It is not yet the great international media-fest of Group meetings (G-8, G-20 etc.) but the first BRIC summit, hosted yesterday by the Russians in Yekaterinburg, is arguably the shape of economic and political deliberations to come. “BRIC” standing for Brazil, Russia, India and China epitomizes the changing economic shape of the world and in the view of some, heralds the beginning of the end of US global hegemony.
China is now the world’s third largest economy with India and Brazil growing fast. Russia is the exception, with failed economic reforms replaced by the return of chauvinistic state interference, if not actual control. This has deterred the substantial foreign investment flows with which China and, to a lesser extent, India have built their new economic wings. But Brazil and Russia share substantial natural resources, not least hydrocarbons which are of consummate interest to the resource-poor Indians and Chinese. Indeed last month China moved to boost substantially its trade ties with Brazil and offered credits and technical cooperation to help exploit the major new offshore oil and gas finds — the largest in the Western Hemisphere for 30 years.
Between them BRIC also represents more than 42 percent of the world’s population, a huge market with significant untapped potential. China and India with respectively 1.3 billion and 1.2 billion citizens are large enough, but Brazil with a population of 194 million and Russia with 142 million also offer a range of opportunities.
The chance for these four countries jointly to assert a growing control of the international economic agenda is clearly one of the attractions of the BRIC grouping. One subject discussed yesterday, the reform of the international financial system was interesting since no BRIC financial institution was directly responsible for triggering the worldwide economic meltdown. The participants also discussed ways to stem the recession and restore the world economy. Not allegedly on the agenda, according to the Russians, was the continuing role of the dollar as the international reserve currency. But it is hard to see how global financial reform could be discussed without considering the dollar’s future. Certainly the money markets’ display of nervousness this week suggests traders expected the issue would be addressed.
From here on, even though with this summit the BRIC countries have laid down their marker, they now have to demonstrate that they have more in common than not yet having a place at the international top economic table. Such a negative is hardly a unifying force. BRIC’s influence will depend upon its members’ ability to create positive benefits for each other as well as lining up front and center with shared policy initiatives. Commentators who have characterized BRIC as a largely political group ignore the reality that it is their emergent economic power that has brought them together. Unless there is some successful alignment of economic goals, the grouping will come to count for little except as an alternative piece of vapid summitry. Nevertheless, yesterday’s summit in the city where the last Russian czar and his family were murdered could well presage the demise of another established order.
