|There is a new era arising in international relations. The rise of the BRICS countries (Brazil, Russia, India, China, and South Africa) is changing power dynamics in world affairs. While the U.S. maintains its superpower status, it is increasingly being challenged in the world sphere by the BRICS countries. The BRICS countries are flexing their power and are demanding a larger role in decision-making processes.
Representing 40 percent of the world’s population and 25 percent of global GDP, the BRICS countries hold $3.93 trillion of foreign reserves, more than one-third of the global total.1 Virtually unscathed from the recent worldwide financial crisis, these countries are poised for long-term growth. By 2015, the BRICS’ percent of world GDP is expected to grow from 14 percent to 21.6 percent and the BRICS’ percent of global exports is also expected to grow from 12.4 percent to 20.1 percent. During this period, the U.S. portion of the world economy is expected to decrease from 25 to 22 percent.2
The BRICS countries offer investors the opportunity for growth. Multinationals worldwide are
Shifting global consumption towards these emerging economies is being accompanied by a realignment of political power. This analysis will debate the cohesiveness of the BRICs countries as a new political/economic bloc and will examine their approach to multilateralism.
BRICS as a New Platform
The BRIC countries have now held three summits, the third of which was held in April 2011 and attended by South Africa, the newest member to the group. BRICS does not have a permanent secretariat or formal international organization. There is disagreement amongst experts about the cohesiveness of the group ties.
The BRIC countries project that their partnership is about strengthening South-South ties, increasing understanding among emerging nations, and boosting regional economic development, as noted by Ding Gang, Senior Editor of China’s People’s Daily.5 At the most recent summit, China agreed to import more value-added products from the other four countries, establish hi-tech projects in Russia, and extend market access and high tech projects in Brazil as well.6
These actions underscore the leading role of China amongst the BRICS. A Financial Times article states that BRICs, is becoming a China-dominated forum in which Beijing can push its evolving global agenda without the overbearing presence of the US.”7 China’s clear dominance as the world’s second largest economy is part of the challenge.
The strain amongst the BRICS countries is revealed in the various bilateral relations within the group. Jin Canrong, Deputy Dean, College of International Relations, Renmin University, notes that China and India compete against each other for global markets, while Russia and Brazil face similar problems in the global energy market. He notes that they are all strategically wary of each other.8
Brookings’ Carlos Pereira and João Augusto de Castro Neves argue that China and Brazil have a competitive trade relationship, especially for the export of manufactured goods to third markets such as the U.S. and Latin America. The two countries are also competing for foreign direct investment, with China attracting much more, despite Brazil’s strong institutions, democracy and market-friendly policies.9
Richard Weitz of the Hudson Institute, discusses the strains between China and Russia. The two countries have not reached an agreement for the pricing of Russian natural gas. There is limited reciprocal investment and policy coordination between the two. Russia and China also pursue different policies towards Asian neighbors North and South Korea, Japan, Taiwan and to other regions as well, such as the Middle East.10
South Africa’s presence amongst this group has puzzled scholars since there are other countries with stronger economies. South Africa’s presence amongst the BRICS countries is in part due to China, which views the country as a stepping stone to reach the rest of Africa.11 There are 313 million people in Africa’s middle class, a number that rivals India and China, and is an attractive market.12
In addition to the strained bilateral relations, there is little investment within the BRICS. South Africa, Brazil, India and Russia only invest about three percent of their resource in trade with each other.13 The BRICs have not allocated much funding to multilateral initiatives and for most BRICS countries, their most important trading partner is a non-BRICs country. It is hard for the BRICS to collaborate on energy policy, as Russia and Brazil are leading suppliers, while China and India are amongst the leading consumers.
Commitment to Multilateralism
While the BRICS have different priorities and are often competing for investment and access to market, they share a commitment to state sovereignty and to a multi-polar world in which no singular country dominates.14
Fyodor Lukyanov, chief editor of the magazine “Russia in Global Affairs,” writes that the whole process of global decision-making needs to be revised. Lukyanov notes that Russia, along with the other BRICS, believes that the West should not dominate world affairs.15
Doha Trade Round
This support of multilateralism can be witnessed in influence of the BRICS in the Doha Trade Round. The round was initially started to provide more access for developing countries to U.S. and European markets. However, the rise of the BRICS countries, led U.S. and European negotiators to demand increased market access for industrial goods in developing countries in return for decreased barriers for agricultural products from developing countries.16
The BRIC countries did not want a tariff-free supply chain for big multinationals to gain access their markets. The U.S. and Europeans feared there would be little left to concede in future rounds if they offered decreased agricultural tariffs without the quid-pro-quot.17 The BRIC countries also felt that past round of trade negotiations were skewed in favor of U.S. and Europeans and that rich countries should make unilateral concessions in this round.18 So, after nearly ten years of negotiations, there will most likely not be a comprehensive agreement from the Doha Trade Round.
A “Plan B” is being surfaced as an alternative, which would address agreed-upon issues, such as a a treaty on “trade facilitation” to help developing countries build roads, ports, custom offices and other infrastructure needs to increase the ease of international trade.19
World Bank and IMF
The BRICS support for multilateralism is further apparent in their bid to change the leadership structure at the IMF and World Bank. Brazil’s President Rousseff, said that the governance structure of the IMF and World Bank should no longer be a systematic rotation between the U.S. and Europe. The IMF recently agreed to shift six percent of voting rights to developing countries. This is the biggest shift in voting rights in IMF history.20
While changes are being proposed to leadership structures at the World Bank and IMF, increased presence for the BRICS at the United Nations is not on the immediate horizon. China has resisted elevating India’s, Brazil’s and South Africa’s status in the UN Security Council. The group is committed to a greater role in general in the UN.21 Multilateralism only goes so far.
The combined economic strength of the BRICS is undeniable. These countries will continue to attract foreign direct investment as corporations hope to gain access to their growing middle class markets. These countries are also increasingly re-balancing their domestic consumption to achieve more sustainable growth models.22
Increased economic power gives the BRICS leverage to assert their needs and desires in the international arena. Already the BRICs have exhibited their strength in the Doha Round and in the call for a new leadership structure in the IMF and World Bank. Similar situations will likely arise in future international agreements and negotiations. The United States and Europe better be ready to compromise.
1 Soliani, Andre. “BRICs Said to Seek End to West’s Monopoly of World Bank, IMF.” Business Week. April 13, 2011.
BRICS: The New World Powers
BRICS: The New World Powers