BRIC or BRICs is an acronym referring to the fast growing economies of Brazil, Russia, India and China. The acronym is used increasingly by politicians and the mass media, reflecting the emergence of a new global reality.
The first BRIC summit will be held in June 2009 in Yekaterinburg. In December 2008, Moscow hosted the first meeting of BRIC experts and policymakers, which was the beginning of Track II interaction. The meeting at New Delhi, hosted by the Observer Research Foundation, with the support of the Ministry of External Affairs, is intended to provide inputs in the form of issues for decision and policy alternatives for the consideration of the BRIC Summit.
BRIC or BRICs is an acronym referring to the fast growing economies of Brazil, Russia, India and China. The acronym is used increasingly by politicians and the mass media, reflecting the emergence of a new global reality.
At first sight, the four BRIC countries are not a natural fit. The political will of the BRICs for cooperation also rests on a relatively modest economic basis. The four countries have been hit by the financial crisis in different ways and they see different ways to overcome it. There are also some serious conflicts between the BRICs in politics. The different geography and diverse history of the four countries dictate different geopolitics and security agendas. The BRICs have different international commitments and belong to different alliances and organizations, where they defend their own interests. There is also an obvious asymmetry among the BRICs in their membership in major international organizations.
On the other hand, the BRIC countries are in one league in terms of their interests on the world stage. They have a similar type of influence over international affairs. All the four are great powers. They represent four great civilizations. The BRICs share common values: dissatisfaction with the present political and economic architecture of the world and with the existing world order; agreement on some general principles, including opposition to unilateralism; respect for the interests of all countries; and support for the principles of a multi-polar world. The four countries have an understanding that together they have a greater capacity to change the international political configuration, global security and the world economic order.
For various reasons, the BRICs have not been included or have only been offered “back seats” in most of the organisations constituting the current global political and economic architecture, such as the G8, and Bretton Woods institutions. The increasingly complicated 21st century world requires new, creative approaches, and the search for these approaches is possible only if different views and horizons are taken into account. It would be impossible to create a stable system of global governance, if the views of all those who have a major impact on world development are not heeded. The BRICs have already demonstrated their ability to state their constructive and unified position at international forums; for example at the G20 Washington summits. It is not clear that any other existing international grouping allows the same leverage for BRIC to promote their common interests.
The BRIC group formed naturally due to the natural wish of countries with the most dynamic and largest developing economies to meet and consult at various levels in creating favorable external conditions for the promotion of their mutual interests. The increasing frequency of bilateral events which the countries have carried out in recent years has been a powerful consolidating factor.
These four countries can certainly continue to get by without the BRIC format, but there is a shared understanding that coordinated actions and a high level of mutual understanding would act as a multiplier of their already considerable individual strengths and endowments.
At the end of the Cold War bipolarity was replaced with claims of unipolar domination, which was viewed by other countries as counterproductive and unfair. Simultaneously, at the beginning of the 21st century the world economy entered a new stage of globalisation, giving rise to new countries taking the lead in economic growth. . The limitations of the Bretton Woods mechanisms, which began to fail already in the 1990s, have become obvious. The financial problems which began in the United States and in other developed countries, and has now snowballed to a global economic crisis.
It has become clear now that effective global governance cannot be ensured by one country alone or by one group of countries. The turmoil in the global economy and financial sector, have only confirmed that it is impossible to monopolize global governance and address all issues from one center. New centers of economic growth and political influence, to which Brazil, Russia, India and China rightfully belong, will make a major contribution to the solution of these tasks.
The role of the BRICs is largely determined by the size of these large countries. They account for more than a quarter (25.9 percent) of the world’s territory and more than 40 percent of the world’s population (2.7 billion people). In addition, they have huge natural resources, large industrial potential, a highly developed society and culture and are regional leaders. The BRICs currently account for 13 percent of global GDP. The gold and foreign currency reserves of the four countries have markedly increased. This refers, in particular, to China (now ranked first in the world), Russia (third) and India. The aggregate bilateral trade of the four BRIC countries is relatively modest, but still amounted to $260 billion in 2008
The four countries have also been hit hard by the global crisis, with plunging stock markets, a liquidity crisis in the banking sector, and a decline in growth rates. Yet they have shown good resilience in the face of the crisis. The countries have preserved the relative stability of their national currencies. In addition, their huge domestic markets provide them a cushion for overcoming the impact of the global crisis on their economies.
Aggregate GDP of the BRICs is currently much smaller than U.S. GDP, and will remain so for several more years. Western countries also have an obvious competitive edge over the BRICs in the financial sector. The voice of the BRICs is still weak at institutions regulating world finance and trade. But this is expected to change in coming decades. The most recent forecast, made public by the U.S. National Intelligence Council called “Global Trends 2025: A Transformed World,” acknowledges that the world is heading towards multi-polarity, in which China and India, along with the United States, will be the economic giants. Russia and Brazil will get considerably stronger if they modernize. The report says that “growth projections for Brazil, Russia, India, and China indicate they will collectively match the original G7’s share of global GDP by 2040-2050.
BRIC is not yet an organization, and also not an alliance or even an established dialogue format. The acronym was first coined more than five years ago in a Goldman Sachs report on the state of the world economy around 2050 entitled “Dreaming with BRICs: The Path to 2050”. It speculated that the BRICs would be the fastest-developing economies. China and India would be two of the top three global leaders in terms of GDP, while Russia and Brazil would be among the top six nations, with the United States and Japan being the only developed economies ahead of them. This forecast has already begun to come true.
Development of BRIC
In 2005, the four nations began four-sided consultations at the level of senior officials. Practical interaction within the BRIC framework started in September 2006 when the first meeting of BRIC foreign ministers was held on the sidelines of a UN General Assembly session in New York. The second meeting of BRIC foreign ministers was held a year later, in September 2007, again within the framework of a UN General Assembly session. The ministers decided to hold annual full-scale meetings of the BRIC countries, to start permanent consultations at the level of deputy foreign ministers, and establish regular contacts between their embassies and permanent missions in major world capitals. The first full-scale meeting of the four foreign ministers was held on May 16, 2008 in Yekaterinburg, Russia and it was a major landmark in relations among the BRIC countries.
BRIC top leaders met for the first time on July 9, 2008 in Japan, on the sidelines of a G8 summit at Russia’s initiative The most recent, fourth meeting of BRIC foreign ministers was held by tradition in September 2008 in New York. The ministers discussed the global financial crisis and issues pertaining to interaction between BRIC countries within the UN framework. The first meeting of BRIC finance ministers was held on November 7, 2008 in Sao Paulo at Brazil’s initiative. The meeting discussed the impact of the global financial crisis on BRIC economies, and the prospects and areas for reform of the international financial architecture with a view towards granting more voting authority to developing countries. They also reached agreement to establish regular contacts between BRIC finance ministries.
The constructive discussions of financial and economic issues within the BRIC format enabled the four nations more effectively to promote their approaches at the first G20 summit in Washington. In particular, the BRICs called for a reform of Bretton Woods institutions. Their joint efforts resulted; in particular, in a decision at the G20 summit that membership in the Financial Stability Forum will be expanded to include emerging economies from within the BRIC. BRIC Finance Ministers met again on March 14, 2009 and issued a Joint Communiqué at London on the eve of a meeting of G20 Finance Ministers to prepare for the London G20 Summit on April 2, 2009. Several ideas of the BRIC Joint Communiqué found mention in the eventual Statement issued at the G20 Summit.
Issues for formulation of suggestions and proposals at the BRIC Summit
An illustrative list for discussion at the Track-II meeting is provided below:
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