the bank to “be so effective and good” that no one would see the need for alternatives.

The acronym “BRIC” was coined by Goldman Sachs executive Jim O’Neill a decade ago as a way to refer to nations he felt would form the foundation of world economic growth in the years to come. Since then the concept has spawned a minor civil war between analysts who continue to see the BRICS nations — South Africa and acapital “S” were added later — as an important economic grouping and those who see the summits as a minor sideshow held among nations with little in common.

It is, in some ways, a partnership of exclusion — a club of now-large economies left out of the industrialized Group of Seven nations that steered the world from World War II through the 1990s.That group — the United States, Japan, Britain, France, Germany, Italy and Canada — still confers on central-bank policy and other matters, sometimes with Russia sitting in.

In the few years that the BRICS countries have held formal summits,it has been uncertain whether their shared interests are deep enough to overcome their potential for competition. All have

experienced fast growth, moved hundreds of millions of people into the middle class and reshaped world trade in commodities and manufactured goods. But factory owners in Brazil are as upset aboutChina’s currency management as factory owners in the United States are. Recent slow growth in Brazil, high inflation in India, a raft of problems in Russia and concerns about China’s economic management have cast doubt on the durability of what Morgan Stanleyanalyst Ruchir Sharma recently recast as the “Broken BRICs.”

The Durban meeting, however, may add weight to the argument that the BRICS nations have strong common aims — in creating alternatives to the dollar in international finance, for example, or in pushing for changes at the IMF and World Bank. Brazil, in particular, has been outspoken about an overhaul of the IMF board, which is waiting on U.S. approval. China, meanwhile, has by defaultinvested much of its annual trade surplus into low-yielding U.S. Treasury bonds and could use the development bank or currency pool as a potential alternative.

“The sheer frustration at lack of reforms on other fronts seems to be binding these countries together,” China expert and Cornell University economist Eswar Prasad said in an e-mail exchange. “These economies are keen to find ways to work around an international monetary system that they feel is stacked in favor ofricher advanced economies.”

http://www.washingtonpost.com/business/economy/brics-nations-try-to-boost-economic-clout/2013/03/26/14b3951a-963b-11e2-8b4e-0b56f26f28de_story.html

At South Africa summit, lack of cohesion weighs heavily on the BRICSBrazil, Russia, India, China and South Africa – together known as the BRICS –are some of the world's fastest growing economies. But do they have anything in common besides that?

By Tom Murphy, Guest blogger / April 1, 2013

BRICS leaders, from left, 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 group picture during the BRICS 2013 Summit in Durban, South Africa, last week.

AP/Sabelo Mngoma

The Christian Science MonitorWeekly Digital EditionA meeting of the major middle-income countries in South Africa garnered plenty of attention, but produced little in terms of actual policies.

Brazil, Russia, India, China and South Africa (BRICS) account for over 40%of the world’s population, one fourth of the world’s GDP, and are responsible for 55 percent of global economic growth since 2009. The BRICShave raced onward in the face of the financial downturn and are poised to take a larger share of the global economy in the coming years.

The recently published United Nations 2013 Human Development Report says that the BRICS are on track to overtake the economies of the longstanding Western powers.“By 2020, according to projections developed for this Report, the combinedeconomic output of three leading developing countries alone—Brazil, China and India—will surpass the aggregate production of Canada, France, Germany, Italy, the United Kingdom and the United States,” says the report.

RECOMMENDED: Think you know Africa? Take our geography quiz.What will this mean for development – for the global push to reduce poverty, inequity, and the so-called north-south imbalance of power? Some experts think not much, because the BRICS are more a concept than a cohesive force. 

Goldman Sachs economist Jim O’Neill predicted a decade of massive economicgrowth by Brazil, Russia, India and China in a paper he published in November 2001. He argued that the changing landscape and the growing economies of the four countries gave reason to re-think the Group of Seven(G7) that is comprised of the major global powers.The grouping recommended by Mr. O’Neill and the moniker BRIC stuck as the countries pursued a different avenue of cooperation outside of the G7. Itsfirst formal BRIC meeting was held in Russia in 2009, and South Africa wasgranted membership in 2010.

“The grouping doesn’t make much sense, and any expectation that these countries will form a new geopolitical bloc is outside of O’Neill’s original intent,” argues economist Daniel Altman.

“Their political systems, population dynamics, and paths to economic growth are all different," Mr. Altman says. "Brazil and Russia both dependto a great degree on natural resources, and India and China must both use manufacturing to employ hundreds of millions of people.”

Will they Accomplish Anything?The group agreed last year when meeting in India to launch their own development bank. It would represent a direct competitor to Western-influenced banks like the World Bank and the International Monetary Fund (IMF). India, a country that recently set up its own international development agency, made the proposal to pursue a BRIC bank.

“The BRICS countries have agreed to examine in greater detail a proposal to set up a South-South development bank, funded and managed by the BRICS and other developing countries,” said Indian Prime Minister Manmohan Singh at the event.The conference in Durban, South Africa one year later was meant to be the opportunity to move from talking about building a bank to actually establishing one. Despite news stories reporting an agreement to form a bank (as if the announcement a year earlier did not happen) however, the BRICS did not come much closer to forming a bank.

The group could not agree where to locate the bank – China wants it in China and South Africa wants it in South Africa – nor could they agree howmuch each country would invest in the bank.

The Russian envoy to Africa Mikhail Margelov told AFP that they want to pursue the BRICS bank in incremental steps.“We believe in a step-by-step way of doing business,” he said. "We better talk about projects and then we talk about needed amounts of money.”

The inability to come to an agreement led to further questions about the feasibility of forming a bank and the ability of the BRICS to accomplish anything meaningful.

The Christian Science Monitor’s editorial board welcomed the effort to form a BRICS development bank, citing that its existince is an example of spreading universal liberal norms."It is, after all, helping humanity, or at least a portion of it where theBRICS want to have influence with what strings are attached to loans. The bank’s very existence plays to the idea of a free market of ideas, or a competition based on merit. And it will likely be run in a democratic way."

Martyn Davies, chief executive of Frontier-Advisory, told Businessweek that it was naive of the BRICS to think that they can quicklyset up a competitor to the World Bank and said that the group lacked the "glue" that existed between the post-World War II nations that formed the World Bank.Others pointed to the equally amorphous statement condemning the fighting in Syria as another example of a lack of cohesion. Russia has long stood in the way of Western attempts to more forcefully intervene through the United Nations. The BRICS made mention of the problem and called for humanitarian aid, but they put little pressure on any side and made no comments on the Assad regime.

President President Bashar al-Assad appealed to the BRICS to help in finding a political solution to the civil war in Syria.

