BRICS

India leading BRICS Bank bodes well for future says Samir Saran

BRICS Summit’s decision to establish a development bank gives a sense of achievement for India as well as fellow nations. India has invested the most in the Bank after much deliberation during the last years. Author and commentator Samir Saran says that with India having the bank’s stewardship, it is a welcome start to a financial institution such as the BRICS Bank. The Bank should not be seen as if it is in competition with other international financial institutions. Rather, it should be viewed as an additionality. BRICS Bank will cater to the scarcity gap, changing the ethos of financial institutions. The Bank’s headquarters being in Shangai should not deter India’s hopes as we will have the bank’s stewardship during these formative years and this will be fruitful to the economy.

Original link is here

Pic 2  Brics

Five emerging nations plan a development bank of their own

Original Link is here

by  , Fortune

July 15, 2014, 9:53 PM EDT

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Leaders of big developing nations hope to create an alternative to the World Bank and International Monetary Fund, as a sign of independence.

Leaders of five big emerging nations plan to create a bank to fund development projects plus an emergency reserve to counter the powerful World Bank and the International Monetary Fund.

The plan was announced Tuesday at the annual BRICS summit, an acronym taken from the name of the participating countries – Brazil, Russia, India, China and South Africa. The idea is to create an alternative to the major international lending sources so as not to be so dependent on them for money and as a symbol of political strength.

The development bank – funded with $100 from the five member states – will be headquartered in Shanghai and, in its first phase, headed by an Indian president. Although China will be bank’s largest donor, each nation will own an equal share of the bank and have an equal say in governance and policy making. Another $100 billion will be allotted to an emergency reserve fund.

BRICS countries account for 42% of the world’s population and represents $6.14 trillion in annual trade. They contribute roughly 20% of the world’s economy based on GDP.

The BRICS summit took place against the backdrop of Russia’s annexation of Crimea, a Russia-China natural gas deal and the change of government in India. The proceedings were therefore of utmost importance to the U.S from a foreign policy standpoint.

“I think the big message to me coming out of the summit is BRICS are trying to create a safety net that means if the U.S. and Europe tried to isolate and sanction one of them they have something to fall back on,” said Thomas Wright, a fellow at the Brookings Institution who focuses on international relations. “The most worrying parts are that they didn’t say anything critical of Russia on Ukraine. Basically they sent out a message that they had no problem with anything with what Putin was doing.”

BRICS was established just prior to 2008 financial crisis with Brazil, Russia, India and China. Two years later, they welcomed South Africa to the club. The member nations vary in their economic health and, in some cases, are undergoing economic problems. But they’ve found a diplomatic and political rationale to exist that Wright described as being based on the idea that “not to have all roads go through the West.”

While Russian President Vladimir Putin boldly expresses his views on BRICS—that he’ll press other emerging markets to find ways to prevent “sanction attacks” by the U.S.—other leaders are cautious about their response.

“Together we should think about a system of measures that would help prevent the harassment of countries that do not agree with some foreign policy decisions made by the U.S. and their allies, but would promote a civilized dialogue on all points based on mutual respect,” Putin said in The Moscow Times.

In the past, the BRICS have struggled to reach a consensus. First they could not agree on a candidate to head the International Monetary Fund or the World Bank in 2011 and 2012. Then recently India and South Africa signaled they may backtrack on a trade agreement initially endorsed by all five countries. Many experts perceived it as a group too “splintered” to make any change.

With today’s summit, BRICS managed to break that perception and move forward to realign the economic balance for future development. “It is an achievement for the countries who have not significantly sat on the high table on economic and political governance matters,” said Samir Saran, senior fellow and vice president at Observer Research Foundation, a New Delhi based think-tank. “It is going to create a new ethos of economic governance.”

 

India lauds BRICS bank set up to counter Western hold on global finances Jul 16

Original link is here

New Delhi, July 16 (ANI): Experts and leaders, on Wednesday welcomed the setting up of $100 billion BRICS bank and a currency reserve pool aimed at reshaping the Western-dominated international financial system. Leaders of the five top emerging markets in BRICS nations consisting of Brazil, Russia, India, China and South Africa, sealed the deal to foster financial and development cooperation and keep the monetary tap running in the face of a financial meltdown like the 2008 crisis. A senior researcher at the New Delhi-based Observer Research Foundation think-tank, Samir Saran, said bank would help emerging and developing nations to mobilize resources for infrastructure and development projects. BJP leader Subramanian Swamy, welcomed the setting up of the bank, adding that the previous Congress -led government had committed to the Chinese demand to have the bank being headquarted in Shanghai

Samir Saran and ANI

 

BRICS needs doses of steroids to prosper

Original link is here

By Samir Saran & Vivan Sharan Source:Global Times
BRICS.jpeg

Illustration: Liu Rui/GT

The political leaders of BRICS member countries are facing pivotal national moments.

