At South Africa summit, lack of cohesion weighs heavily on the BRICS
Brazil, 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?
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A 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 BRICS have 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 combined economic 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.
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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 economic growth 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. Its first formal BRIC meeting was held in Russia in 2009, and South Africa was granted 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 depend to 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 how much 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 the BRICS 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 quickly set 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 this week 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 China to 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.”
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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.”
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