“It’s less clear what the BRICS represent politically. Setting up a big new bank to give away money is easier than figuring out what to do with a desperate crisis like Syria. And on that test of global leadership, where so many have been so critical of the global powers-that-be, the BRICS thisweek stumbled miserably,” wrote Carroll Bogert in Slate.Why is South Africa Included?If the G8 was the proverbial adults table, that would make the BRICS the rapidly growing teenagers who eat fast and yell loud enough that they can be heard by the adults in the next room (Russia is the awkward kid who gets to eat at both tables, but doesn’t really fit in with either group).

The thing is that the economies of India, Brazil, Russia and China are undoubtedly large and growing quickly. Somehow, however, South Africa also managed to get a seat at the table of unruly teens when it is still an undersized ten-year-old yearning to be older.

China looms large over the group with an economy that is bigger than the other four combined. Meanwhile, the economy of South Africa is equivalent to that of China’s sixth larges province, pointed out Eurasia Group president Ian Bremmer in the New York Times.There are plenty of other countries that make for a better fit economically, says Altman, the economist.

“In terms of economic size and potential for growth, Indonesia, Mexico, South Korea, and Turkey are much closer to the existing BRIC countries.”

Some have cited the inclusion of South Africa as a strategic move by Chinato gain better access to the continent of Africa. However, Roy Robins argued that idea is false in Foreign Policy.

“China would do just fine on the continent if South Africa did not exist. The truth is that China sees Africa as the gateway to a richer and stronger China,” wrote Robins.He expressed concern that trying to keep up with the Joneses has South Africa prioritizing the wrong problems. He says that South Africa is not just along for the ride, but argues for a greater emphasis on fixing internal problems.

“It needs to look more deeply inward, where its challenges are enormous and increasing. Only when the country achieves greater stability, equality, and prosperity at home will it be a genuinely impactful player abroad.”

RECOMMENDED: Think you know Africa? Take our geography quiz.While opinions about the BRICS remain varied, the inability to accomplish much in Durban produced more criticism and gives greater credence to Bremmer’s conclusions from December.

“In short, the BRICs can agree to disagree with the global status quo. They will sometimes use their collective weight to obstruct U.S. and European plans. But the BRICs have too little in common abroad and too much at stake at home to play a single coherent role on the global stage.”

http://www.csmonitor.com/World/Africa/Africa-Monitor/2013/0401/At-South-Africa-summit-lack-of-cohesion-weighs-heavily-on-the-BRICS

COMMENT

Broken BRICs

Why the Rest Stopped Rising

Ruchir Sharma

RUCHIR SHARMA is head of Emerging Markets and Global Macro at Morgan Stanley Investment Management and the author of Breakout Nations: In Pursuit of the Next Economic Miracles.

Over the past several years, the most talked-about trend inthe global economy has been the so-called rise of the rest,which saw the economies of many developing countries swiftly converging with those of their more developed peers. The primary engines behind this phenomenon were the four major emerging-market countries, known as the BRICs: Brazil, Russia, India, and China. The world was witnessing a once-in-a-lifetime shift, the argument went, in which themajor players in the developing world were catching up to or even surpassing their counterparts in the developed world.

These forecasts typically took the developing world's high growth rates from the middle of the last decade and extended them straight into the future, juxtaposing them against predicted sluggish growth in the United States and other advanced industrial countries. Such exercises supposedly proved that, for example, China was on the vergeof overtaking the United States as the world's largest economy-a point that Americans clearly took to heart, as over 50 percent of them, according to a Gallup poll conducted this year, said they think that China is already the world's "leading" economy, even though the U.S. economyis still more than twice as large (and with a per capita income seven times as high).

As with previous straight-line projections of economic trends, however-such as forecasts in the 1980s that Japan would soon be number one economically-later returns are throwing cold water on the extravagant predictions. With the world economy heading for its worst year since 2009, Chinese growth is slowing sharply, from double digits down to seven percent or even less. And the rest of the BRICs are tumbling, too: since 2008, Brazil's annual growth has

dropped from 4.5 percent to two percent; Russia's, from seven percent to 3.5 percent; and India's, from nine percent to six percent.

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yalejournal.orghttp://yalejournal.org/2013/02/26/russia-the-brics-and-the-united-states/

Russia, the BRICs, and the United StatesManaging Editor for YaleJournal.org

By Thomas Graham*

By The White House via Wikimedia CommonsAbstract — Despite formidable challenges, Russia should remain a leading emerging market economy, along with Brazil, China, and India (BRICs). The BRIC grouping thus has a future as a symbol of the rise of the non-Westernworld. The future of the Russian-led effort to consolidate the BRICS (the

BRICs plus South Africa) as an influential multilateral organization is less certain because of inherent contradictions in the members’ ambitions,prospects, and security challenges. The United States engages Russia for strategic, not economic reasons. It matters little to the United States that Russia is a BRIC, and it will not engage Russia through the BRICS.

Does Russia belong among the BRICs, along with Brazil, India, and China? That depends on what one means by the BRICs.

The Emergence of the BRICs

In 2001, Jim O’Neill, then Goldman Sachs’ head of global economic research, coined the term ‘BRICs’ as part of a discussion about how to better manage the global economy. At that time, BRIC countries were the four largest “emerging market,” non G-7 economies in the world, by measures of both nominal and purchasing power parity (PPP) GDP.1 Accordingto O’Neill, the relative importance of these economies would increase in coming decades, since they would continue to grow substantially faster than the already mature G-7 economies. His question, then, was how the G-7might be reconfigured or enlarged to allow for better management of the global economy.

O’Neill recognized that the BRICs were hardly a group of similar countries. As he wrote, “Clearly, the four countries under consideration are very different economically, socially and politically, and incorporating all four of them into a G-7 style club might not be straightforward, (although the existing G20 meetings are arguably an extended club version of this proposal) and . . . the case based on economic criteria is strongest for China, and less for the others.” 2 Whatunited them was their growing importance for the global economy.

After the global financial crisis of 2008–09, during which Russia sufferedthe sharpest economic contraction among the BRICs (and indeed among the G-203) by a wide margin, many observers have questioned whether it still belongs among the BRICs, whether BRICs might rightly be reduced to BICs. O’Neill rejects that position, noting that “while Russia does have seriouschallenges, it also has the potential to have a higher GDP per capita thanthe other BRICs, and even higher than all other European countries.”4 Meanwhile, ten years after O’Neill’s initial study, Goldman Sachs contended that his projections had proved broadly accurate. Indeed, the BRICs’ actual performance during the previous decade had exceeded the initial projections. What Goldman Sachs had baptized as the ‘Great Transformation’—“the long shift in economic weight and the engines of growth towards the BRICs and the emerging markets”—was well underway.5

O’Neill’s initial projections were music to Russian ears. They played intoPresident Putin’s own ambition to reassert Russia as a major power after its profound socio- economic and political crisis of the 1990s, during which its GDP collapsed by about forty percent. They also validated the economic course—and by extension the politics— that he, in his second yearas president, was pursuing to rebuild Russia.