Brazilian President Dilma Rousseff is simultaneously navigating her socialist and internationalist moment, after a face-off with the Americans on the NSA spying saga. She has reasserted Brazil’s propositional role in the global order by hosting the ambitious NETmundial – Global Multistakeholder Meeting on the Future of Internet Governance.

Russian President Vladimir Putin’s European misadventures have gotten him embroiled in a controversial international debate on sovereignty, while his country’s economy struggles to overcome structural flaws.

On the back of a decisive popular mandate, the new Indian Prime Minister Narendra Modi faces tough regional challenges, even as he tries to revive industrial output and create jobs.

Chinese President Xi Jinping is in charge of an administration which has courted altercations on various fronts while in search of a new and sustainable model for economic growth.

And recently re-elected South African President Jacob Zuma has to contend with both a weak political mandate and rising socioeconomic inequity, while attempting to reconcile differences with African neighbors.

Each of the BRICS leaders is faced with significant challenges. How useful will coordination and cooperation at the BRICS platform be for each of them? The BRICS platform itself will first need doses of steroids if it is to remain viable.

This past year has been quite unsettling for those interested and invested in BRICS. Economic growth of the member countries has been below par. The external economic environment has not been favorable either.

The promise of BRICS is based on new economic and political opportunities. The group is lean and lithe by design and therefore has the right ingredients to make for a 21st century cooperation and coordination platform. Both these characteristics were on display when the group met in India in 2012, where a number of forward-looking economic and political decisions were made. However, neither critical decision-making nor effective implementation has been on display over the last year. Relating to this, there are five concerns that must be addressed at this year’s BRICS summit.

First of all, the focus of the previous summit was clearly on African issues. The eThekwini Declaration in 2013 focuses on unlocking Africa’s potential, regional integration for Africa’s growth and the New Partnership for Africa’s Development. With the continued moderation of growth rates, the grouping must prioritize domestic economic imperatives and close commercial ties rather than narrowly focus on a single region or use the platform for regional grandstanding.

The second concern follows directly from the first. BRICS members have large stakes in the international system and share the common aspiration of becoming global agenda-setters. Indeed, they must not continue to be passive recipients of rules and standards in vital areas such as global trade and investment.

Third, the new areas of cooperation listed in last year’s declaration outlining areas for immediate collaboration are strikingly vague. As a result of myopic drafting, a rather counter-productive role reversal has taken place. The interactions between non-government stakeholders have started to lag behind inter-governmental interactions.

Governments have limited vocabulary and dynamism compared with the private sector and civil society and intra-BRICS cooperation must be unfettered and creative. An example is the BRICS Exchange Alliance, a market-led initiative to integrate financial trading platforms. Such concrete efforts must be replicated rather than endlessly expand the list of issues to cooperate on for the sake of seeming ambitious.

The fourth concern relates to the veritable silence on BRICS engagements in the world media following the high-profile summit last year. Perception-building must take greater precedence at this summit. This must be aided by the timely dissemination of information on actions such as the setting up of the Contingency Reserve Fund and a BRICS-led development bank.

And finally, perhaps the most critical issue for the five BRICS leaders, who will meet at the sunny shores of Fortaleza, will be practical goal-setting. This will be an exercise in planning and coordination to maintain continuity as well as honing in on objectives for the long term. If there is an opportunity to be seized in cross-leveraging political and economic ties, it will be in the coming years.

Samir Saran is a vice president and Vivan Sharan is an associate fellow at Observer Research Foundation, Delhi. opinion@globaltimes.com.cn

BRICS of a new world

Opinion, July 12, 2014

Original link is here

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BRICS must mitigate the systemic risks posed by imbalances in the global economic system, perpetuated by Western central banks. (Source: Reuters photo)


 

The Fortaleza summit should address the undermining of the multilateral trading system.

Prime Minister Narendra Modi’s first major foreign visit, to the BRICS summit in Fortaleza, Brazil, is in the news for a variety of reasons. But there is little discussion on what is at stake and the possible takeaways for BRICS, and particularly India.

This is a crucial moment for the world, faced with a central European face-off, the long tail of the financial crisis, trouble in the western Pacific, a stalemate on trade and environment, new contests in cyberspace and outer space and a new irrationality in the Middle East. BRICS, particularly India, are vulnerable to downward spirals in any of these areas. India must seek to first protect and then promote its interests at this platform. The new prime minister is the right man for this task and there are five key areas he must navigate.

