By Tilak Jha
For China, the fourth edition of BRICS (Brazil, Russia, India, China and South Africa) Summit in New Delhi has been another opportunity for promoting at least two crucial foreign policy objectives: The first is economic: China’s influence and interest in the global economy and international financial institutions and, the second, geopolitics: greater weight for China in international institutions using multilateralism as a strategy.
On the economic front, the most significant announcement of the BRICS Summit 2012 has been the proposal for a new Development Bank modelled on the World Bank for pooling in mutual resources. The other crucial development on economic front has been the agreement on extending credit facilities in local currencies and on letters of credit facility.
Two factors make Beijing the most important stakeholder in any BRICS financial arrangement. First, China is the world’s second largest economy and is almost half of the entire BRICS economy. Second, the existing global financial architecture dominated by the West leaves Beijing without its desired say in institutions like the World Bank (WB) and International Monetary Fund (IMF). Getting BRICS countries to work together will give each of them, particularly Beijing, greater leverage in pressurizing the West to redress the demand for reforming such institutions.
However, acute differences remain among BRICS countries in the economic domain regarding market-economy status (especially of China), trade imbalances (especially between India-China with US$ 27 billion in China’s favour) and China-Russia (heavy dependence of Russian exports on China for energy products), an undervalued Renminbi and low bilateral investments. Also, all the five BRICS countries are critically dependent on the West for markets, funds and technologies, and in India’s case, arms (interestingly to balance the military threat mainly from China). For China, its dependence on exports is deeper unlike other BRICS countries.
This also explains why even as the New Delhi BRICS Summit called for a merit-based selection of IMF and WB Presidents, and vowed its support to a developing country candidate for the post, BRICS countries could not come together on voting for Nigerian Okonjo-Iweala even as a symbolic move.
Lack of bilateral strategic trust especially between India and China is also bound to spill over, at least in intangible terms, in the setting up of such a bank. China has a long border dispute with India and it claims parts of the Indian state of Arunachal Pradesh. In June 2009 China successfully mobilized support to block an Asian Development Bank loan meant for development projects in Arunachal Pradesh.
However, India is important enough for China to be ignored. India-China trade is the largest among China’s bilateral trade with other BRICS countries and is highly in China’s favour. According to 2010 IMF figures, in terms of Purchasing Power Parity (PPP), India ranks fourth globally. Russia and Brazil are the 6th and 7th largest economies respectively in PPP terms. India is also one of the very few countries which will have a huge youth bulge and a buoyant economy fueling consumption and growth for the next four decades.
Under the guiding theme of ‘BRICS Partnership for Global Stability, Security and Prosperity’, the member countries agreed to coordinate their stands in the Middle East, Arab-Israeli Conflict and North Africa. The BRICS joint statement stand regarding Syria and Iran is nearly in line with the Chinese position on the issue. The summit declaration called for “an immediate end to all violence and violations of human rights in Syria” and “a Syrian-led inclusive political process.” On Iran, it said that the situation “cannot be allowed to escalate into conflict.” The assertion comes amid Western pressure to cut crude oil imports from Iran as part of the sanctions. China and India are the biggest buyers of Iran’s crude oil. The BRICS declaration said that they are not bound by unilateral sanctions on Iran.
The BRICS countries, however, have not always had a common stand regarding either Syria or Iran even after the formation of BRICS. India voted along with Russia and China in 2009 in favour of a resolution at the IAEA on referring the Iran nuclear programme to the UNSC. On Syria, India, Brazil and South Africa abstained from voting in favour of the Western resolution in October 2011, but India and South Africa voted for another Western resolution on Syria in February 2012. Both the resolutions were vetoed by China and Russia. At best, the voting decisions were due to other considerations rather than a reflection/violation of commitment to adopt a common BRICS strategy. Nevertheless, the commitment marks a positive sign for China.
In the case of Afghanistan, China’s concerns are common with Russia and India. All three countries want stability in Afghanistan and understand the inevitability of regional and international cooperation to combat terrorism there. But Beijing which shares a long border with Afghanistan and good relations with Pakistan, an inevitable player in Afghanistan, is the most reticent about being creative and engaging India and China.
China and Russia have called for a comprehensive reform of the UN, including the Security Council, but have been reluctant to support UNSC membership of India, Brazil or South Africa.
There can be no doubt that settling the above differences and disputes can take BRICS countries to deeper economic inter-linkages and higher levels of cooperation and coordination, and in turn, a greater say in international institutions. Despite the fact that there are fundamental differences among BRICS countries due to different political systems, and at times conflicting international obligations and domestic pressures; there remains the possibility of taking BRICS to a much higher level of cooperation than where it stands now. The question that BRICS countries especially China need to ponder is how high the stakes are because of such restrained coordination and how long they are prepared to pay for it.
MPhil Candiate, JNU
email: [email protected]
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