Putin sought to secure a seat for Russia in the top tier of world affairs.Soon after he became president in 2000, he set his sights on hosting the G-8 summit in Russia for the first time (Russia joined the G-8 in 1997, although it was not admitted to the G-7 meetings of financial ministers). He achieved that goal in 2006, but the strains in relations with Russia’s G-8 partners, particularly the United States, were evident and growing at that time due to concerns about Putin’s authoritarian tendencies and Russia’s aggressive policies toward Georgia and Ukraine. That Russia had paid off its debt to the International Monetary Fund (IMF) ahead of schedule in 2005 and to the Paris Club (of sovereign lenders) in 2006 madehim more impatient with Western criticism and freed him to pursue an independent course. Putin was turning his back on his earlier goal of integrating Russia into the West and beginning to forge an independent, multi-vectored foreign policy.6 The BRICs could prove handy in that effort, particularly if the four big emerging economies could be united topush against Western domination of the institutions of global economic governance and more broadly of the international agenda. In 2006, the BRICforeign ministers met for the first time as a group on the margins of the UN General Assembly’s opening session. In 2008, Russia hosted a meeting ofthe BRIC foreign ministers, and a year later it took the initiative to raise the BRIC’s profile by hosting the group’s first summit. Three more summits have since taken place, and the agenda has expanded to include a wide range of socio-economic, political, and security issues. In 2010, at China’s request, South Africa was invited to represent sub-Saharan Africa,although, economically, it is not in the same class as the BRICs.7

Writing in early 2012, Putin stressed that the BRICS grouping was “a striking symbol of the transition from a unipolar world [led by the UnitedStates] to a more just world order.” He acknowledged the countries were experiencing difficulties in working together in this format, particularlyat the United Nations (all five BRICSs served on the Security Council in 2011). But he predicted that “when BRICS is really up and running, its impact on the world economy and politics will be considerable.” 8

As this brief review indicates, BRIC(S) comes in two guises, as a four-faced symbol of the growing weight of the emerging markets in the global economy, and as a political institution created to help redress the balance in world affairs in favor of the largest non-Western powers. And the question of whether Russia belongs among the BRIC(S) is twofold:

Will Russia remain among the four largest emerging markets?

Will the BRICS consolidate as an influential multilateral organization in global economic and political affairs?

Russia’s Economic Future

Russia’s economy has grown rapidly in the decade since O’Neill introduced the BRICs. In 2001, Russia was the fourth largest emerging market and tenth largest economy in the world, in PPP terms. By 2011, it had become the third largest emerging market and sixth largest economy overall. In

the next two to three years, it should be the world’s fifth largest economy (after the United States, China, Japan, and India), as Putin told the Duma in spring 2012.9 Meanwhile, Goldman Sachs continues to believe Russia has great potential; in 2011 it projected that its economy would rank fifth in the world by 2050 (behind China, the United States, India, and Brazil) and its per capita GDP would rank eighth, well ahead of the other BRICs.10

But, as Goldman Sachs itself points out, its projections are indications of a country’s potential, not forecasts of its actual performance.11 The obstacles to Russia’s economic success are well-known: overdependence on commodities, particularly oil and gas; underinvestment in the energy sector; inadequate investment in rapidly aging infrastructure; lagging technological development; decaying education and public health systems; and crime and corruption.12 Russia will have to attract a considerable amount of foreign investment to overcome these obstacles, meaning it must urgently and radically improve its current investment and business climate: Russia ranked 120 out of 183 economies in the World Bank’s 2012 Doing Business report.

Russian leaders, including President Putin, have repeatedly acknowledged the country’s economic challenges.13 Various government and government-sponsored committees and commissions have developed plans for overcoming them. But the government has lagged in formulating clear policies and thenexecuting them in an efficient and timely fashion.

Russia’s political system makes this situation unlikely to change. To succeed in the twenty-first century, countries need to foster innovation, creativity, flexibility, and risk- taking. That would suggest Russia needsto liberalize its soft authoritarian system to create more space for personal freedoms. Yet since he returned to the Kremlin last May, Putin has moved in the opposite direction. In response to the urban protest movement that erupted after rigged Duma elections in December 2011, he pushed legislation that has raised the costs of protests, restricted contacts with foreigners, and threatened broad censorship of the internet.These steps have erected significant barriers to continued growth, and have narrowed room for much needed debate over Russia’s future.

Street demonstrations and other public signs of protest have largely fadedaway, though that might reflect more the inadequacies of opposition leaders than the effectiveness of Putin’s crackdown. But the disaffection has only increased, including with Putin personally. His “trust” rating, according to a leading pollster, dropped from fifty-five percent in March 2012 to forty-three percent at the end of January 2013.14 Moreover, disaffection is greatest among young urban professionals—the very social stratum that is critical to innovation and economic growth.

These economic and political challenges are formidable, but it is important to put them into perspective. First, the economic challenges arenot new. And as recent years have demonstrated, they do not preclude continued growth in Russia, even if they might reduce the rate. Second,

the political challenges do not portend a near-term crisis of governability or widespread instability; indeed, they could eventually lead to some liberalization should Putin realize that his crackdown is ineffective in dealing with the discontent and producing the economic growth he seeks. Third, Russia’s challenges are not necessarily more severe than those faced by the world’s other major economies, including the other BRICs, as they seek to deal with the aftermath of the 2008–09 crisis. As a result, Russia is almost certain to remain among the top fouremerging market economies, along with China, India, and Brazil, well into the future. In that limited sense, it still belongs among the original economic categorization of the BRICs.

The BRICS’ Geopolitical Future

The BRICS’ future as a geopolitical grouping is less certain. To be sure, BRICS members share some significant positions, notably the defense of sovereignty and non-interference in internal affairs as fundamental principles of world order and a common desire to rebalance power in international institutions in favor of non-Western powers. But these shared interests are unlikely to withstand geopolitical realities for long. The BRICSs are hardly natural allies. India sees China as its greatest security challenge, while China worries that India might be drawninto a coalition of states along China’s border that seek to contain it. Although Russian-Chinese relations might be, in Putin’s words, at “an unprecedented high, marked by great mutual trust in political and economicmatters,” Russia must have concerns about the demographic imbalance along its border with China (six to eight million Russians facing well over one hundred million Chinese) and Chinese commercial penetration into Central Asia.15 At the same time, pipeline projects from the Caspian Basin across Central Asia to China are eroding Russia’s control of the export routes ofoil and gas from that region, which has been a critical source of Russian leverage and influence throughout the former Soviet space.