The first is the big-ticket BRICS-led development bank, proposed at the New Delhi summit in 2012. While China has clear ambitions, a worse outcome would be to allow the creation of a Chinese version of the Asian Development Bank. The new bank must follow a one-country-one-vote formula, and allow other states and institutions to invest capital in return for a minority controlling stake and returns commensurate to their investments. BRICS members must walk the talk on the “equity and fairness” they seek from the West. By allowing each BRICS country equal weight in ownership of the bank, they would demonstrably craft a model for other IFIs to emulate.

The second area is global trade and investment. Through the proposed Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP), developed economies are seeking to redirect trade and investment flows. They will do so by instituting new rules, standards and tariffs, and by gradually dismantling the multilateral system (WTO) that India and others believe to be essential. BRICS must seek to counter the negative externalities from such mega free trade arrangements (FTAs). While it is expected that BRICS will announce export guarantees and agreements on innovation and banking, the members must also commission academic assessments of the impact of imminent mega FTAs and coping strategies.

Third, BRICS must mitigate the systemic risks posed by the imbalances in the global economic system, perpetuated by the central banks of advanced economies. BRICS leaders are expected to launch a foreign exchange reserve fund of $100 billion as a hedging mechanism. This will resemble the Chiang Mai Initiative, put in place by Asean+3 after the Asian financial crisis of the late 1990s. It is essentially a pooling arrangement, with China contributing $41 billion, Brazil, Russia and India $18 billion, and South Africa $5 billion. Indeed, Modi would do well to suggest that BRICS take a principled position on recent policy decisions by Western central banks, already suspected to be fuelling new asset class bubbles.

Fourth, over the years, political content in the outcome statement has increased dramatically. BRICS states will need to discover common approaches on political developments in different regions. In particular, the stability of southwest Asia is critical to India, and as the US withdraws from Afghanistan, there is bound to be a jostle for political capital. Can BRICS catalyse the RIC (Russia, India and China) into discovering a basis for meaningful cooperation in the region? Here, the bilateral meetings on the sidelines will be vital. Similarly, Russian expectations on collective support for its position on Ukraine will need to be delicately managed.

The fifth area pertains to cyber governance and cybersecurity. There are clear differences in the positions of BRICS members. Russia has passed a bill requiring all technology companies to store personal user data on domestic servers. This closely mirrors developments in China that ensure local data storage and government control. Meanwhile, the Brazilians, who hosted the “Net Mundial”, have positioned themselves alongside the US and EU, favouring a multi-stakeholder framework. India sees a greater “state” role as it seeks to connect its “next billion” to the internet. There is an opportunity to recognise these cleavages, and develop a calibrated approach for discovering common digital ground. That each BRICS member has either the US or EU as its most important economic partner in the digital world may help.

The Fortaleza summit will represent the reboot of BRICS. This is a different world altogether, with the Brazilians seemingly reasserting a “Lulaesque” style of external engagement, the Russians defiant and petulant at the same time, the Chinese testing the geographical limits of their economic and political ambitions, and the South Africans seemingly wedded to their regional aspirations. Prime Minister Modi has the biggest political mandate among his BRICS counterparts, and also the weight of the largest expectations.

The writer is vice president, Observer Research Foundation. Views are personal

A Long Term Vision for BRICS released

21 September 2013
Original link of report in detail is here

“A Long Term Vision for BRICS”, produced by Observer Research Foundation, was released on Friday (20 September) by the Secretary (Economic Relations) in the Ministry of External Affairs and India’s Sherpa to BRICS, Mr Pinak Ranjan Chakravarty.

This Report, which had incorporated the first round of feedback received from within the Track II network, was submitted to the 5th BRICS Academic Forum this year in South Africa.

ORF is a member of the BRICS Think Tanks Council set up by the leaders at the BRICS Summit in Durban in March this year.

The BRICS long term vision report includes five prominent agendas of cooperation and collaboration which are integral to the very idea of long term engagement between the BRICS nations and provide a framework for accelerating momentum and increasing significance over the long term.

Reform of global, political and economic governance institutions is the centrepiece of the BRICS agenda. Multilateral leverage, furthering market integration, intra-BRICS development platform and sharing of indigenous and development knowledge and innovation experiences across key sectors are the other thrust areas envisioned in the report. Releasing the Report, Mr. Chakravarty said the five countries may follow some of the recommendations to share indigenous and development knowledge and innovation experiences across key sectors.

“There is a lot to learn from each other and develop a high level of cooperation in select areas in BRICS as well as contribute collective capabilities to the global discourse,” Mr Chakravarty said.

He said while it is true that the international governance architecture requires a significant overhaul, there is a lot of work to be done domestically and among BRICS members as well.

Mr Dinesh Bhatia, Joint Secretary, MEA, noted that even Mr Jim O Neill of Goldman Sachs fame and credited with first deploying the BRIC acronym, has also commented on the report. Mr Neill has also emphasised that global governance must become more plural, with the BRICS playing a commensurately larger role.

