By Zoya Sham:
The BRICS nations (Brazil, Russia, India, China and South Africa) convened last week at Ufa for their 7th annual summit. The association was established with a view to change the existing international world order of western dominance by creating an environment of mutual reliance. This year, with the dominant themes of global development and economic cooperation, the BRICS nations seem to have targeted US’s superpower status where it hurts the most – economic dependence. The question is, can mutual cooperation between these nations really be achieved, and if so, will that be enough for sustainable development?
The two major achievements of this year’s summit were the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA), which are meant as substitutes for the World Bank and the International Monetary Fund. “The New (Development) Bank will help finance joint, large-scale projects in transport and energy infrastructure, industrial development.” Putin told Reuters, explaining the NDB that has the initial capital of $50 billion whereas the CRA is a currency pool in the form of a short-term monetary emergency fund of $100 billion.
Russia and the US have had differences for many decades. With sanctions over its role in the Ukraine crisis, cutting off access to western funding, coupled with the fall in the price of oil – its main export, the summit has brought Russia at an important juncture. By promoting business to Asia and Africa, Russia has reestablished its position as a competitor to the US in the global market. Conversely, while China in the BRICS is attempting to promote the economic and political development of emerging markets in the Pacific, it is by definition attempting to isolate the same with the developed western nations. Both Russia and China are therefore working against the individual policies of India and Brazil, which are pro-US in terms of business and finance. This will put a strain on mutual cooperation that the summit aims to achieve.
While India is not completely relying on the west and also maintains the ‘Looking East’ policy, China has similar policies in place that will make them competitors in the Asian market. Although China’s President Xi Jinping and Prime Minister Modi discussed various subjects like the ‘One Belt One Road’ initiative – connecting China to nations across Europe, Asia and Africa, more Chinese investment in India, and better management of security in their border regions, their trade competition in the Asian region may keep them from total mutual cooperation.
Similarly, even though the relationship between Russia’s Putin and South African president Jacob Zuma appeared friendly at the summit, Russian investment in Africa has been the least at $12.5 billion in context to the total trade of BRICS nations in the region of $376 billion. This shows that although leaders may project good relations, the facts and statistics don’t always match up.
Even if these countries achieve the mutual cooperation they have aimed at during this summit by ‘joining together their raw material resources, human capital and huge consumer markets for a powerful economic spurt’ as Putin believes. This may not be enough.
Together, the BRICS nations account for only 20% of the world’s economic output but 40% of the world’s population. With India yet to realize the economic goals of the new government, South Africa on the brink of a potential debt crisis – possibly in immediate need of the CRA – and China having just suffered a stock market blow, these nations are unlikely to be of much help to each other. Furthermore, in case of an emergency need for funds, the amounts pledged by the nations, a mere $150 billion, would hardly be a significant solution. In this case, India may be right to stick by its pro-US policy.