THE FIFTH BRICS SUMMIT Are we moving towards a G–ZERO world?

8 April 2013 06:30 pm - 0     - {{hitsCtrl.values.hits}}

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In the immediate aftermath of the fifth summit of heads of state from Brazil, Russia, India, China and South Africa (BRICS) held in Durban on 26 and 27 March 2013, its impact on the future of the nations within the group itself, and the larger international community, is the topic of intense discussion in international caucuses. 

The emerging narrative is dichotomous. On the one hand it is argued that the agreement to set up a new development bank is a significant achievement, while at the other end of views it is argued that there are gaps in agreement that make the agreement, in essence, much ado about nothing. Is it really then a matter of perspective or a matter of prescription?
 
This year’s summit was the first head-of-state summit to be held in South Africa. Fittingly, the theme of the conference was “BRICS and Africa-Partnership for integration and industrialisation.” To that end, several African organisations as well as non-BRICS leaders like Egyptian President Mohamed Morsi participated in the summit alongside BRICS heads of state namely South African President Jacob Zuma, Brazilian President Dilma Rousseff, Russian President Vladimir Putin, Indian Prime Minister Manmohan Singh, and Chinese President Xi Jinping.
 
Africa presents both enormous opportunities and challenges for BRICS nations. On the one hand, BRICS members like China and India have been steadily deepening relations on the continent in order to tap into Africa’s enormous natural resources as well as to open up markets for consumer goods. That latter goal is likely to prove particularly important as certain parts of Africa emerge as international success stories.
 
On the other hand, many parts of Africa are steadily deteriorating due to a breakdown of governance. Meanwhile, Egyptian leader Morsi is presiding over an increasingly perilous situation at home as political disputes continue to hamper necessary economic reforms. Ominously, with an estimated three months to go before its foreign reserves run out, the global political risk consulting firm, Eurasia Group, said in a research note in March that, “the chances of state collapse [in Egypt] will be better than even in the coming three months.” 
 
One challenge BRICS countries face in deepening their presence in Africa is the possibility of opening themselves up to charges of imperialism and neocolonialism. One way to hedge against this risk is by acting through multilateral institutions and initiatives. In this regard, it wasn’t surprising to see BRICS come together at the summit in creating a number of new institutions and initiatives.
 
No such initiative was as important and anticipated as the creation of a BRICS Development Bank, and as well as the related reserve currency fund. However, BRICS leaders announced they had failed to reach an agreement on funding the Development Bank. 
 
Earlier South African Minister of Finance, Pravin Gordhanhad said, “We have made very good progress” on working out the terms of the bank. While  some areas of contention still need to be worked out, BRICS will likely continue discussing how to bring this idea to fruition in the coming months.
 
On the eve of the summit, a business forum was launched featuring over 900 business professionals which resulted in the creation of a permanent business council. The business council consists of 5 members, each of which is a BRICS country representative. Yuri Ushakov, Russian Presidential aide said, “Its main task will be [the] implementation of multilateral investment projects,” including the formation of the BRICS-led Development Bank.



 
South Africa’s Human Sciences Research Council (HSRC) was given the responsibility of nurturing and growing the South African BRICS Think Tank launched prior to the summit. The Think Tank is supposed to be a South African equivalent of BRICS Think Tanks already established in other member states. Its purpose is to “provide a forum for discussion among academics, policy makers and non-governmental organisations on the BRICS developmental strategy” that will allow member states to collaborate on policy research and analysis.
 
Clearly, the Fifth BRICS Summit has proven ambitious in its aims. Despite its critics, many diplomats are optimistic about the outcomes and long-term implications for these new projects. South Africa is in a unique position to advance fellow-African interests through the BRICS forum to assist in developing the continent, and has recognised its role as such. Whether they will succeed in this, as well as how exactly it will impact international relations, remains to be seen. Its more certain, however, particularly after this summit, that it remains one of the most important trends to monitor in the coming years.
 