Mr. Samir Saran, lead author and Vice President, ORF, said there is an urgent need for the five BRICS countries, which constitute around 40 percent of the world population and responsible for about half of the global growth, “need to sit on the same table and discuss and frame rules for the new road”.

Besides Samir Saran, the Report is authored by Mr Ashok Kumar Singh, Senior Fellow, and Mr Vivan Sharan, Associate Fellow, Observer Research Foundation, with lots of inputs and cooperation from the Ministry of External Affairs.

A LONG-TERM VISION FOR BRICS

Original link is here 

The objective of this document is to formulate a long-term vision for BRICS. This in turn flows from substantive questions such as what BRICS will look like in a decade and what the key priorities and  achievements will be. It is true  that  BRICS is a nascent, informal grouping   and   its   agenda   is  evolving   and   flexible.   Therein  lays  the uniqueness of BRICS. The BRICS leaders have reiterated that  BRICS will work  in  a gradual,  practical and  incremental manner. Nonetheless, the grouping  needs  a long-term vision  to  achieve  its  true  potential for two reasons: (1) to dove-tail  the tactical and individual activities into  a larger framework and direction; and (2) to help in monitoring the progress of the various sectoral initiatives in a quantifiable manner.

The  Track  II BRICS dialogue,  under  the  chairmanship of India  in 2012, has been robust. On March  4th  – 6th,  2012,  academics and experts  from the five BRICS nations—Brazil, Russia,  India,  China and South  Africa— assembled  in  New  Delhi   for  the   4th   BRICS  Academic   Forum. The overarching theme was “Stability, Security  and  Growth.” This  theme is useful for understanding the motivation and ethos of BRICS as a platform for dialogue and cooperation on issues of collective interest.

The  dialogue  led to the drafting of a comprehensive set of recommendations for BRICS leaders  (Annexure 1). The  17  paragraphs that  capture the  recommendations to  the  BRICS leaders  were  reached through a consensual process between  60 academics and experts from the five countries. Forum  delegates  contributed a number of research and policy papers  that  formed  the basis for the enriching discussions. Each of these  papers  highlighted key  areas  for  cooperation, within the  overall construct of the BRICS agenda.  This  research led to a significant build-up of knowledge on BRICS. This  long-term vision document is an attempt to aggregate the dialogue and research that  has fed the Track II process so far and to build upon it.

Broadly speaking, the document is divided into four sections. The first, on ‘Common Domestic Challenges’, aims to pinpoint multiple areas in which sharing experiences and best practices within the BRICS Forum  will help to respond to common problems. For example, BRICS nations have vastly differing levels of educational attainment and healthcare policies. As large developing   countries with  significant  governance challenges,  but  also ‘demographic dividends’ and  other  drivers  of growth  to reap,  BRICS can greatly benefit from innovative ideas emanating from similarly positioned nations.

The  second  the  matic section focuses  on  ‘Growing  Economies, Sharing Prosperity’. Given  the  huge distance that  the  BRICS nations have yet to cover   in   tackling  poverty   and   providing   livelihoods  to   their   rising populations, there  is no option other  than maintaining and  accelerating economic growth.  This  section outlines the necessity of deepening intra- BRICS  and  worldwide   trade   and  economic synergies.   Additionally,  it documents growing energy needs and discusses how the economic growth imperative affects the BRICS discourse on climate change.

The third section, titled ‘Geopolitics, Security and Reform of International Institutions’, outlines an enhanced role for BRICS within an increasingly polycentric world  order.  Within the  United  Nations  (particularly the Security  Council), enhanced BRICS representation can institutionalise a greater  respect  for  state   sovereignty and  non-intervention. In  Bretton Woods Institutions, like the IMF and World Bank, BRICS seeks to reform voting  shares   to  reflect  the  evolved  global  system, different  from  that forged in the immediate aftermath of World War II. Finally,  as leaders  in the   developing   world,   BRICS  nations  seek  to  create   a  development discourse that better represent their aspirations.

The  fourth thematic section, on the  ‘Other Possible  Options for Cooperation’, outlines possible  developments to further collective engagement once the necessary prerequisites are achieved. At the present juncture, it  may  be  too  early  to  think of  BRICS  becoming a  formal, institutionalised alliance. However,  it  is important for the  grouping  to envision a commonality of purpose, continuity of operation and dialogue beyond annual summit meetings.

There are five prominent agendas  of cooperation and  collaboration that emerge from this  vision document. These themes are integral to the very idea of long-term engagement between  the  BRICS nations and provide  a framework for accelerating momentum and  increasing significance over the long term:

1.         Reform of Global Political  and Economic Governance Institutions: This  is the centrepiece of the BRICS agenda,  which  in many  ways resulted in the  genesis  of the  grouping. With  the  move  towards a polycentric world order,  BRICS nations must assume a leadership role in the global political  and economic governance paradigm and seek greater equity for the developing world. Over the coming years, they  must continue to  exert  pressure for  instituting  significant reforms within institutions—such as the United Nations Security Council (UNSC),  the World Bank, and the International Monetary Fund  (IMF). Various  suggestions outlined in this  report  provide  a constructive framework for enabling substantive reforms.

