By Mukul Sanwal
The BRICS are now making an impact on global governance. The theme of the fourth Summit, ‘BRICS Partnership for Global Stability, Security and Prosperity’, signaled its strategic intent through an alternative interpretation of interdependence. The Delhi Declaration has elements that primarily have an economic dimension though these are essentially political, suggesting a new system of multilateralism. The strategic overtones have elicited a cautious response from the United States, recognizing that a multi-polar world has emerged where global leadership is increasingly shared.
So far the focus of the BRICS has been on reforming governance structures of international organizations like the International Monetary Fund and the World Bank, while allowing them to continue to maintain a central role. The decision to work towards the establishment of a Development Bank for infrastructure and sustainable development, better responds to emerging global needs than the ‘Washington Consensus’ with its focus on the social sector and the attendant conditionalities. Inclusion of the provision for relief in cases of financial crises and disasters, as well as risk sharing, in effect re-defines international development policy.
A beginning has been made towards a new international monetary policy. The decision to link markets and establish financial integration of their economies by managing the $230bn intra- BRIC trade, which is projected to increase to $500bn in 2015, through extending credit in local currencies and benchmark equity index derivatives will allow investments without currency risks while cross-linking the stock exchanges. Eliminating the intermediate step of converting to and from the dollar reduces its role between them as trade would be independent of the value of the dollar, and will impact on its global dominance. For the first time advanced economies were advised “to adopt responsible macroeconomic and financial policies, avoid creating excessive global liquidity and undertake structural reforms to lift growth that create jobs” .The Declaration also backed a “merit-based selection-process” for the heads of the IMF and the World Bank, posts reserved customarily for a European and an American respectively, since the 1950’s.
A new international security policy is also emerging. The call for an “inclusive political process” in Syria also backs a Syria-led democratic transition. The resolution supports “political and diplomatic means and dialogue between the parties concerned” on Iran and also recognises Iran’s right to pursue peaceful nuclear energy. On Iran, the BRICS have made clear that they will follow United Nations resolutions and not the domestic laws and rules of any country, read United States. This is a move against selective regime change through multilateral action, as was done in Libya, and brings the deliberations of the BRICS into the political sphere.
These outcomes have taken commentators by surprise. As late as last year, Joseph Nye of Harvard University had argued that the BRICS have deep political divisions and will make “little political sense for long range assessments of power relations”. Martin Wolf, of the Financial Times, also argued that “they have nothing in common” and they are not “natural allies”, because the difference in values is quite strong, and there’s no reason to expect them to agree on anything substantive in the world, except that the existing dominating powers should cede some of their influence and power. A recent article in the The New York Times predicts that individual countries and “not an artificial block” will shape global governance, and the Summit was a mere photo-op. More perceptive is the argument that given as all BRICS countries have strategic partnerships with the US and currently value their relationship with Washington more than with each other’s capitals, there is no incentive to confront the leader of the Western bloc. Certainly, the BRICS have so far been reactive rather than proactive.
However, the current dynamics is such that BRICS countries are now gaining strength, and the ability to exercise influence, through economic rather than military power. BRICS countries have accounted for over 50 per cent of global economic growth in the last decade, and Goldman Sachs predicts that their economic potential will be bigger than that of the G7 by 2035. By focusing on economic integration they are also shifting the balance of power, and overriding bilateral differences. For example, China is already India’s largest trading partner and both have agreed to put aside the differences over the demarcation of the border and focus on increasing trade and investment ties. The outcome of the Summit is an indicator that a collectivity is emerging, the trend is towards better coordination and fairer global governance, and since the current order was established by the United States to serve the national interests of the developed countries some tension is inevitable.
In today’s world, given ecological limits to growth, security and prosperity can no longer be guaranteed by military strength or economic wealth alone, but by the ability to compel collective action through a rule bound approach. For global leadership the BRICS will need a strategic vision and direction that responds to the concerns of the world’s poor, and is not limited to pushing their own national interest. In the Bretton Woods Institutions they could, for example, seek a review of the surveillance parameters, conditionalities and a focus on sustainable development instead of narrower environmental considerations. Within the United Nations they could move beyond the developing-developed country divide to establish a new global goal for the eradication of poverty within planetary limits by 2050. The current emphasis on human rights defined in terms of political and procedural rights will then need to be supplemented with an equal emphasis on social and economic rights based on equity of opportunity for all. The focus on re-distribution will be new, as it has so far been kept out of the multilateral agenda.
The term BRICS was coined by Goldman Sachs in 2001 with reference to economic policymaking. They did not, quite naturally, envisage that in a globalised world influence, and power, will be increasingly be defined in economic terms. The first meeting of the BRICS took place in 2009, following the global economic downturn. As economic growth and the political centre of gravity continue to shift, BRICS already have a major role in dealing with transnational challenges, with power sharing institutionalised in the international architecture through the G20. For global leadership the BRICS will have to espouse new universal values that reflect the concerns of the world’s poor.
Mukul Sanwal is a former civil servant and diplomat.
Originally published by Institute for Defence Studies and Analyses (www.idsa.in) at http://www.idsa.in/idsacomments/BRICSNowMatterInTheChangingGlobalWorldOrder_MukulSanwal_160412
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