Is expansion the right approach for BRICS?

[AVERAGE INDIAN]

As the BRICS members take steps to increase cooperation, another country is exploring the possibility of joining the club. Indian Ambassador to Buenos Aires Amarenda Khatua announced in mid-May that Argentina was interested in becoming part of BRICS and that India, Brazil and South Africa supported the initiative. Russia and China are wary of the prospect, however, given Argentina's sizable external debt.

Russian Deputy Foreign Minister Sergei Ryabkov said that expanding the group could be discussed at the next BRICS summit, scheduled for July 15 in the Brazilian city of Fortaleza. "We will take a constructive approach to any proposals, no matter where they come from," Ryabkov said. "The BRICS participants will have a chance to discuss the question in detail."

BRICS is looking to expand its geopolitical presence as Russia and the West face off over the situation in Ukraine. Proposals for the group to create its own ratings agency and monetary fund have gained momentum in recent months. Experts say that the process to create such institutions was already moving forward and the moves are not directly related to sanctions.

"The BRICS integration process is not a result of U.S. and EU sanctions (over the Ukrainian crisis)," said Dmitry Ontoyev, an analyst at the Moscow Skolkovo School of Management Institute for Research on Emerging Markets.

"Rather, it is due to objective reality and current global economic and political trends. Set against the backdrop of the culmination of a series of economic and political cycles, the Ukrainian crisis is only an indicator, not a catalyst for change in the global paradigm," said Ontoyev.

The joint statement issued by BRICS members at The Hague summit at the end of March this year was the first step in establishing a coherent foreign policy for the group. China, India, Brazil, and South Africa expressed their sympathy regarding the historical aspects of the situation in Crimea and underscored their opposition to the sanctions leveled against Russia.

Ontoyev believes that, under these new conditions, BRICS will develop into one of the most important political and economic alliances thanks to one important factor – the full sovereignty of each participating member of the association.

All five countries can pursue independent policies that are not limited to any alliance or association, and have sufficient economic capacity and weight to ensure these policies. "BRICS is comprised of the few countries worldwide that have such sovereignty," added Ontoev.

Maxim Pleshkov, senior analyst Russian rating agency RusRating, said that the commonalities between the BRICS countries made the alliance stronger. "BRICS members are natural allies. Where Russia conducted its policy alone in the G8 club, BRICS policy promotes the policies Russia shares with the other member countries of the partnership," Pleshkov said.

 

[AVERAGE INDIAN]

According to Pleshkov, BRICS member countries hold the same position on at least three fundamental issues.

First, all BRICS members are striving to modernize their economies while simultaneously addressing social problems, whereas the West is concerned primarily with the concept of sustainable development.

Secondly, BRICS wants reform of the international monetary and financial system that developed in the years after World War II and resulted in the dominance of the U.S. and its Western partners . BRICS member countries want to gain a position that would be consistent with the increased role of their individual economies in the world.

Finally, BRICS member countries have consistently advocated the strengthening of international law and the primacy of the UN. These shared goals can be used as the foundation for developing a joint BRICS policy.

"We should not forget that BRICS economies are mutually complementary. Member countries are spread out over all continents, and the total size of the BRICS market is more than 3 billion people," said Pleshkov.

In order to realize the huge potential of the association, Ontoyev believes it is necessary to create joint venture management institutes and discussion and decision-making bodies, and to coordinate policies and procedures, as is the practice in other, more structured and formalized international associations, such as the Shanghai Cooperation Organization or the Eurasian Economic Commission.

Participating member countries are currently concluding talks on the development of a general program. Of particular note among the initiatives that have already been outlined is the Russian draft program for developing a strategy of economic cooperation among BRICS members.

Among its key provisions are: an expansion of trade and investment ties; technological innovation and the development of BRICS industrial potential; ensuring BRICS energy and food security; the development of transport and communications; and innovation and technology exchange.

A carefully considered draft program already exists, and the main risk is not the development of an economic strategy, but rather its adoption and subsequent implementation.

Maxim Pleshkov is convinced that BRICS should work on further developing the interaction that has already been initiated, and he sees the creation of credit and financial institutions (such as a development bank) as the next logical step. Pleshkov also believes it would be useful to create various research centers for BRICS-related issues and increase the integration of the member countries in various sectors of the economy.

On the prospect of Argentina as a BRICS partner, Russian analysts see positives and negatives.

Pleshkov believes that Argentina shares the core BRICS values and should be invited to join the group. Its inclusion, among other things, would reduce U.S. influence in South America.

Ontoyev, however, believes that before expanding, BRICS should deepen integration between the existing members and to institutionalize their cooperation. Otherwise BRICS risks facing the erosion of its economic competence, and becoming, if not simply a debating club, an amorphous political alliance.

"The opportunities that BRICS offers Latin America are enormous," said Pleshkov, "and in order to realize this potential, it would be more practical for the "Five" to maintain a policy of concerted action in this part of the world, which can be spear-headed by the inclusion of one of the region's countries in the BRICS association.

"This does not negate the need to develop a multi-stage format of participation in the organization and the involvement of other countries as observers or partners," he added.

As for the problems BRICS faces, Ontoyev believes one of the main challenges could be the cultural differences between the participating countries.

"BRICS, unlike the EU or ASEAN, unites different cultures, and all its far-reaching and potentially significant initiatives in the economy may fail because of different approaches to the same issues and processes, and, moreover, because of different ways of thinking, he said.

"Therefore, one of the most important initiatives of BRICS should be the enhancement of cultural, scientific, and educational exchange among the group," he said.

According to the analyst, if the development of human capital through the humanitarian integration of BRICS is successful, the member countries can work together effectively to implement projects on an entirely different scale and look for answers to the global challenges of the 21st century, including the exploration of space and inaccessible regions of the Earth, global food, and energy security.

Is expansion the right approach for BRICS? | Russia & India Report

 

[pmaitra]

I have a question.

Who came up with the idea of BRIC, and later BRICS? Are they some migratory birds?

 

[AVERAGE INDIAN]

I have a question.

Who came up with the idea of BRIC, and later BRICS? Are they some migratory birds?

BRIC is an acronym that refers to the economies of Brazil, Russia, India, and China, which are seen as major developing economies in the world. According to Forbes, "The general consensus is that the term was first prominently used in a Goldman Sachs report from 2003, which speculated that by 2050 these four economies would be wealthier than most of the current major economic powers."

In March 2012, South Africa appeared to join BRIC, which thus became BRICS. At that time, Brazil, Russia, India, China and South Africa met in India to discuss the formation of a development bank to pool resources. At that point, the BRIC countries were responsible for about 18% of the world's Gross Domestic Product and were home to 40% of the earth's population. It would appear that Mexico (part of BRIMC) and South Korea (part of BRICK) was not included in the discussion.

The BRICS members are all developing or newly industrialised countries, but they are distinguished by their large, fast-growing economies and significant influence on regional and global affairs; all five are G-20 members. As of 2013, the five BRICS countries represent almost 3 billion people, with a combined nominal GDP of US$16.039 trillion,and an estimated US$4 trillion in combined foreign reserves. Presently, South Africa holds the chair of the BRICS group, having hosted the group's fifth summit in 2013. The BRICS have received both praise and criticism from numerous quarters.

BRICS: CNBC Explains

BRICS Countries: A New International Structure in Formation | Opinions | RIA Novosti

BRIC Countries - Background, Latest News, Statistics and Articles

 

[pmaitra]

Got the answer - Goldman Sachs.

 

[Compersion]

Got the answer - Goldman Sachs.

Jim O'Neill (economist) - Wikipedia, the free encyclopedia