2.         Multilateral Leverage: There are multiple formats for engagement and cooperation in order to leverage the BRICS identity at the global high  table.  The  outcome of the  BRICS officials  meeting on  the sidelines of the  November 2012  G20  in  Mexico,  where  it  was decided  to  create  and  pool  a currency reserve  of up  to  USD  240 billion   is  one   instance  of  enhanced  intra-BRICS cooperation. Similarly, the  Conference of Parties, the  United Nations, and  the World  Trade   Organisation are  existing   cooperative frameworks,

within which BRICS countries can collectively position themselves by fostering  intra-BRICS consensus on issues  of significance. The United Nations is central to a multilateral framework, and there  is significant potential for BRICS to collaborate and  assume a more prominent  role   in   global   political   and   economic  governance, conflict  resolution etc.,  through institutions such  as the  Security Council.

3.         Furthering Market Integration: Global  economic growth  has  been seriously  compromised in the years following the Global Financial Crisis. Each percentage point  reduction in global growth  leads to a significant  slowdown  of  economic development within  BRICS which hinges  upon  a necessary component of economic growth.  In this   regard,   market  integration within  BRICS,  whether in  the context of trade, foreign investments or capital markets, is a crucial step  to  ensure that  the  five countries become  less  dependent on cyclical trends in the global economy.

4.         Intra-BRICS  Development   Platform:  Each   BRICS  nation  has followed a unique development trajectory. In the post-Washington Consensus era, developing  economies within BRICS must set the new development agenda, which in turn must incorporate elements of inclusive growth,  sustainable and  equitable development, and perhaps most   importantly,  uplifting those  at  the  bottom of the pyramid. The  institution of BRICS-specific  benchmarks and standards, as  well  as  more  calibrated collaboration on  issues  of common concern including the rapid pace of urbanisation and the healthcare needs of almost half the world’s population represented by BRICS, must be prioritised.

5.   Sharing of Indigenous and Development Knowledge and Innovation Experiences  across   Key  Sectors:   Along   with   the   tremendous potential for resource and technology sharing and mutual research and development efforts, coordination across  key sectors—such as information technology, energy generation, and high-end manufacturing—would prove immensely beneficial for accelerating the BRICS development agenda. Moreover, the BRICS nations must share  indigenous practices and experiences to learn and respond to the immense socio-economic challenges from within and outside. This  vision document contains multiple suggestions for instituting such  sharing mechanisms through various  platforms and cooperation channels.

This   document  analyses  the   above   themes  in   detail.   Each   section concludes with  recommendations specific  to  the  chapter’s theme. The final  section contains synthesised suggestions which  serve as an outline/framework for enhancing intra-BRICS cooperation and collaboration. The  official declarations/statements of BRICS leaders  are available in Annexure (s) 2 to 5.

U.S. Rebalancing to Asia: A View From India

http://carnegietsinghua.org/2013/03/21/u.s.-rebalancing-to-asia-view-from-india/g0upU.S. Rebalancing to Asia: A View From India

Original Link is here

Faced with the limitations of economic relations without political integration, Asian states have begun to reevaluate their prior relations and coalition structures to meet the demands imposed by U.S. rebalancing within Asia. Nowhere is truer than in the nuclear arena, where China, India, and the United States face questions over their ability to redefine their partnerships and the global nuclear order. Samir Saran, vice president and senior researcher at the Observer Research Foundation in New Delhi, spoke in the twentieth session of the “China-South Asia Dialogues” seminar series for senior experts. This was followed by presentations by three Tsinghua University master’s degree students: Mao Keji from China, John McGowan from the United States, and Ece Duygulu from Turkey. The students’ presentations were part of the “China and South Asia’s Future” seminar series for rising scholars. Carnegie’s Lora Saalman moderated.

Rebalancing Within Asia

Saran noted that while the United States is often seen as rebalancing “to” Asia, much of this reorientation has actually occurred “within” Asia. Even as Washington seeks to redefine the role that it will play, regional powers have begun to delineate their own identity, he asserted. In doing so, economic integration has begun to “reach its limits” in the face of unresolved political tensions and obstacles. Without addressing political integration and rebalancing among regional players, Saran suggested that an integration project designed and implemented by Asians themselves would be difficult to achieve.