There are other inherent contradictions among the BRICSs. Brazil, India, and South Africa are democracies; China and Russia are authoritarian states. Russia’s interest as an energy producer in high oil and gas pricesruns counter to China’s and India’s interests as major energy consumers. Brazil and South Africa have little interest in the Eurasian security problems that preoccupy China, India, and Russia.

Moreover, for all the talk about growing economic ties among emerging markets, BRICSs are not, generally speaking, key economic partners for oneanother. For China, the relationship with the United States is far and away the most critical. Russia, although it is actively seeking to build up its presence in East Asia, will find itself closely intertwined with Europe for years to come. (Today, the European Union accounts for about half of Russia’s overall trade and upwards of seventy-five percent of foreign direct investment stock in Russia.)16 China may have overtaken theUnited States as Brazil’s leading trade partner, but the other BRICSs do not figure large in Brazil’s trade. South Africa by any measure is a minorcommercial player compared to the other BRICSs.

Finally, although Russia has played the leading role in organizing the BRICSs, it remains—in ambition, prospects, and worldview—the odd-man out. Of the five, Russia is the only one with recent history as a global power,and it desperately wants to reassert itself as a major player. But in the eyes of most of the other leading powers, particularly the United States and China, Russia is a power in decline, while China and India are rising powers and the fortunes of Brazil and South Africa are rapidly improving. Russia’s rapid economic development since 2000 was made possible in part by reutilizing Soviet infrastructure that had been underused during the crisis of the 1990s. The other four BRICSs, in contrast, have built moderninfrastructure to support their growing economies. And while the growing prominence of the other four is a consequence of their economic achievements and promise, Russia’s influence still derives largely from its nuclear weapons and energy resources. As a result, Russia probably looks less confidently toward the future than the other BRICSs do. These differences in perspective and prospects will both reduce the range of issues on which Russia can collaborate with the other BRICSs and complicate further efforts at cooperation.

Despite the inherent problems, Russia will continue to use the BRICS as aninstrument to advance its global agenda. But it will likely find, as will all the others, that it is only of value for a narrow range of issues, notably global economic governance. BRICS will be of little value for manyof the key challenges Russia faces, particularly along its periphery in Europe, Central Asia, and the Arctic as well as in the strategic realm. Onthese matters, it will operate through other fora with different partners.The other BRICSs will find themselves in similar situations as they confront their most serious security challenges. In short, the BRICS grouping will not disappear, but it is improbable that it will grow into an influential multilateral organization.

The United States, Russia, and the BRICS

As the geopolitical uncertainties surrounding the BRICS suggest, the grouping itself does not figure into the equation of U.S. foreign policy, although each of the individual countries do. The United States will, as arule, deal with each of these countries bilaterally and in appropriate fora, such as the United Nations or IMF, but not as a member of BRICS; norwill it engage with the group directly. Likewise, it is hard to envisage any of the BRICSs insisting that the United States deal with it primarily through BRICS.

Consequently, for all practical purposes, BRICS will not be an issue in U.S.-Russian relations. As it has for decades, Russia’s importance for theUnited States lies in the strategic realm, not the economic one. The United States cares about Russia’s nuclear arsenal, nuclear expertise, andvast natural resources. Russia’s geographic location makes it a significant player in Europe, the Middle East, and Asia, who can help the United States achieve its goals or complicate the challenge.

Even with a growing economy and over $500 billion in international reserves, Russia does not figure large as an economic player for the United States. It matters little that Russia is a BRIC economy. Russia’s recent entry into the World Trade Organization (WTO) will not change this calculation. Today, Russia accounts for well under one percent of overall U.S. trade, and even the most optimistic estimates for increased trade resulting from its WTO membership would only increase its share to about one percent in five years.17 American direct investment in Russia is small, particularly outside of the energy sector, as is Russian direct investment in the United States. Nothing suggests that a significant change in the investment pattern is in the offing.

As a result, the U.S.-Russian agenda will revolve around the issues it always has: strategic stability; non-proliferation; counterterrorism; security in Europe, the Middle East, and Central Asia and Afghanistan; andhuman rights. The United States will deal with Russia bilaterally and in various fora on those issues. At times, other BRICSs may participate, along with the United States and Russia. There is, after all, some overlapin the U.S. agenda with Russia and the United States’ agendas with the other BRICSs. China and India, for example, figure in the United States’ calculus for Central Asia and Afghanistan, along with a number of other states in the region. All the BRICSs are players on non-proliferation and counterterrorism, if not necessar- ily among the most important. But for the key issues on the U.S.-Russian agenda, BRICS is irrelevant.

*Thomas Graham, a Managing Director at Kissinger Associates, Inc., and a senior fellow at the Jackson Institute for Global Affairs, Yale University, 2011–2012, was the senior director for Russia on the U.S. National Security Council staff 2004–2007. 

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Notes

1 The major developed economies, that is, Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.2  Jim O’ Neill, Building Better Global Economic BRICs, Global Economics Paper No: 66, Goldman Sachs, November 30,2001.3  See OECD statistics available at http://stats.oecd.org/index.aspx?QueryID=350#4  Jim O’Neill, The Growth Map: Economic Opportunity in the BRICs and Beyond (New York: Portfolio/Penguin, 2012), Kindle Version, loc. 694.5Dominic Wilson, Kamakshya Trivedi, Stacy Carlson and José Ursúa, The BRICs10 Years On: Halfway Through the Great Transformation, Global Economics Paper No: 208, Goldman Sachs, December 7, 2011. The quoted phrase is foundon p. 3.6  See Dmitri Trenin, “Russia Leaves the West, ”Foreign Affairs (July/August 2006), available at http://www.foreignaffairs.com/articles/61735/dmitri-trenin/russia-leaves-the-west7  See http://www.bricsindia.in/about.html8  Vladimir Putin, “Rossiya i menyayushchiysya mir” [Russia and the Changing World], Moskovskiye novosti, February 27, 2012, available at

http://mn.ru/politics/20120227/312306749.html9  Vladimir Putin’s Report to the Duma, April11, 2012.The full text is available at http://www.kp.ru/daily/25866/2832380/10  Dominic Wilson et al., GDP per capita projections are found on p. 31.11  Ibid., pp. 16–17.12  See National Intelligence Council, Global Trends 2025: A Transformed World, November 2008, pp. 31–32.13  See, for example, Putin’s Report to the Duma, April 11, 2012.14  See the Public Opinion Foundation’s data available at http://bd.fom.ru/pdf/d4712.pdf15  See Putin’s interview with Russia Today, September 6, 2012, available at http://kremlin.ru/news/1639316  See http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/russia/17  Anders Aslund and Gary Clyde Hufbauer, The United States Should Establish Permanent Normal Trade Relations with Russia, Policy Brief Number PB11-20, Peterson Institute for International Economics, November 2011, p. 2.

