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Mainstream, VOL LIV No 48 New Delhi November 19, 2016

Goa BRICS Summit — a New Milestone

Monday 21 November 2016, by Arun Mohanty

With the Eighth BRICS Summit over at Goa, it is time for stock-taking of the developments at the meet. BRICS is the youngest and fastest growing international grouping that is designed to make the world truly multipolar ending the hegemony of any particular country. In order to assess the outcome of the BRICS Summit at Goa on October 15-16, one must look at the genesis of this grouping, its importance for its members and the extent to which it can influence international decision-making.

The origin of BRICS lies in the RIC (Russia-India-China) group set up formally at Russia’s initiative to promote multipolarity at the peak of American unilateralism and to end Western hegemony in global affairs in order to establish a just, democratic world order. The strategic triangle consisting of Russia, India and China —the three major Asian countries and emerging powers—was proposed by the then Russian Prime Minister, Evgeny Primakov, in December 1998 during his visit to India in the wake of the Anglo-US bombardment of Iraq. Though China and India seemed reluctant to accept Primakov’s proposal in the beginning, they hesitatingly started welcoming it after the NATO’s bombard-ment of Belgrade. Gradually the Foreign Ministers of these three countries started meeting regularly at the sidelines of important international forums, first of all the UN General Assembly. Subsequently, the Foreign Ministers of the three countries started meeting at regular annual meetings to discuss international and regional issues of mutual interest.

When the triangle could not take off effectively as expected because of internal contradictions, Russia abandoned the initiative to set up yet another grouping—this time BRIC consisting of Brazil, Russia, India and China. The BRIC concept, with Brazil’s inclusion, would better subsume them, it was felt, besides strengthening even more the political as well as economic base of multipolarity. The inclusion of Brazil, the largest South American country and the fourth emerging economy identified by Goldman Sachs in 2001, gave a certain coherence to the group. It also facilitated Russia’s political re-entry into South America from where it had retreated after the Soviet break-up.

Goldman Sachs’ projection that the emerging economies of Brazil, Russia, India and China would overtake the G-7 nations by 2050 provided the platform for building the BRIC grouping. Indeed, Goldman Sachs’ forecast about the BRIC nations overtaking G-7 in terms of size of the GDP may come true much earlier than the time forcast. The BRIC countries, currently home to 42 per cent of the world population, account for 28 per cent of the global GDP, two- fifths of the global foreign exchange reserves and 32 per cent arable land. The BRIC countries account for a significant share of the world’s growth and output, not to speak of the overwhelming dominance in terms of land mass and population. Goldman Sachs’ next projection suggested that the BRIC nations would have a larger economy than the G-7 by 2032. Subsequently, inclusion of South Africa into the grouping made it (BRICS) representing all the major continents.

It is important to note that the BRICS countries “represent not just different socio-economic models but different civilisations. The globalisation has brought them together and endowed them with new functions, also making them major actors of international affairs. The historical responsibility of a civilisation is much higher than political responsibility inherent in states.”

The strength and influence of the grouping can be judged from the fact that two of its members, namely, Russia and China, are permanent members of the UN Security Council, whereas the remaining three—India, Brazil and South Africa—are serious contenders for the new permanent seats in the expanded UNSC under discussion.

Practical cooperation within BRICS is being reinforced with meetings of Foreign Ministers and Finance Ministers taking place more or less regularly. Since June 2007, when President Lula of Brazil openly floated the idea of the BRIC meeting and agenda, the Foreign Ministers of the four emerging countries met on the sidelines of the UN General Assembly, and in 2008 the BRIC Foreign Ministers held their first ever stand-alone meeting. The BRIC Finance Ministers had several rounds of meetings to discuss the issue of global economic crisis and building new global financial architecture. The BRICS Agricul-tural Ministers had their meeting at Moscow to discuss issues of food security and climate change. It has been decided to create a data-base for increasing trade turnover between the BRICs nations, work out a strategy for wiping out hunger and augmenting cooperation in the sphere of agricultural technology and innovation.

