Inducting BIMSTEC into BRICS talks was a good idea

The top leaders of the BRICS nations met in Goa recently, for its eighth annual summit. The meeting was successful in getting the full participation of the leaders of its all five members (Brazil, Russia, India, China and South Africa) which showed cohesion and willingness on the part of powerful personages to remain within the group. The BRICS group was expected to have a huge potential.  But for that, it requires to show a clear path for its future, more than various repetitious pledges about what needs to be done. Then Goa summit only yielded mostly bilateral deals between India and Russia and India and Brazil with China not being on the same page as India on many issues. South Africa remained a kind of outlier with its own special problems. On India’s part, it could have been better if it focussed on discussions on major issues facing the members and providing a new model for international financial architecture. One must recall how the western world was threatened by the establishment of the new BRICS bank (New Development Bank) in China last year which challenged the hegemony of the Bretton Woods Institutions — the World Bank and the IMF. The NDB, CRA (Contingency Reserve Arrangement) and AIIB (China-led Asian Infrastructure Investment Bank) have been established in Shanghai and Beijing and between them they have $250 billion capital base which is a clear challenge for World Bank with a capital base of $252.8 billion. These institutions are ready to provide developing countries loans without conditionality for infrastructure as well as for social development. NDB has started functioning already, giving out loans for green infrastructure to commercial banks within the BRICS. A branch of the NDB has been established in South Africa also.  India’s Canara Bank got $250 million for promoting a renewable energy infrastructure project. Unlike the IMF, which has recently revised its quotas for Emerging Market Economies under pressure from G20 and now India has around 3 per cent quotas (denominated in Special Drawing Rights of the IMF) and China has 6 per cent, but US still has the veto power with 16.5 per cent of the quotas, the NDB has given equal voting rights and quotas to all members.  It is democratically structured and holds a hope for all developing countries in the world. There is a mention about the need for a further revision of quotas (Fifteenth Review) in the BRICS declaration in which higher quotas and voting rights are expected to be given to Emerging Market Economies. The Chinese renminbi has been included in the SDR basket since October 1, 2016 due to the urgings of G20. The significance of this important decision by the IMF could have been discussed. Various swap arrangements between two BRICS members is already taking place which precludes the need to deal in terms of dollar. The $24 billion ($150 billion Yuan) swap deal is a kind of mutual credit line between central banks and is an important development between Russia and China bringing them close together. Except for Russia, all BRICS members are developing countries which have shown a fast rate of growth in the past but have enormous problems today. Their financial needs continue to be huge and the BRICS summit could have addressed their needs and their debt burden. That was the whole purpose of BRICS to begin with – to have convergence of ideas and find the means of finance for promoting future sustainable development. The BRICS banks can raise more money in the future, but for that it would need a credit rating agency. To have its own agency was emphasized, but actions towards setting it up was not completed in the summit. On the whole, the emphasis on finance and commerce has unfortunately come down. India chose to talk about domestic issues and focus on terrorism and neighbourhood problems. Of course terrorism is a big and immediate problem for India but it is not perceived in the same light and urgency by other members. Each country has its own set of unique problems and the summit declaration called for action against all UN designated terrorist organizations but it named only Islamic State and Al Nusra. China has failed to designate JeM founder Masood Azar as a terrorist.   This has definitely caused friction and unhappiness on India’s part. Inducting the BIMSTEC into BRICS talks was a good idea because it meant a wider awareness and participation in BRICS by India’s neighbouring countries minus Pakistan. Nepal, Bangladesh, Bhutan, Sri Lanka, Thailand, and Myanmar were the invitees. The focal point of the Summit could have been the ongoing recession among three members of BRICS countries — Russia, Brazil and South Africa and how to overcome the temporary problems of falling commodity and oil prices that are leading to problems of unemployment and hardships. Plans for revival of these economies could have been spelt out more clearly and a free trade pact could have been envisaged to promote intra BRICS trade which currently is at a low point. Focusing on MSMEs was also a good idea because all the members have a large number of MSMEs and there is scope for cooperation in tackling similar technical problems and in becoming integrated in regional and global value chains. Similarly enhanced cooperation in e- commerce, single window clearance, IPR cooperation, trade promotion did find a place in the declaration as also removal of nontariff measures, standardisation and conformity assessments as areas of future cooperation. But most of these have been said in G20 meetings before! How is BRICS meeting different from the others? It is hard to bring out the salient features that distinguishes BRICS summit from others taking place around the world in which developing countries are present. In the Goa meeting, clearly India did stake its claim to having the status of a global power with the highest rate of growth in the world. Previously China remained the lone contender among the BRICS to becoming a global power. As populous developing countries, India and China should have stuck to cooperation in poverty reduction, infrastructure building via the Silk Road project and better commercial and financial relations. Any form of cooperation that would bring prosperity to the member countries should have been the top priority. Much more would have been achieved if major issues like health, nutrition, education and agriculture were focussed upon because 30 per cent of humanity lives in these five countries. It could then have remained a challenger of current western dominance in the world order.

• International Affairs
• Great Power Dynamics
• Economic Diplomacy
• International Financial Institutions
• Neighbourhood
• BIMSTEC
• BRICS 2016
• world order

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