ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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The Crumbling Mortar of BRICS

Is BRICS merely an overhyped acronym to cover up a fuzzy geoeconomic concept?

 

The ministerial meeting held in Rio de Janeiro on 28 July 2019 for articulating the agenda of the forthcoming 11th BRICS (Brazil, Russia, India, China and South Africa) Summit in November 2019 began on a note of discordance among the member countries on the issue of resolution of the Venezuelan crisis. This discordancy—a manifestation of the closure of an era of expanding global cooperation—however, has not stifled the prima facie consensus of the members regarding the need for dialogues on various issues of cooperation, including science, technology, innovation, digital economy, and in countering terrorism and money laundering. However, it remains to be seen whether this consensus can revive the plummeting hope of BRICS to evolve into a grown-up force with its own institutions.

Beyond the conceptual (and subsequently rhetorical) usefulness of binding the most prominent emerging economies of the world, the functional efficacy of the association of these countries has always been a matter of uncertainty given their varying fiscal and political realities. What adds to the ambiguity this year is Brazil’s shifting foreign policy priorities under the current tenure of President Jair Bolsonaro. The Brazilian foreign policies for almost a decade and a half now have been premised on the generic acceptance of a multipolar world. While Bolsonaro’s predecessors had sought multilateralism in the genre of South–South cooperation to mark their country’s presence as a “balancing force” in this multipolarity, the new diplomacy has blatantly rejected multilateralism in favour of privileged relations with the Western nations, especially the United States (US). With restricted (or no) global ambitions that are potentially aligned with this diplomatic objective—be it withdrawing from the recently signed global pact on migration, or an abrupt change to contentious diplomatic relations with the decade-old trade partner China, or the self-declared reliance on American political/military intervention for toppling the presidency of Nicolás Maduro in Venezuela—Brazil appears to be a weak link of BRICS.

Since the 2008–09 global financial crisis, there is an emerging view—predominantly from the US—that the concept of BRICS, at least from the economic standpoint, no longer holds water. This view primarily rested on the back of the estimates of dwindling gross domestic product (GDP) growth rates of the member countries, especially China, which evidenced a sharp decline from double-digit growth figures to 7% or less. These estimates contrasted with the projections made by Goldman Sachs—the originator of the BRICS acronym—regarding BRICS being the locomotive of global economic growth in the coming years since the 2000s. In 2015, Goldman Sachs itself folded its BRICS fund into a general emerging market fund on the grounds that this fund lost almost 88% of its assets since a 2010 peak. In a filing with the US Securities and Exchange Commission in September 2015, the investment firm mentioned that it would reorganise its “surviving fund” across “a more diversified universe of foreign and emerging markets.” Brushing aside such scepticism, 2014 saw the formation of the New Development Bank (NDB) as a response of the BRICS countries to their under-representation in the traditional global governance structure.

If one argues that it is this common resentment about under-representation—and not any shared ideology, political structure or culture—that animates the purpose of BRICS as a bloc, then one cannot also dismiss the fact that the longevity of this purpose hinges on the duration of the “feeling” of resentment. Viewed through this lens, Brazil’s hobnobbing with the US should be potentially as much threatening for the sustainability of BRICS, as is Russia’s avowed commitment to strengthen the United Nation’s central role in geopolitics. In both the cases, policies can be conceived under hierarchical pressure for appeasement, thereby compromising the autonomy of BRICS and/or its institutions, such as the NDB. Extant literature on such top-down political drivers of policy convergence identifies “policy diffusion” through interdependent problem-solving—and not coercive imposition or harmonisation—as a crucial driver of (economic) policy reforms.

Simultaneously, the implication of economic divergence within BRICS cannot be overlooked while discussing its relevance as a bloc. In fact, the economic disparity within the group leaves ample room for the members to be resentful of each other regarding their individual representation in BRICS institutions. For instance, China with its cash surpluses has pledged to contribute two-fifths of the NDB’s proposed Contingency Reserve Arrangement of $100 billion. In so doing it may attempt to dominate the bank in due course, and/or look for opportunities to promote yuan-denominated trade among BRICS and/or the broader developing world.

With such inherent ambivalences in the notion of BRICS as a bloc, can we not say that the concept is trapped in the pitfalls of thinking in acronyms, one that could not transcend the outdated rhetoric of “multilateralism”?

Updated On : 13th Aug, 2019

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