•U.S. Regional Role:

Saran asserted that one of the driving motives behind U.S. rebalancing within Asia has been China’s reluctance to enter into a G2 construct, under which Washington and Beijing would serve as the primary players. Rather than resulting in comity or competition in a bipolar order, Beijing and Washington are both jockeying for their own national interests, said Saran. However, he added, the United States maintains a strong isolationist streak that could result in significant drawdowns in how it engages the region and guarantees its security. In the face of this uncertainty, Saran maintained that regional players would be best served by coordinated political integration fashioned by capitals in the region.

•India’s and China’s Regional Roles:

The futures of China and India are inextricably linked, Saran said. Chinese refusal to sign onto the bilateral U.S.-China agenda, coupled with the fact that Washington has already made its unsuccessful play for a G2 construct, means that Beijing is in the driver’s seat. As a result, he maintained that the U.S. pivot to Asia will ironically be “made in China.” In looking further afield for energy stores and cooperation, Beijing and New Delhi will also be faced with the need to guarantee passage throughout the Indo-Pacific, Saran added. Beyond the bilateral, he noted that engagement at multilateral forums has proven to be most viable for China and India, since it obviates confronting mutual tensions. Enhancing Cooperation

•India’s Role in Security:

Saran noted that preoccupation with traditional security misses the economic fallout and necessity of integrating political, economic, and military solutions, particularly when faced with new territorial disputes, piracy, drug running, and other asymmetrical threats. To this end, Saran asserted that India has a role to play. However, when it comes to territorial disputes in the East China Sea and South China Sea, he remained reluctant to predict a role for New Delhi. When asked about ties between New Delhi and Tokyo by one of the Chinese participants, Saran responded that Japan and India have similar interests, which become all the more evident in the context of China’s regional rise.

•Identity Crisis:

One of the Chinese participants spoke of allegations of China’s aggressiveness when it comes to its neighbors and suggested that this was tied to internal shifts in how China defines itself. He questioned whether India is undergoing a similar case of self-reevaluation. Saran responded that part of Beijing’s crisis of perception comes from the fact that despite its growth and creation of regional dependencies through donations and economic benevolence to its surrounding countries, it has not changed its behavior towards these countries. Similarly, given New Delhi’s growth, it seeks accommodation on its desire to be a “global manager.” Unlike China, however, he noted that India has global aspirations, but continues to be bogged down by domestic issues. A Chinese expert added that he felt China and India have more in common with each other than with the United States, advocating increased interaction and exchange to build strategic mutual trust.

•Mutual Respect:

A Chinese participant queried what measures would increase China’s respect for and willingness to cooperate with India. Saran responded that people-to-people contact, expanded media interaction, and investments leading to greater integration between Beijing and Delhi on all levels are key. Mao, McGowan, and Duygulu offered their takes on how this dynamic has played out in the nuclear sphere, with India’s pursuit of a nuclear capability to solidify its status and respect from countries such as China. A Chinese expert noted that when it comes to multilaterally binding arms control treaties, India still has a role to play, particularly with the Comprehensive Test-Ban Treaty (CTBT). Saran responded that trust must be mutual; as such, India’s signing of treaties like the CTBT will be dependent upon the actions of China and its decision whether or not to ratify them.

•Demographic Pressures:

Much like “China’s Dream,” Saran cited “India’s Promise,” asserting that Beijing is waking up to New Delhi’s potential over the next ten to fifteen years. However, he cautioned that while demographic windfalls may shore up India’s production capacity in the short term, they are likely to pressure New Delhi to meet the employment demands of a young and disenfranchised population. As these numbers soar, Saran further predicted that the long-term implications of caring for the elderly would threaten the sustainability of India’s economic growth. Despite such pressures and the recent decline in Sino-Indian trade, Saran maintained that the two countries share common aspirations and challenges. More than simply reacting to U.S. rebalancing within Asia, Beijing and New Delhi should conduct their own regional recalibration, Saran concluded.

BRICS and mortar for India’s global role

ImageDEVELOPMENT PARTNERS: The grouping’s members can not only learn from each other’s development experiences and understand views on subjects like climate change but also define new rules for health care, education and Intellectual Property Rights.

 

New Delhi finally has a platform to assert its might and rewrite the rules of global, political and economic governance

India is at a unique geopolitical moment. On the one hand its neighbourhood and the larger Asian continent are being unpredictably redefined. The United States has declared, if somewhat ambiguously, its reorientation or “pivot” towards Asia, recognising the region’s economic force moving forward, or perhaps merely countering enhanced Chinese power. India and China are charting new geographies of contests, the Indian Ocean and South China Sea. The “Arab Spring” has exposed the fundamental inadequacies in Middle Eastern and North African governing structures but has also given rise to an uncertain political future in an important energy-producing region. Last, but certainly not least, China’s growing assertiveness in the Asia-Pacific region has led to increased, if sometimes seemingly unnecessary, conflict with neighbours in Southeast Asia and Japan.