– Judith Heistein Sabba served as Lead Editor for this article. 

What Are the BRICS Building?116780

This odd coalition was formed to shift the world economy. But is it becoming a political tool for autocrats?

By Carroll Bogert

(L-R)Indian Prime Minister Manmohan Singh, Chinese President Xi Jinping, South African President Jacob Zuma, Brazilian PresidentDilma Rousseff, and Russian President Vladimir Putin during the fifth BRICS Summit in Durban on Wednesday

Photo by Rogan Ward/Reuters

The Chinese call it jin zhuan, or golden brick. The Russians have suggested calling itbriuki, an acronym meaning trousers in Russian. And what about the ambiguous S? It originally was just aplural for the emerging economies of Brazil, Russia, India, and China, places where a Goldman Sachs analyst was urging greater investment. Now it stands for South Africa, which joined in 2010despite having an economy roughly on the order of China’s sixth-largest province.

What is this thing called the BRICS? This week’s summit in the South African city of Durban produced grand plans for a new development bank and a new currency stabilization fund, though without many of the key specifics. It also heard ringing calls to “reform” the United Nations Security Council, aka the old global order, where BRICS members who don’t have permanent seatsare eager to nail one down. (Russia and China made no promises.)BRICS might be, as a recent Kremlin “concept paper”asserted, “one of the most significant geopolitical events at the start ofthe new century.” But that remains to be seen.

Understandably, some of the fastest-growing economies in the world want to change an international financial architecture that is more than 60 years old. The BRICS represent about 45

percent of the world’s population and nearly a quarter of its gross domestic output (though China’s economy is bigger than theother four put together). Their main goal is getting a bigger say in how the world economy is run.

It’s less clear what the BRICS represent politically. Setting upa big new bank to give away money is easier than figuring out what to do with a desperate crisis like Syria. And on that test of global leadership, where so many have been so critical of theglobal powers-that-be, the BRICS this week stumbled miserably.

They had to take up the matter. Syrian president Bashar al-Assadappealed to the BRICS for their help in negotiating a peace; dozens of civil society groups, Human Rights Watch included, hadwritten urging the BRICS to denounce the killing of civilians and the use of cluster munitions and incendiary bombs, which theSyrian government has widely deployed.

The upshot? On the bright side, at least the BRICS didn’t side with Assad. But their final communiqué limply expressed the same“deep concern” as the previous year, when the death toll stood at 9,000. It’s more than 70,000 today.

The BRICS did call for “immediate, safe, full, and unimpeded” access for humanitarian organizations to deliver aid. But they ducked the critical question of how to ensure that U.N. agenciescan cross Syria’s borders to help millions of people in need. The Syrian government has so far kept U.N. agencies from operating in opposition-held areas, and the Russians and Chinesehave kept the Security Council from pressuring Assad to open access. For their Syria statement to have any significance, the BRICS will need to put the screws on Assad to let aid come over the border directly. That may mean a Security Council statement;apparently, the old world order still matters.

In the corridors of international diplomacy, India, Brazil, and South Africa make an attractive target for diplomatic blandishment. Two years ago, they were all serving two-year stints on the Security Council, which helped cement their statusas a swing vote. As recently as last month, the Brazilians were still clinging to “IBSA,” a term their former president coined 10 years ago, calling it “even more ambitious than the BRICS.” IBSA will have its own summit later this year in India.

As democracies with free media, IBSA might be expected to resistthe courtship of repressive China and Russia. But the 2011 U.N.

Security Council vote that led to intervention in Libya has madethem wary of again providing cover for Western military action. South African President Jacob Zuma took a lot of heat from his own African National Congress for supporting a Western campaign that helped overthrow Qaddafi; reaction in India and Brazil was also negative. So on Syria, IBSA is stepping carefully. And thatsuits China and Russia just fine.

For a sense of the BRICS political proclivities, one need look no further than the summit itself. Unlike G-8 summits, climate change conferences, and just about any major international gathering these days, the BRICS declined to register any participants from non-governmental organizations at all. Literally at the same moment that Russian President Vladimir Putin was calling on the BRICS for a “common approach on a broadrange of political and economic issues,” authorities in Moscow were “inspecting” the offices of Human Rights Watch and Transparency International. Countless other NGOs around the country had suffered the same fate earlier in the week. Putin ispresiding over the worst crackdown on civil society since the Soviet Union collapsed more than 20 years ago. He hardly wants feisty NGO activists in the room at a BRICS summit.

Without civil society in the corridors making trouble, it was left to journalists to raise the inconvenient questions. But it wasn’t easy doing so. The Chinese and Russian regimes traveled with their own lapdog media. The “press conferences” in Durban this week were all dog-and-pony shows in which leaders read prepared statements and walked out without taking any questions.When this author shouted a question to Putin about whether he would support a Security Council resolution allowing humanitarian aid directly over the border to Syria, he paused for a moment and smiled slightly. “We will think about it,” he said.

Carroll Bogert is deputy executive director for external relations at Human Rights Watch.

http://www.slate.com/articles/news_and_politics/foreigners/2013/03/brics_summit_in_durban_south_africa_is_this_odd_economic_coalition_becoming.html

BRICS Nations Reveal World Bank AlternativeMarch 29, 2013 2:36 AM

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The leaders of Brazil, Russia, India, China and South Africa announced this week that they would set up a development bank to rival the World Bank. For more on that summit held in Durban, South Africa, David Greene talks to Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics.

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DAVID GREENE, HOST:

The leaders of five giant economies gathered in South Africa this week for a summit. The group is known as the BRIC nations - that would be Brazil, Russia, India and China. Now South Africa is sometimes in the group, which puts the S in BRICS. The meeting andthe grouping are largely an effort to counterbalance what many in the developing world see as the dominance of America and Europe inthe global economy.

Now, to talk more about what came out of this meeting, we're joined by Arvind Subramanian; he's with the Peterson Institute forInternational Economics.

Arvind, thanks for joining us.

ARVIND SUBRAMANIAN: Great to be here, David.

GREENE: It's a little ironic when we talk about these BRIC countries because the name BRIC was first coined by a British banker who was working at Goldman Sachs, the investment bank, right?