Nobody should have any doubt that BRICS is slowly but surely gathering momentum. Today the BRICS countries account for almost half of world’s population, one-third of the global raw-material stocks and energy resources, and a quarter of the world’s modern techno-logies. The BRICs nations demonstrate that they are the locomotive of global economic growth while the rest of the world struggles to overcome the recession. These countries have significant potential for integration, realisation of which will have enormous influence on the global political, economic and financial situation. If in the early 2000s experts were predicting that the union of emerging economies might be formed by the 2050s, now it is evident this might happen around 2025 with the US’ impulsive behaviour being the catalyst to the process.

The BRICS countries have demonstrated the resilience of their national economies against the global economic crisis. This immunity to external influences is a consequence of the development of cooperation within the grouping. The formation of a common market of the BRICS countries could potentially attract the greater part of all the existing investment resources. The extensive base of raw materials, modern technologies, as well as human and scientific potential make BRICS attractive for investors, who are exceedingly tired of the United States and its manner of conducting foreign policy.

In his address to the plenary session of the BRICS Summit at Goa, Russian President Vladimir Putin said: “We value greatly the fact that the Indian presidency has ensured continuity and has taken into account the initiatives Russia put forward at Ufa a year ago,” adding that “we believe that our industrial cooperation can become more effective.” President Putin further said, the BRICS countries’ role in the global economy continues to grow emphasising that “in 2007 we accounted for less than 24 per cent of the global GDP, but this year, we now account for more than 31 per cent”. The five BRICS countries are active participants in developing multilateral decisions and agreements that will accelerate global growth and trade.

The establishment of BRICS as an economic union that may actively cooperate in military-technical spheres will ensure its safe and dynamic development. In fact, BRICS is confidently transforming not only into an economic but also into a political grouping, which can challenge the hegemony of the sole superpower in the foreseeable future. Formation of such a formidable grouping would turn into a real nightmare for the sole superpower.

The most important stage of development of the grouping was the establishment of the BRICS Bank— a promising alternative to the World Bank and International Monetary Fund. In practice, this would mean abandoning making settlements in US dollars at some point of time in future. This step may not push the Federal Reserve System to the brink of collapse, but it would deprive the United States of the status of sole global power in economic terms. The establishment of BRICS as an alternative financial system has thus turned out to be one of the most terrible nightmares for the leaders of the USA.

The Goa Declaration expressed satisfaction over the first set of loans by the New Develop-ment Bank, particularly in the renewable energy projects in the brics countries. Issuance of the first set of green bonds in RMB was noted with satisfaction. The BRICS leaders were pleased to note the operationalisation of the BRICS contingent of reserve arrangements that has strengthened the global financial safety net.

The signal successes of BRICS—the establish-ment of the New Development Bank (NDB) as well as the Multilateral Contingent Reserve Arrangement—have been viewed, along with the Asia Infrastructure Investment Fund, as initiatives in order to create rival institutions to those of Bretton Woods, though the Summit declarations state they are meant to supplement the existing structure.

One can actually argue that beyond its financial sector initiatives, the BRICS group receives little international attention today.

The BRICS leaders at Goa affirmed their commitment to a strong, quota-based and adequately resourced International Monetary Fund. They are for coordinated efforts by the emerging economies to ensure that the Fifteenth General Review of Quotas, including the new quota formula, will be finalised in the agreed timelines so as to ensure that the enhanced voice of the dynamic emerging and developing economies reflects their relative constructions to the world economy while protecting the voices of the least developed countries.

They have urged the developed European economies to cede two chairs on the Executive Board of the IMF. The IMF reform should strengthen the voice and representation of the poorest members of the Fund.

They support the multilateral trading system and the centrality of the WTO as the cornerstone of a rule-based, open, transparent, non-discrimi-natory and inclusive multilateral trading system with development at the centre of its agenda.