The BRICs countries announced that formal talks would be held to launch a development bank. However, to satisfy basic democratic requirements, this bank would need:  a wide-ranging public information policy, including norms of transparency; international accountability; open discussion with peoples potentially affected by projects to be funded; and decision-making that includes civil society organisations in affected countries. Modern democratic funding criteria require that such a bank must help develop a healthy relationship between governments, civil society organisations and popular movements.
 
The bank’s launch is not only a matter of economics. It also reflects a new political space owing to the fragility that was a consequence of the global financial crisis, which has revealed that so-called emergent economies have huge accumulated reserves, due to rising prices of raw materials and high demand in world markets.
The BRICS bloc has a gross domestic product of $20-trillion in purchasing power parity. Among these five countries, Russia and China have permanent seats at the United Nations Security Council and are among the world’s largest producers, exporters and importers of oil and natural gas. Brazil, India and South Africa have repeatedly demanded inclusion in the Security Council. Three have nuclear weapons (Russia, China and India), while one destroyed its weapons (South Africa, before apartheid ended). Together they have 40% of the world’s population but 48% of the formal workforce. They have also considered opportunities in green capitalism, particularly those related to the Redd (reducing emissions through deforestation and forest degradation) scheme. They are capable of engaging in the most conceptually advanced financial mechanisms to tap natural resources (of which they have abundant reserves), and they intend to fund the construction of economic infrastructure in Africa. 
 
Another objective is to support BRICS companies, particularly in Africa, which is the stage for a potential cold war between Brazil and China over the construction of infrastructure and the funding of agricultural fuel on a large scale.
 
Not by coincidence, the BRICS Development Bank feasibility studies point to infrastructure and sustainable development as priorities. 
 
The time has come for civil society across the five BRICS countries to work pre-emptively and ensure the creation of a BRICS Development Bank that is not just a new mega financial institution without any citizen control, even if it is public in name.
 
Commentators argue that the world should not hold its breath. Although their ambitions are clear, the way forward is sketchier. Even fuzzier are plans for increasing intra-BRIC trade, investment, technology sharing, and other good things that have been pledged at every summit since 2009. The Durban communiqué promises yet again to strengthen trade links among the five, but trade conflicts between China and India are among the fastest growing in the world, Brazil has just launched a WTO case against South Africa for its protectionist farming, and Russia and China are still wrangling over pipelines, oil prices, and energy development in Siberia.
 
Political analytics cogently argue that the problem is that the BRICS countries are in some sense, a club of rivals more than partners:  While touted as being economic equals, China towers over the rest – its GDP is a quarter larger than the four other’s combined and 22 times larger than South Africa’s. India, in this context, is struggling to keep pace. Brazil’s growth has slowed dramatically, to less than 1 per cent this year. South Africa’s world trade ranking has plummeted from 16th place in 1980 to 41st today. And Russia is being held up by a finite energy boom. However, it is no doubt the BRICS’s economies will continue growing, if at an uneven pace. 
But ironically, as the BRICS grow more powerful, they also grow more fractious. Brazil is opposed to China’s economic drivers; China is opposed to Brazil’s industrial protectionism; India is opposed to China’s widening surpluses; Russia and China are opposed to the other BRICS’s dreams of permanent Security Council seats. 
The biggest flash points are geopolitical. Russia, China, and India are in a dangerous new race in central Asia for supremacy, while China and India find themselves in an escalating arms race in the South China Sea and along their 4,500 km border. In fairness, this lack of cohesion is not unique to the BRICS; many international groupings today are all struggling to find common ground. This brave new multi-polar world may be more democratic than the old superpower one, but it’s also messier. 
 
Meanwhile, globalisation is erasing the neat lines that once divided the first, second, and third worlds. Now the third world resides in the first – Detroit’s slums, for example – and the first world resides in the third – Shanghai’s glittering skyline, for instance. 
 
Power is both more diffused and more confused, leavening no one GROUP in charge. The President of Eurasia Group and renowned Political Scientist, Ian Bremmer, calls it a “G-Zero” world.
 
salmayusuf@gmail.com

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