On the other hand, the world is seeing a once-in-a-century churn. The global board of directors that sit on the high table and define rules for conduct of political and economic governance are now unrecognisable from the lot just after World War II. India must seize the moment to shape these revisions of rules devised by the Atlantic countries and defend its growth and development interests in areas such as trade, Intellectual Property Rights (IPR), space, climate, and energy policy, among others.

Regional order and global governance are both in flux and demanding India’s attention. This is not unique by itself. What is different this time around is that India has the capacity, increased capabilities and enhanced level of demonstrated intent to engage with this dual external relations challenge. In order to attain the global power status it desires, India must walk and chew gum at the same time. It must tend to its immediate and extended Asian neighbourhood while also engaging with the task of shaping a new rules-based political and economic order. BRICS represents a uniquely appropriate platform and flexible mechanism with which India can address this dual imperative.

Role for three

Engaging with China and Russia in an environment free of the sharp edges often wrought in bilateral negotiations will catalyse congruence over an array of mutually important issues. Any stable Asian order must have at its core, a certain level of accord among these three large continental powers. The past would need to be defrayed and the path for future integration would need to sidestep suspicion and history. Annual BRICS summit-level discussions on political and economic matters allow the three countries such an arena of tactical camaraderie. The current moment allows a unique opportunity for the three to shape a new construct for Asia amidst the regional flux. Perhaps at some stage it may be worthwhile having a summit level RIC meeting on the sidelines of BRICS to discuss this Asian project.

On resetting and reshaping economic and political governance, BRICS has the potential to be the new (and often criticised) game changer. The sheer size and rate of growth of intra-BRICS trade and economic exchange will allow each of these countries to exert their collective weight for their individual gains. Who gains more should not matter, as long as every member benefits from this dispensation and the order is visibly equitable.

There are a few benefits that India must seek through and with the BRICS. First, there are many multilateral organisations within which a “BRICS-bloc” can exert significant leverage. The U.N. and World Trade Organization are two such forums. While geopolitical and economic thinking among BRICS is not always in-sync, where there is consensus (and the areas are increasing rapidly) BRICS could be a compelling voice. Like they did on the debates on non-interference and “Responsibility to Protect.” Similarly, India’s views on climate change, financial norms, trade rules and so on could also benefit from BRICS’s aggregate voice. Of course the UNSC membership issue strikes a discordant note but it should not cannibalise the possible coming together on other matters.

Barrier against slowdown

Second, as economic powerhouses and regional hubs, intra-BRICS market integration can insulate these nations from western economic slowdown. The Organisation for Economic Co-operation and Development (OECD) stagnation is impacting BRICS growth, with multi-percentage point GDP dips in India and China. BRICS market integration could leverage the economic power of emerging world economies by sparking increased trade and foreign investment, especially if done in local currencies. Only China is part of India’s top 15 trading partners, making the BRICS forum an attractive stage from which India can promote economic ties with other dynamic economies. The BRICS development bank, option of holding each others’ currencies as reserves, stronger trade facilitation and eventually a comprehensive BRICS economic partnership agreement are all worthy possibilities.

For inclusive growth

Third, the BRICS are each experiencing rapid development with uniquely national characteristics. However, despite growing middle class populations, BRICS hold the lion’s share of the world’s impoverished population. These nations must take increased responsibility for a new global development agenda, incorporating inclusive growth, sustainable development and poverty alleviation. BRICS is a platform not only to learn from each other’s development experiences but also the instrument that can define new rules for health care, education and IPR for the billions at the bottom of the pyramid.

The collective BRICS experience around social policy could be beneficially shared with others as well. A forum (like the OECD) or clearing-house to disburse this information would prove a relatively low-cost measure producing substantial insight into development efforts, technology sharing, low-cost and sustainable energy generation, information technology and manufacturing.

By drawing on collective BRICS brainpower, local development efforts will be catalysed. For example, sharing China’s experience on infrastructure development or poverty reduction or Brazil’s in clean-fuel generation could be beneficial for India currently lacking the ability to take full advantage of its economic potential.

Is BRICS just a catchy acronym masking the haphazard, slapping together of five developing, yet ultimately incompatible, nations? India should respond with an emphatic no. At this unique moment, when India faces a multitude of challenges seeking its attention both towards the region and the global stage, BRICS provides a flexible platform to respond to both.

(Samir Saran is vice president and Daniel Rubin is Henry Luce Fellow at the Observer Research Foundation.)

Why BRICS is important to Brazil

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Original article can be found here

Brazil has a prominent role to play in the global governance architecture. The country has sustained structural economic growth on the back of favourable demographic drivers, growing middle class consumption and broad scale socio-economic transformation. As a result, the business environment in the country has steadily improved; and the number of people living in extreme poverty have halved over the last decade. It is time for the country to place commensurate emphasis on consolidating its position as a regional leader; and as a key stakeholder on the global governance high table. BRICS provides the perfect platform to marry the dual imperatives.