The scope of the BRICS agenda over the years has become so vast that by this yardstick alone the group could claim functional success. The BRICS Summit declarations are inflated—the Fortaleza and Ufa Declarations had over 70 paras, though to what extent the agreed texts represent a real convergence of policies is open to question. The Goa Declaration, with 109 paragraphs and 7000 words, is the longest comprehensive agenda so far adopted by any BRICS Summit.

It ranges from energy, e-commerce, narcotics, think-tanks, education, youth affairs and ICTs to interbank cooperation, trade unions, culture, labour and employment, population, agriculture, S&T and innovation, telecommunications, disaster management, anti-corruption, media, legal cooperation and so on.

BRICS has academic, business, parliamentary and financial forums, its National Security Advisers meet on a regular basis. There are altogether 30 formats of BRICS meetings, which speaks of the increasing vastness of the agenda of the association.

Multipolarity is no longer the rallying concept it was. The US’ failures in West Asia and Afghanistan, its reluctance under Obama to embroil itself in external entanglements and the rise of China have weakened US hegemony.

China’s repeated opposition in the Security Council to India’s bid to have Jaish-e-Mohammed chief Masood Azhar declared an international terrorist reveals the huge gap between the BRICS Declarations on terrorism and China’s actual conduct.

India’s trade gap with China has become even worse. Growing distrust is affecting Chinese investments in India. India has steadily moved closer to the US even in the defence sector. India’s joint strategic vision with the US for Asia-Pacific and Indian Ocean regions is incompatible with the BRICS framework. With serious deterioration of its ties with the US, Russia has strengthened its strategic relations with China. All this no doubt cast a shadow over the growth of BRICS.

All the eight BRICS Summits so far have demonstrated their increasing resolve to influence global affairs. The global agenda on all international issues was being set up by the US and Europe till the recent past, which may not be possible any more without taking the BRICS countries into confidence.

While there were several intangible outcomes of the Goa meeting, more concrete are the three MoUs signed on agricultural research platform, cooperation between diplomatic academies and between customs of the BRICS countries. On the much anticipated credit ratings agency to monitor the health of the BRICS economies, the declaration only suggested to its ‘possibility’.

Also noticeable were the Indian push for accountability of nations in international affairs, rule of law, the World Trade Organisation’s dispute resolution in fair trade practices and the like.

The Goa Declaration has defined the main goal as the need to build the institutions of the association as quickly as possible. The leaders of the five emerging countries have agreed that a BRICS rating agency, a centre for agricultural research, a network of railways of the association, a customs cooperation committee should be created as soon as possible. A Memorandum of Understanding has been signed for establishing cooperation among the diplomatic academies of the member-countries.

While China’s continuing ‘technical hold’ at the United Nations Security Council Committee on Pakistan-based terrorists has disturbed confidence in its bilateral relations with India, the Goa Declaration was unequivocal in condemning terrorist incidents including the recent Uri attack. India’s main concern on terrorism was highlighted at the Summit, although Pakistan could not be penalised directly, ostensibly at China’s behest.

The Declaration has identified the danger from Islamic State and Jabhat al-Nusra in whose ranks thousands of Uighurs from Xinjiang, China, have reportedly joined.

The Goa Declaration is expansive on terrorism in other parts of the world or generically. Ironically, it speaks of “the relentless pursuit against terrorist groups so designated by the UN Security Council” and mentions the “significant increase in terrorist activities in Afghanistan”, but pointedly omits any reference to terrorism directed specifically at a BRICS member. Worse, it condemns “the recent several attacks, against some BRICS countries, including that in India”, without labelling them as “terrorist” attacks. India’s failure as the host to get a better formulation points to China’s sturdy opposition to recognising India as a victim of terrorism to prevent any finger-pointing at Pakistan.

Another disappointment for India was the Chinese intransigence on the Nuclear Supplies Group membership. China had earlier this year stuck to its position that India needs to sign the nuclear Non-Proliferation Treaty and other arms control treaties which New Delhi termed as discriminatory.

Since the Yekaterinburg summit in 2009, Russian and more significantly the Chinese position on United Nations Security Council reform and reorganisation has not even witnessed incremental improvement but frozen in their stance that they ‘support (Brazil, South Africa and India’s) aspiration to play a greater role in the UN’.

