BRICS may not replace the old world order – but it could still make a difference

This article by Urvashi Sarkar first appeared on Scroll.in 


Since its first summit in 2009, the BRICS group of nations has done what it takes to be noticed – carved out a multilateral bank with an initial authorised capital of $100 billion and created a Contingency Reserve Arrangement to tackle financial crises. However, as the group of emerging economies gears up for its eighth summit that will be held in Goa on October 15-16, in a year India assumed the BRICS presidency, questions remain about its credibility.

BRICS first started with Brazil, Russia, India and China as its constituents, and was joined by South Africa in 2010. It was envisaged as an alternative to dominant Western financial institutions like the World Bank and International Monetary Fund, which, 70-odd years after they were set up, continue to be dominated by the United States and Europe.

However, links with the International Monetary Fund remain in place. A BRICS country, when in need, still requires an agreement with the financial body to withdraw more than 30% of its quota from the Contingency Reserve Arrangement. Also, the growing ties of India and Brazil with the United States further undermines the grouping’s credibility.

BRICS nations – comprising 43% of the world population, 31% of global GDP (purchasing power parity basis) and 17% of world trade – also face other serious problems. High levels of poverty and great inequality mark their societies. The faltering of their economies, barring India, is a concern. Critics also draw attention to a renewed scramble for Africa by BRICS countries, resulting in natural resources extraction and impoverishment of locals.

Different political structures, varied economic trajectories and inter-rivalries such as between member nations India and China, make it difficult to accept that BRICS can have a cohesive position on anything.

Great expectations

Despite such problems, ahead of the eighth summit, different constituencies have their expectations. For instance, business-related groups want it to be easier to do business with each other and seek increased trade, and civil society groups hope to be consulted in policy making.

“The BRICS countries could have better levels of intra-BRICS trade,” said Onkar Kanwar, chairman of BRICS Business Council (India). “This can be done through harmonisation of customs regulations, easier visa regime, uniformity in technical standards and easier access to information on trade and investment.”

The BRICS Business Council will also press for a travel card, or special business visa, which will make it easier for people doing business in these five countries to travel across BRICS.

The Indian government’s expectations from BRICS is best expressed in terms of what not to expect. Contrary to popular and media perceptions, issues like the Kashmir dispute or India’s Nuclear Suppliers Group membership cannot be pursued.

“If these issues are pursued, BRICS would only be occupied with India-China border problems or Brazil-China anti-dumping disputes,” said former Ambassador HHS Viswanathan, who works with the Observer Research Foundation and heads the BRICS Academic Forum from India. “Bilateral issues are off the agenda. Even if international issues relating to third countries crop up in discussions, we try not to enter them. And if we do need to mention them, references are watered down.”

BRICS nations, which cooperate against terrorism, have condemned the recent attack on an Army camp in Uri in Jammu and Kashmir. But the summit outcome is unlikely to refer to Kashmir’s internal unrest in which at least 80 people have died and thousands injured since July.

India and BRICS

So, how does India gain from BRICS?

BRICS wants to alter institutions such as the World Bank and International Monetary Fund and pushes for reform of the United Nations Security Council, and India is keen on both processes.

Further, by being a founding and contributing member of the New Development Bank and Contingency Reserve Arrangement, India has come a long way since it had to request food aid from the United States in the 1970s, and negotiate assistance from the International Monetary Fund in 1991, during the balance of payments crisis.

BRICS also provides a space for India and China, which share thorny ties, to find areas of cooperation such as in railways, industrial parks, tourism, urbanisation and agriculture. The group can be a source of investment for initiatives like Make in India and smart cities, and facilitate investments by Indian companies in BRICS countries.

As far as civil society in India goes, the belief is that the legitimacy of BRICS can increase if civil society organisations that are attuned to people’s concerns are also consulted for inputs into policy making.

While the government-approved civil BRICS with a focus on Sustainable Development Goals will take place in Delhi, a separate gathering, People’s Forum on BRICS, will be held in Goa later this month. The forum will focus on BRICS from a relatively critical lens, with discussions on public services, natural resource governance and human rights.

While civil society organisations have demanded that their participation be formally recognised in BRICS summits, as in the case of academia and business participation at present. But though the Indian government will facilitate a gathering of such organisations, or civil BRICS, it still does not mean institutional recognition. Further, the recommendations from the gathering may not be accepted in the final summit outcomes since there is no formal mechanism for accepting recommendations.

Concerns about the New Development Bank have also been raised by civil society groups.

Joe Athialy of the Centre for Financial Accountability said: “If the NDB [New Development Bank] cannot show transparency and accountability and evades environmental and social concerns, it won’t be any different from multilateral development banks like World Bank and Asian Development Bank.”

BRICS and the world order

BRICS remains a young institution still in the process of contact building among member countries. Existing areas of cooperation include attempts to provide an alternative to dominant financial institutions, reducing international financial market risks and concerns about disruptive monetary policies of advanced countries. Further grounds of cooperation are being identified with each summit.

BRICS cannot be the new world order and perhaps does not intend to be, given its differences and continued cooperation with existing institutions of power. The attempt will not be to replace these institutions, but to occupy space within them, and gain a share of global governance through arrangements like the BRICS bank, Contingency Reserve Arrangement, and trading in local country currencies. But more importantly, global governance entities like the World Bank, International Monetary Fund and the UN Security Council are in serious need of a shake up to reflect current global realities, and BRICS might just be able to deliver this. It is therefore premature to write it off, just yet.

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