Category Archives: BRICS
Article in “Russia and India Report”: It’s time for a ‘BRICS Fund
by Samir Saran and Vivan Sharan
November 14th, 2011
Please find here the original article
With a post-crisis global recession deepening in the eurozone and other parts of the world, the BRICS countries can take the lead to set up a ‘BRICS Fund’ to reenergize faltering growth in both developed and developing economies, argues Samir Saran and Vivan Sharan.
The current global economic scenario is uncertain, volatile and misleading. The uncertainty stems from a breakdown in macroeconomic correlations and a continuation of a post-crisis recessionary environment in large parts of the world. The volatility emanates from the unpredictable price action across asset classes and increased sensitivity of almost all asset classes to financial and political fragilities, like those that are prevalent in the euro zone. Meanwhile, the misdirection and misallocation of capital across asset classes is a direct consequence of the lack of clear signals by political institutions and markets alike, leading to broad scale risk aversion especially in the case of sovereign investors such as central banks.
Increasingly, as such strains constrains economic development and investment flows, it is necessary for the BRICS nations to realise their new roles in the emerging global economic order. The imperative to shape the dynamics of future growth must come from these new drivers of economic momentum. One of the ways to do it could be the creation of a BRICS fund – a consolidated wealth fund with appropriate and proportionate monetary contributions from the central bank reserves of all the BRICS countries. Such a multilateral fund, with pre-determined investment mandates, could prove to be a useful tool for rebalancing capital flows, and reenergizing faltering growth in both developed and developing economies.
About one eighth of all assets managed in the US are allocated to “impact investments” or “social investments” – an impressive statistic that must be replicated by emerging economies. With a view to the future, it is clear that social, economic and environmental sustainability are going to be essential for economic development and growth – at individual company, industry and international level. A BRICS fund which invests back into sustainable initiatives both within the BRICS and outside in the least developed economies could prove to be an unparalleled tool to promote and accelerate sustainable growth trajectories. Rather than being a problem of capital generation, the key challenge in financing transitions to sustainable, low carbon trajectories is the redirection of existing and planned capital flows to financially viable allocations in non-traditional asset classes. Alternative investments into sovereign debt of struggling economies based on mutually agreed upon special purpose vehicles could be another avenue for funding which would also leverage the BRICS’ bargaining position in multilateral negotiations.
In the recent international climate negotiations at Durban, it was decided by member countries that that the second commitment period of the Kyoto Protocol will run from January 2013. Furthermore, it was decided that the Durban Platform for Enhanced Action – an agenda strongly backed by the EU and the Association of Small Island States (AOSIS) would be instituted to develop another new Protocol by 2015 – an international legal instrument that will be applicable to all parties to the UN climate convention and will come into effect after 2020. Simultaneously, the parties to the COP agreed to institute a $100 billion Green Climate Fund (GCF) – a measure largely intended to appease developing nations such as those in the AOSIS to come on board the EU agenda. The strategy worked well, although smaller economies should be aware that in the past a bulk of the funds that have been made available to developing countries through the Clean Development Mechanism of the UN have gone to private project developers in China, India and Brazil (in that order). China got the lion’s share of close to half of the total investments made till now. If the investment flows were analysed at from a primarily deterministic prism, it would be hard to conclude that the funds from the GCF would benefit small developing economies, or impact real organic change. The Durban negotiations provided a textbook case where bargaining positions of developing countries, and especially those in the BASIC group of countries including Brazil, South Africa, India and China, could have been leveraged, had these countries already committed to fund sustainable development through a parallel fund. Instead, the outcome was sub optimal – given that there still is no mechanism for the eviction of carbon squatters who have conveniently pushed the onus onto countries that are still in the low to mid income development profiles for what is effectively a $100 billion payoff.
The BRICS fund could also provide suitable SPVs to smoothen any future financial shocks to the highly integrated global economy. Just as in climate change scenarios, financial shocks and imbalances are likely to alter the growth trajectories of developing economies in a much more significant way than of advanced, developed economies which already have monetary cushions owing to high per capita incomes and strong existing infrastructure. The BRICS fund could help the central banks of the member countries counter the effects of erratic demand cycles, global resource pricing distortions, and systemic contagious failures in global financial markets, through strategic investment stimuli. Such a mechanism would not only be complementary to the policy mandates of the central banks of the BRICS nations, but would send a strong signal about their overall financial policy independence of Bretton Woods institutions such as the IMF.
Whatever the investment mandate – the overall emphasis for such a fund would have to be the generation of absolute returns to be considered worthwhile by all of the relevant stakeholders. Furthermore, it is beyond doubt that multilateral institutions have limited degrees of freedom. If a BRICS fund becomes a reality, a necessary condition would have to be complete operational and functional independence to deliver what is needed. This would only be possible with the effective and efficient delegation of policy sovereignty. The modern-day central banking trend of institutional independence would be a good model to follow. Ensuring political and financial goals are separate, and asset allocation occurs purely on the basis of the accepted common mandate and profitability would create a strong shared institution.