SUBRAMANIAN: Exactly. And it's an amazing tribute to the power of an idea that he came up with this grouping and now it's become a political reality.

GREENE: Well, before we get to this meeting, I mean give us the background. These countries ran with this idea. What are they

trying to create? A political bloc? Are we just talking about economics?

SUBRAMANIAN: Well, I think initially we're just talking about, youknow, and economic grouping aimed at achieving certain things. Butprimarily the motivation is what you said, David, that, you know, there is a lot of frustration at the fact that the existing international institutions are dominated by America and Europe.

Take the IMF, for example. This is an organization where the voting structure and who has power was shaped about 50 years ago after World War II, and that has barely changed. So we have a situation where Europe, which is now a debtor - it's borrowing from this - still has veto power de facto in the institution. And,you know, the new guys are saying, hey, this can't be right. You know, the world has changed. We, China, are a big creditor. We're going to give a lot of money and we don't have the same say that the U.S. and Europe have, so we want to change that. Now, they're unable to change that, and the frustration is getting reflected partly in creating these new alternative structures.

GREENE: And one reason is, right, that they're not natural allies,these countries. I mean Russian President Vladimir Putin, didn't he refer to these five countries as different kinds of animals that are very different?

SUBRAMANIAN: Exactly. I think that's going to be the challenge, that there's a negative reason for getting together - i.e., we don't like the dominance of the status quo powers. But you need something positive to actually translate that negative commonalityinto action, and that - it's far from clear that they have that.

GREENE: Let me just make sure I understand this. So the IMF is outthere. There's this dominance of the United States and Europe overthe IMF. But now China is basically saying, look, Europe, you're in debt. We, China, have a lot of money. If you're not going to give us a say in the IMF, we're going to go create some other institution where we can put a lot of money in and help different countries that are our members.

SUBRAMANIAN: Exactly. And I think BRICS should also be seen as part of a bigger Chinese strategy of diversifying its international engagement. China is part of the IMF. Yes. But Chinais also creating Asian institutions. It's lending a lot to Africa.And so this is yet another way China is engaging with the world and trying to assert its kind of influence. 'Cause in Africa, for example, attitudes to China are a bit ambivalent. On the one hand,the Africans need Chinese money but they don't exactly like the way China is kind of asserting itself in Africa. So for the

Chinese it's also buying legitimacy as part of a bigger geostrategic game.

GREENE: This is really interesting. Well, let's talk about how theBRIC is doing. They have this meeting in South Africa. They have some ideas to create sort of their own version of an IMF, their own version of a World Bank...

SUBRAMANIAN: Right.

GREENE: ...to fund infrastructure projects around the world. I mean can they actually succeed in creating these institutions?

SUBRAMANIAN: So going back to what you said earlier, you know, what is common to these countries?

GREENE: Yeah.

SUBRAMANIAN: And the fact that they don't have that much in commonactually is reflected in the fact - they've now and five summits. But what came out was actually very little concrete action and more by way of promises. So what they want to do is to set up a World Bank-like institution, putting in $50 billion and then hoping to, you know, lend money to countries for infrastructure. But more interestingly, they want to also create an IMF-type institution by pulling together the foreign exchange reserves of these countries - and China has $3 trillion, India has about 300 billion - to pool these together so that like the IMF, if countries get into trouble, they can draw upon this pool of reserves. But in both cases you can see that, you know, it's far from clear that it will take off because there's not a whole lot of agreement yet as to how much money should there be, who should have the power, who should put in the money, what should be the terms of borrowing, etcetera, etcetera.

GREENE: None of that sounds easy...

SUBRAMANIAN: Exactly. Yeah. And you need kind of some common vision, some common interest even, for this to go forward, and we're not there yet.

GREENE: Thanks so much for coming in. I've learned a lot from thisconversation.

SUBRAMANIAN: Thanks, David.

GREENE: Arvind Subramanian is with the Peterson Institute for International Economics.

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ПРОСТО ДЛЯ ИНТЕРЕСАBRIC Becomes BRICS: Changes on the Geopolitical Chessboardby Jack A. SmithJanuary 21, 2011

The world’s four main emerging economic powers, known by the acronym BRIC— standing for Brazil, Russia, India and China — now refer to themselvesas BRICS.

The capital “S” in BRICS stands for South Africa, which formally joinedthe four on Dec. 24, bringing Africa into this important organization ofrising global powers from Asia, Latin America and Europe. President JacobZuma is expected to attend the BRICS April meeting in Beijing as a fullmember.

This is a development of geopolitical significance, and it has doubtlessintensified frustrations in Washington. The U.S. has been concerned aboutthe growing economic and political strength of the BRIC countries forseveral years. In 2008, for instance, the National Intelligence Councilproduced a document titled “Global Trends 2025″ that predicted:

The whole international system — as constructed following WW II — will berevolutionized. Not only will new players — Brazil, Russia, India andChina — have a seat at the international high table, they will bring newstakes and rules of the game.

More recently, the U.S. edition of the conservative British weekly TheEconomist noted in its Jan. 1 issue that “America’s influence has dwindledeverywhere with the financial crisis and the rise of emerging powers.”

São Paulo, Brazil (Photo: Roberto Zimme)The U.S. is still the dominating global hegemon, but a swiftly changingworld situation is taking place as Washington’s economic and politicalinfluence is declining, even as it remains the unmatched militarysuperpower.

America suffers from low growth, extreme indebtedness, imperial overreach,and virtual political paralysis at home while spending a trillion dollarsa year on wars of choice, maintaining the Pentagon military machine, andon various other “national security” projects.

The BRICS countries, by their very existence, their rapid economic growthand degree of independence from Washington, are contributing to thetransformation of today’s unipolar world order — still led exclusively bythe United States — into a multipolar system where several countries andblocs will share global leadership. This is a major aim of BRICS, whichrecognizes it’s a rocky, long road ahead because those who cling to empireare very difficult to dislodge before they swiftly disintegrate.

Looking down that road the next few decades, it is imperative tocontemplate two potentially game-changing events that will heavily impactglobal politics, and the future of world leadership.

1. The rate of petroleum extraction will soon reach the beginning ofterminal decline, known as peak oil. This means more than half the world’spetroleum reserves will have been depleted, leading inevitably to muchhigher oil prices and severe shortages. Under prevailing globalconditions, this will greatly exacerbate tensions between major oilconsuming countries leading to wars for energy resources

One resource war already has taken place — the Bush Administration’sbungled invasion of Iraq, which possesses the world’s fourth largestreserves of petroleum and tenth largest of natural gas. Since the U.S.with less than 5% of world population absorbs nearly 30% of the planet’scrude oil, who’s Washington’s next target — Iran? Behind the U.S.-Israelismokescreen of alleged Iranian aggression and supposed nefarious nuclearambitions, reposes the world’s third-largest proven oil reserves andsecond-largest natural gas reserves.