                       

HOT TOPICS: BRICS

Brazil boasts of one of the world’s largest domestic markets and a sophisticated business environment. It ranks 53rd on the World Economic Forum’s Global Competitiveness Index (2001-12), and is ahead of the rest of the BRICS nations in the availability of financial services among other key indicators of financial market penetration. Brazil’s upwardly mobile middle class and its elite have inexorably embraced the liberal globalisation framework, promoted by the developed world. Consequently, since the 1990’s they have shown a greater willingness to engage with the international system, and accept transnational regulations and norms.

As a willing signatory to international norms, ranging from those around mitigation of climate change to preventing nuclear proliferation, Brazil has often broken its own historical typecast of being defensive. What superficially seems to represent a systemic re-prioritisation – requires deeper investigation. According to the Economist’s Economic Intelligence Unit, domestic savings rates in the country are below 20 percent. Mid-sized industries still largely rely on external markets for raising money and channelling investments. By default, international perception about the Brazilian economy is an important component of national strategy. Concomitantly, the Latin American identity is one that successive governments have strived to shed.

Being part of the BRICS grouping has helped Brazil to leverage its ‘emerging market’ identity and de-hyphenate from its Latin American identity (which had its own convoluted dynamics in any case). This is evident both in the global economic and political spheres. BRICS has provided Brazil with a platform to engage with the international system more progressively. It can now navigate the international rules based architecture, with greater bargaining power and seek greater representation in institutions of global economic and political governance. Using the BRICS identity, Brazil no longer has to drive a wedge between its development and growth imperatives. It can shield its poor from international regulations, without fear of its ‘investment worthiness’ being diluted. It can participate at the global high table, while simultaneously catering to nuanced regional imperatives.

The recent death of Hugo Chavez was termed “an irreparable loss” by Brazilian President Dilma Rousseff. This serves as an example of the ideological flexibility, which the country employs to engage with a neighbourhood that is strictly divided on the Venezuelan President’s legacy. Indeed fine balancing tactics are not new to Brazilian foreign policy, also termed ‘a study in ambivalence’. The pluralistic construct of BRICS fits perfectly with Brazil’s strategic outlook on its neighbourhood and the world. Brazil has taken on more regional commitments over the same twenty year period during which it has enhanced its engagements with the international system. This is evidenced from increased participation in regional working group meetings, official summits and informal gatherings by the government.

There are numerous accounts of Brazil’s deployment of regional priorities as a bargain chip. Through MERCOSUR (Southern Common Market), Brazil has been able to successfully negotiate trade agreements in favour of its national interests. It is a pivotal founder member of the five-member trading bloc, which recently included Venezuela within its fold. In the on-going negotiations for a Free Trade Agreement with the European Union (EU), Brazil has pulled out all the stops, shielding its local industries from cheaper foreign made imports; with support from other members including Argentina. Similarly, common interests rather than common ideologies dictate the BRICS agenda. Brazil’s membership of the grouping is in complete consonance with its regional and global strategic imperatives.

Aside from the adaptive flexibility that the informal BRICS grouping offers, it allows Brazil great latitude in bringing specific agendas around innovation, intellectual property rights and green growth at its core. Brazil is home to nearly half of the world’s biodiversity; the overarching sustainable development agenda is not surprisingly a national priority. Similarly, Brazil has the opportunity to use mechanisms such as the BRICS Exchange Alliance for attracting investments. While the current framework enables investors to trade in cross-listed futures indices, if there is political will, the mechanism could eventually encompass various products with different underlying assets including equities. Another relevant sector specific example is commercial aerospace cooperation, where Brazil has unmatched expertise within the grouping.

There are in fact multiple opportunities for Brazil within BRICS, not limited to the economic sphere. In many ways, the grouping brings Brazil from the left corner of the world map to the centre, where the geopolitical theatre is most active; in Asia and the Indo – Pacific. However there are two oddities in the Brazilian agenda which would require circumnavigation if Brazil is to be brought to the heart of the geopolitical discourse. The first is to moderate its insistence on pursuing ‘euro-styled’ agendas such as interventionist doctrine ‘responsibility to protect’ (R2P), with an ambiguously defined alternative ‘responsibility while protecting’. Sovereignty matters to other BRICS and there is some time before supra-national initiatives would pass muster. And the second is to shed its reluctance on the agenda for creation of a BRICS led Development Bank. In this instance Brazil, with its considerable Development Bank experience, can help shape a credible institute that will empower billions south of the equator.

Vivan Sharan is Associate Fellow and Samir Saran is Vice President at the Observer Research Foundation (ORF), New Delhi.