From purely the perspective of profitability and diversification of sovereign assets, such a fund would provide a good alternative mechanism for central banks within the BRICS to allocate appropriate portions of their reserves to riskier assets than they traditionally are mandated to invest in. Thus, the fund could substitute for Sovereign Wealth Funds, an increasingly popular concept for diversifying sovereign reserves through alternate mechanisms, while simultaneously creating significant signaling benefits which would be advantageous in matters of setting trends and norms in international financial investment agendas in the future. Today, financial institutions are zealously protective of their cash assets. This is far from being a panacea for the prevailing economic scenario with a failing European idea and a politically problematical environment in the US. A BRICS fund could provide the much-needed liquidity and confidence, especially to capitalise on resilient business models looking for seed money.
For decades, economies in the BRICS consortium have been subjected to the rhetoric of structural reform by actors that have consistently overspent on consumption. The retooling and rebalancing of the global financial system is an imperative that cannot be ignored any longer. With the increasing cooperation between BRICS countries along political and economic lines, the conceptualisation of alternative mechanisms to promote the development agenda at a time when financial institutions are cautious with their money is certainly justified. Disruptive changes to status quo policies and investment patterns are traditionally most effective in uncertain, volatile environments. Looking forward, this decade presents a mixed bag of opportunities and challenges for nations and economies. With the emphasis and impetus of growth shifting to the emerging and recently emerged economies, it is only natural that the BRICS countries take the initiative and the lead to innovate their way out of international crises.
Samir Saran is Senior Fellow and Vice President at the Observer Research Foundation. Over the past year, he has been actively involved in setting up a green business “gTrade” to promote sustainable investing in India.
Vivan Sharan is Associate Fellow at the Observer Research Foundation. He has interned at the UNDP, and PWC undertaking disparate research tasks. His primary research interests are in monetary policy, equity/debt markets in America and the BRICs.
Article in “Russia & India Report”: BRICS and eurozone crisis
by Samir Saran and Vivan Sharan
November 2nd, 2011
Please find here the original article
The rise of the BRICS nations as new epicentres of economic activity in the rapidly evolving world order has been simultaneously accompanied by a steady decline in the relative economic strength of many of the member countries of the eurozone.
The single currency union has become essentially a two-faced beast. A North–South divide in economic fortunes is clearly visible within Europe (and the irony of this is probably lost on most Europeans). It is time for the leaders of this grouping to recognise the fact that the major rebalancing and recalibrating actions that are urgently needed within the economic and monetary union must also address the concerns of external creditor nations such as those within the BRICS grouping.
After much introspection and procrastination, the European leaders managed to pass a controversial but necessary deal on Greek debt. The deal, which calls for a “voluntary” cut on a nominal 50 percent of private sector investments of over 450 financial firms to reduce total debt burden in the economy by 100 billion euros, is a desperate attempt by policymakers to stymie the relentless bouts of selling pressures on Greek debt. Although given the circumstances, it was extremely important for the eurozone to signal some form of cohesive multi-stakeholder action to the financial markets, the deal is built upon ambiguous foundations.
The private sector has voluntarily decided to take these ‘haircuts’ and at the same time banks have agreed to increase capital reserves to 9% to shield against an imminent market collapse in Greece. This translates into tremendous pressures on banking institutions, without much positive effect on the bond markets, with Greek bonds still yielding unprecedented rates of interest. It is clear that the projected reduction of Greek debt to GDP ratio from 160% now to 120% in 2020 is not impressing bond traders.
The European leaders have announced that they seek to increase the size of the European Financial Stability Fund (EFSF) from its current capacity of 440 billion euros to over a trillion euros. It is not clear how they intend to do this, and whether a trillion euros (approx.) is the amount they consider to be sufficient to counter the effects of possible contagious sovereign debt defaults and banking crises in member countries. While these leaders attempt to keep kicking the can down the road with respect to how they manage the myriad financial crises that are evolving in southern Europe, it has become increasingly clear that the problem is too big to be handled without outside help.
The Chief Financial Officer of the EFSF recently told a Brazilian newspaper that his colleagues are “pleased” to see BRICS countries starting to invest in the EFSF. The composition of the investments into the EFSF is not public, and therefore there is no real way of knowing how much each of the BRICS nations have contributed to the fund so far. The EFSF was originally set up to raise money for the Portuguese and Irish bailout packages through the disbursal of loans. Although the Fund has nearly risk-free credit ratings by all the major rating agencies (AAA by Standards and Poor’s and Fitch, and Aaa by Moody’s), it can be argued that investing in Greece’s sovereign debt is a far riskier proposition for creditors to the Fund.
Many of the BRICS nations are already heavily invested in the euro. The central banks of China and India hold approximately 25% and 20% in eurozone bonds respectively and are therefore not likely to spend much more of their international reserves buying into a now suspect currency. However, much like Brazil, which is allegedly considering investing into euro debt via its Sovereign Wealth Fund (which allows greater risk taking) rather than purchasing debt through its international reserves, the economies of China, India and Russia could soon follow suit.