This suggests that China has been insisting on endorsing its positions or interests by the aspirant countries.

The Goa Declaration also exhibited differences and some commonalities among BRICS states on the issue of global commons, mainly in the maritime, cyber and space domains. For instance, in the light of the Edward Snowden incident and due to restrictions imposed by China and partly by Russia on cyber domains, the Declaration supported an ‘open, non-fragmented and secure Internet’.

Clearly, democratic opinions from India, Brazil and South Africa had an upper hand on these issues.

On outer space, the Goa Summit advocated peaceful uses and ‘no first placement’ of weapons. This is against the backdrop of several countries, including the United States, Russia and China having initiated measures for outer space weaponisation, including anti-satellite tests, lasers etc.

The BRICS member-states found under-standing regarding the idea of the coordinated use of modern communications, including internet technology, in the interest of economic development and security of the BRICS countries. Plans for the creation of a common energy agency of BRICS and prospects for cooperation in peaceful space exploration have been outlined. The combined efforts of the five countries could make a significant contribution to the solution of such problems as global climate change, natural disasters, environmental problems, spread of infections such as Ebola, Zika virus and others.

While China hinted at a free trade area for the BRICS grouping, which witnessed low intra-BRICS trade at below $ 300 billion, there are, of course, apprehensions within the BRICS partners on how effectively China opens up its market and implements fair trade practices.

One of the concrete actions of BRICS so far has been the establishment of the New Development Bank which disbursed in April about $ 911 million in loans for infrastructure projects in the BRICS countries. More such initiatives are likely to follow based on the Bank’s performance.

The BRICS leaders at Goa expressed their satisfaction over the development of cooperation among the member-states and underlined the importance of further strengthening the BRICS strategic partnership guided by principles of openness, solidarity, equality, mutual under-standing, inclusiveness and mutually beneficial cooperation. India’s BRICs chairmanship was appreciated at Goa. They noted the intensification and diversification of cooperation between the BRICs countries and lauded the outcomes of the meetings of the BRICS NSAs, Ministers of Agriculture, Disaster Management, education, finance, labor and employment, science, technology and innovation, health and telecommunications. The leaders expressed satisfaction over the momentum generated by the BRICS Business Council meetings. They welcomed the progress in the functioning of the New Development Bank and its decision to disburse the first instalment of loans for projects in the area of green and renewable energy. Enhancement of people-to-people contacts within the BRICs countries during the Indian presidency over the grouping was applauded.

The leaders of the emerging nations expressed satisfaction over the development of the BRICS economic cooperation. The progress in the implementation of the strategy for the BRICS economic partnership adopted at the Ufa Summit was appreciated. Initiatives such as e-commerce, single window, intellectual property rights cooperation, trade promotion and micro small and medium sized enterprises cooperation were appreciated.

The Goa Declaration reflects the BRICS stand on a host of important international and regional issues. The BRICS countries share close positions on current global and regional issues, stressed Russian President Vladimir Putin, calling for resolute action to fight terrorism, and joint efforts to counter other serious threats and challenges in today’s world. “We believe that all international conflicts should be resolved exclusively through political and diplomatic means and we reject all forms of pressure using force and infringement of other countries’ sovereignty.”

Summing up the deliberations held during the Eighth Summit, Prime Minister Narendra Modi said: “In a world of uncertainties, BRICs stands as a beacon of peace, potential and promise. We are celebrating 10 years of our partnership under BRICS, it has produced strong benefits of cooperation.”

Speaking to journalists after the BRICS summit, President Putin dismissed Western suggestions that BRICs was losing its relevance, partly because of tensions between countries like India and China.

The synergy of the peoples of the BRICS countries is the positive creative impulse of the very philosophy of the association. It gives mankind new hope and a new vision for the future.

The author is a Professor, School of International Studies, Jawaharlal Nehru University, New Delhi. He is also the Director of the Delhi-based Eurosian Foundation.