In 2009, the U.S., with a population of 300 million, consumed 18.7 millionbarrels of oil day, the world’s highest percentage. The second highest —the European Union, with a population of 500 million — consumed 13.7barrels a day. China, with a population of 1.4 billion people, was third,consuming 8.2 million barrels. BRICS, incidentally, includes the countrywith the world’s first largest natural gas reserves, Russia (which is alsoeighth in petroleum reserves).

2. Equally dangerous, and perhaps much more so, is the probability ofdisastrous climate change in the next few decades, the initial effects ofwhich have already arrived and are causing havoc with weather patterns.This situation will get much worse since the industrialized world,following slothful U.S. leadership, has done hardly anything to reduce itsuse of coal, oil and natural gas fossil fuels that are mainly responsiblefor climate change.

Another climate question is whether the capitalist system itself iscapable of taking the steps necessary to dramatically reduce dependence ongreenhouse gas emissions, as the socialists maintain. Eventually, underfar better global leadership, some serious action must be taken, but thedamage done until that point may not be rectified for centuries, if notlonger. The question of better global leadership depends to a large degreeon the outcome of the unipolar-multipolar debate.

Returning to the immediate problem, Washington not only opposes BRICS’preference for multipolarity, but is disgruntled by some of its politicalviews. For instance, the group does not share America’s antagonism towardIran — President Barack Obama’s whipping boy of the moment.  BRICS alsolacks enthusiasm for America’s wars in Central Asia and the Middle Eastand maintains friendly relations with the oppressed Palestinians. The fivenation emerging group further leans toward replacing the U.S. dollar asthe world’s reserve currency with a basket of currencies not preferential

to any one country, as is the present system toward the U.S., or perhapseven a non-national global reserve legal tender.

For a small group —though it is symbolic of a large trend in world affairs— BRICS will have considerable clout this year as members of the UNSecurity Council occupying five of 15 seats — temporarily for Brazil(until the end of 2011), India and South Africa (ending after 2012), andpermanently of course for China and Russia.

BRICS as an organization had a most unusual birthing. The group wasbrought into the world, so to speak, without the knowledge of its members.The event took place in 2001 when an economist with the investmentpowerhouse Goldman Sachs created the BRIC acronym and identified the fourcountries together as a lucrative investment opportunity for the company’sclients based on the enormity of their combined Gross Domestic Productsand the probability of increasing growth.

Neither Brazil, Russia, India nor China played a role in this process, butthey took note of their enhanced status as the BRICs and recognized thatthey shared many similarities in outlook as well as significantdifferences in their types of government and economic specialties.

The main similarity was that they were emerging societies with growingeconomies and influence, and they viewed Washington’s unilateral worldleadership as a temporary condition brought about by accident two decadesearlier due to the implosion of the Soviet Union and most of the socialistworld. They all seek a broader, more equitable world leadershiparrangement within which they and others will play a role.

At the initiative of Russia’s then-President Vladimir Putin in 2006, BRICbegan what became regular meetings at the ministerial level that evolved acouple of years later into what is in effect a political organization.There are some differences and rivalries within its ranks that have beenkept within bounds, such as between China and India (which is also closeto the U.S.), and, to a lesser extent, between Russia and China. Braziland South Africa are everyone’s friends.

All five BRICS states — three of whom possess nuclear arsenals — maintainessentially cordial relations with the U.S. and try to avoid antagonizingthe world superpower.

Dispite productive working relations between the U.S. and Russia, Moscowjustly perceives Washington to be an implicit threat that seeks toneutralize — if it cannot dominate — it’s now reviving former Cold Waropponent. The Russian leadership seems to view the U.S. as a strategicallydeclining imperialist power, perhaps all the more dangerous for itspredicament.

The Chinese government, while standing up for its rights when challengedby the U.S., is especially cautious because America’s military power atthis point is overwhelmingly superior to its own in all respects. It’strying to catch up in terms of defense, but it will take many years.

The Chinese Communist Party and government are primarily focused, as theyhave been for decades, on the creation of a modern, advanced, educated,and 70% urban society of some 1.4 billion people. The national plan is toachieve this goal by 2030, based on economic growth (China is now theworld’s second largest economy, heading toward first within 15-35 years),political stability at home (which will soon require substantial socialreforms to facilitate), and a foreign policy of nonintervention andfriendship between nations.

The Beijing leadership is evidently uncertain whether the U.S. decline istemporary or long term and does not officially comment on such matters inline with its foreign policy perspective.

Just before the start of 3-day talks in Beijing regarding U.S.-Chinamilitary relations, Defense Secretary Robert Gates told the New YorkTimes Jan. 8 that the Obama Administration was so concerned aboutBeijing’s “military buildup in the Pacific” that the Pentagon was nowincreasing spending on such weapons as an advanced “long range nuclear-capable bomber aircraft,” among other measures.

Responding to Gates’ comment two days later at a joint press conference,Chinese Defense Minister Gen. Liang Guanglie said the U.S. “wasoverreacting” to an effort to modernize. “We can by no means callourselves an advanced military force,” Liang said. “The gap between us andthat of advanced countries is at least two to three decades.” This cannotbe honestly disputed.

The newspaper also paraphrased Gates as saying  during his visit that “ifChinese leaders considered the United States a declining power… they werewrong.” He was then directly quoted: “My general line for those both athome and around the world who think the U.S. is in decline is thathistory’s dustbins are filled with countries that underestimated theresilience of the United States.” Last August, it should be noted, two-thirds of the America people queried told an NBC News/Wall Street Journalpoll they think the U.S. is in a state of decline.

While Gates dwells upon Beijing’s “buildup,” the U.S. virtually encirclesChina with military bases, submarines, fleets at sea, spy satellites,long-range nuclear and conventional missiles, offensive weapons many yearsin advance of Chinese defenses, overwhelming airpower, plus alliances withJapan and South Korea in Beijing’s vulnerable northeast, Taiwan,Australia, the Philippines, Thailand, Indonesia and India. The U.S. spendsover 10 times more on the military than China. It operates up to 1,000large and small military bases around the world, while China has noforeign bases.

The Obama Administration is presently fishing in the troubled waters ofthe South China Sea, intervening in territorial disputes between China andneighboring countries, including Vietnam, much to Beijing’s chagrin.

It is precisely this kind of “leadership” that BRICS and a number ofemerging nations want to change.

The addition of South Africa was a deft political move that furtherenhances BRICS’ power and status.  The new member possesses Africa’slargest economy, but as number 31 in global GDP economies it is far behindits new partners, nearly by 20-1 in China’s case. It’s also behind suchother emerging countries as Turkey, Mexico, and South Korea, for example —but African credentials are important geopolitically, giving BRICS a four-continent breadth, influence and trade opportunities. China is SouthAfrica’s largest trading partner, and India wants to increase commercialties to Africa.

Johannesburg sought BRIC membership over the last year, and as early asAugust the process of admission was underway, but now as a member it musttake serious steps to substantially hasten its economic development tokeep pace with other BRICS members. This will not be easy, but it isassumed the partners will help out.

A Chinese Foreign Ministry spokesperson declared: “We believe that SouthAfrica’s accession will promote the development of BRICS and enhancecooperation between emerging economies.” Russia’s Foreign Ministrystatement said South Africa “will not only increase the total economicweight of our association but also will help build up opportunities formutually beneficial practical cooperation within BRICS.”

Brazil’s Foreign Ministry, in addition to the conventional welcoming,interjected a sharp political note into this economic club by suggestingthat “on the international level” BRICS would work “to reform thefinancial system and increase democratization of global governance.”  Thereference was to Washington’s dominant authority over global finance andits unipolar leadership. This is bound to further irritate Washington.

India, like South Africa a former British colony and now a swiftlydeveloping country, cannot conceivably oppose Johannesburg’s admission forobvious reasons, but has so far remained publicly silent since the Dec. 24announcement. India’s unexpected quietude is of interest because lastAugust Indian High Commissioner Virendra Gupta commented that “India ofcourse remains extremely supportive of South Africa joining BRIC.” TheIndian foreign office is too sophisticated to have forgotten the expectedroutine welcoming.

Maintaining good ties with Washington, which is disturbed by SouthAfrica’s membership, is one of New Delhi’s main considerations. The UnitedStates has been courting India for some time, offering various rewards —from help with its nuclear program (despite its refusal to join thenuclear-nonproliferation treaty) to supporting India’s quest for a futureSecurity Council seat (which China opposes and Russia supports). Thepurpose is to attract India more deeply into Washington’s orbit,undercutting Beijing’s increasing global influence, and perhaps settingthe two against each other.

Global Trends 2025 even envisioned possible “great power rivalries andincreasing energy insecurity” between India and China that may lead to a

serious confrontation “though great power war is averted.” In the process,“United States power is greatly enhanced.”

Regardless of BRICS and other emerging economies, President Obama’sprincipal foreign policy objective since assuming office has been toreassert American global leadership after the Bush Administration’sneoconservative imperialist wars and unilateralism weakened Washington’salliances and compromised its hegemony. This is what Obama was elected todo — not, by rank-and-file Democrats cocooned  in “change we can believein,” but by the representatives of great wealth, great corporations andgreat financial power.

The Obama Administration’s first National Security Strategy report,released in May 2010, makes it clear that “Our national security strategyis … focused on renewing American leadership so that we can moreeffectively advance our interests in the 21st century.” In discussingworld economies, which correlate to global leadership in Washington’sview, President Obama declared in his State of the Union Speech last yearthat “I do not accept second place for the United States of America.”

As part of this policy the U.S. seeks to forestall the development of agenuine multipolar system by making limited concessions to the emergingnations that will that leave Washington in charge for many years.

Washington’s latest scheme, introduced a year and a half ago by Secretaryof State Clinton, is the  so-called, “multi-partner,” not “multipolar,”world — suggesting the Obama Administration’s intention is to serve as“senior” partner of a global leadership “coalition of the willing,” as itwere, that will in effect strengthen Washington’s singular role.

“We will lead,” Clinton told the Council on Foreign Relations, “byinducing greater cooperation among a greater number of actors and reducingcompetition, tilting the balance away from a multipolar world and toward amulti-partner world. Now, we know this approach is not a panacea. We willremain clear-eyed about our purpose. Not everybody in the world wishes uswell or shares our values and interests. And some will actively seek toundermine our efforts. In those cases, our partnerships can become powercoalitions to constrain or deter those negative actions.”

The U.S. also gives verbal support to an eventual expansion of theSecurity Council, and has cooperated in extending the powers of emergingcountries within the Group of 20 leading industrialized economies, in theWorld Bank and IMF. In addition the State Department seeks one-to-onearrangements advantageous to certain countries to keep them well withinthe U.S. sphere of influence.

Washington intends to function as the principal world power for as long asit can. After all it is still an enormously wealthy, militarized statewith powerful and obedient industrialized allies including the EuropeanUnion countries (and NATO), the UK-Australia-Canada-New Zealand nexus,Japan, South Korea, Taiwan and others.

However, the ongoing global diversification of economic and politicalresources toward the emerging countries appears to be leading inevitablyto multipolarity. To quote “Global Trends 2025″ once again:

The unprecedented transfer of wealth roughly from West to East now underway will continue for the foreseeable future…. Growth projections forBrazil, Russia, India, and China indicate they will collectively match theoriginal G-7’s share of global GDP by 2040-2050.  China is poised to havemore impact on the world over the next 20 years than any other country. Ifcurrent trends persist, by 2025 China will have the world’s second largesteconomy and will be a leading military power.

Actually China became the second largest global economy last August, 15years before 2025.

Under such conditions, how many newly empowered emerging countries willremain content simply to play follow-the-leader behind a faltering andmilitarist Uncle Sam?

The time of decision about the architecture of future world leadershipdraws nearer. At some point in 10 or 20 years a reluctant Washington mayhave to settle for a prominent position in a multipolar world construct.

But of course there remains another possibility.

Given the volatile global situation — peak oil, climate change, continuedU.S. imperial wars, grave poverty that will increase as world populationgrows from 6.8 billion today to over 9 billion in 2050, and many emergingcountries seeking a rightful share of world leadership — the Unites Statesmay resort in time to global military aggression to sustain its dominantstatus, possibly even World War III.

Considering the U.S. political system’s decades-long move toward theright, the enormity of the Pentagon’s arsenal, the militarism in oursociety, and the ability of Washington and the corporate mass media tocollaborate in “selling” wars to a misinformed public, this cannot beruled out.

It is impossible to predict how all this will turn out. What is known isthat the American people still have the power to make their own history.This not so much a question of voting — for whom, in this case? — but oftaking action to galvanize the masses of people to oppose the politicalstructure’s penchant for wars and global domination, for inexcusable foot-dragging on climate change and indifference to gross economic inequality.

http://www.foreignpolicyjournal.com/2011/01/21/bric-becomes-brics-changes-on-the-geopolitical-chessboard/view-all/