Given the volumes of trade between the euro zone members and each of the aforementioned nations (China surpassed the U.S as E.U’s largest trade partner in July) along with hefty direct investment flowing both ways, it is certainly not in the interest of any of the stakeholders – to let the euro collapse. The involvement of countries like China, with immense amounts of liquidity, does not fail to inspire market confidence as was seen last year in July, when China announced that it would purchase a billion euros in Spanish debt. The bond auction was oversubscribed and lead to a turnaround in market confidence in Spanish debt even though China only committed 400 million euros.
Keeping in mind their leveraged bargaining position in current circumstances, the BRICS nations should coordinate their positions and assert themselves while negotiating investments in eurozone debt. Although the BRICS nations have a diverse set of agendas and priorities, it is not hard to see a future where there is greater coordination within the nations in the grouping, especially between geographical neighbours Russia, China and India, in order to deepen global financial integration and reverse the Western narratives that have dominated the larger economic realm for the past century.
At the Sanya BRICS summit in April, the leaders put on record that the “international financial crisis has exposed the inadequacies and deficiencies of the existing monetary and financial system” and that the BRICS nations support “the reform and improvement” of this system. In order to support the troubled European economies, the BRICS countries need to devise a formal set of pre-conditions for granting bilateral loans and investing in various bailout funds. Perhaps these could be centred on some basic premises such as further trade liberalization, increased access to intellectual property and perhaps they can even be self-righteous enough to demand more friendly immigration laws.
The Europeans will no doubt be faced with some hard choices. They have to be careful to juggle two contradictory imperatives – that of enlarging existing regulatory capacities in order to strengthen and deepen European fiscal, monetary and political integration, while at the same time accepting the inevitable growing interdependence with external nations.
If the evolving debt crisis in the eurozone is viewed through a deterministic prism, it becomes immediately apparent that panaceas such as debt write downs only offer short term relief to the markets as long as structural imbalances persist. In light of this, the Europeans will be hard pressed to look for a multipronged approach to dealing with the existing problems of their southern peripheral nations.
The glory days of Western credit and forced fiscal reforms in Asia and other ‘south’ countries are far behind us, with hegemonic Bretton Woods era relics such as the International Monetary Fund struggling to find its ‘traditional’ relevance within the new political and economic realities. Although it is in no way certain that the balance of power will completely shift towards the emerging or recently emerged nations such as those in the BRICS, as they are grappling with internal problems of their own, one can be relatively certain that the growing degrees of independence – both from Western policies and from Western demand — will provide the perfect platform for increasing economic leverage through investments in equity and debt as well as direct investments. Europe has few options left but to align economic expectations with those of the BRICS. The question that still looms large is whether there is enough political unity and substance in the grouping (BRICS and other emerging nations) to make the right kind of bargains.
Column/Opinion in The Economic Times on ‘RIC – How to evolve into an Asian trading region’
October 12, 2011
New Delhi
Please find How to evolve into an asian trading region for free PDF download here.
Samir writes in Russia & India Report on ‘Evolving an Asian Trading Region’
September 26, 2011.
by Samir Saran and Nandan Unnikrishnan. Both are Vice President(s) at the Observer Research Foundation, New Delhi.
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It’s time economics replaced politics as the key driving force of the Russia-China-India (RIC) trilateral. The Big 3 of Asia has a major opportunity to create and drive an Asian Trading Region.
At a recent interaction in Moscow with scholars and editors, there was an interesting discussion on finding ways to significantly increase the economic interaction between Russia and India and, more specifically, change the nature of the G2G-driven bilateral trade. Our suggestion was spontaneous and to some outlandish. We suggested that for a paradigm shift in our trade volumes (less than $ 10 bn dollars currently) the two countries would need to work for an Asian Trading Region shaped and steered by Russia, India and China. Until then we (Russia and India) would remain prisoners of perceptions and perceived geographical distance.
It was apparent that this idea did not resonate well with many experts in the room. However, it did spark an interesting round of debate and many have subsequently written in with their own ideas on a trading zone or region in Asia. We still argue that the only sensible architecture would need to be fundamentally driven by and emerge out of the RIC arrangement. Even though the RIC was conceptualized as a club of the Big 3 in Asia and had more political overtones than economic reality, the vocabulary of cooperation emanating from previous RIC forum allows enough leeway to work towards the formation of an Asian Economic Zone beginning with an Asian Trading Region largely driven by Russia, India and China.
The then Russian Prime Minister Evgeny Primakov first voiced the idea of a Russia-India-China (RIC) Trilateral Forum publicly in December 1998 during a trip to India.The motivation was generally believed to be a desire to create a countervailing influence to the US, which at the time had unprecedented dominance in the international system. The fact that Russia, India and China saw the US as their primary interlocutor at the bilateral level did not appear to be an impediment at the time. However, despite regular Track II interactions between the three countries, it took four years for the first official interaction between the three – a meeting between Foreign Ministers on the sidelines of the United Nations General Assembly (UNGA) in 2002. The first RIC standalone meeting of the foreign ministers took place only in June 2005. Thereafter, on the sidelines of the G8 meeting in St Petersburg in July 2006, President Valadimir Putin, President Hu Jintao and Prime Minister Manmohan Singh had a tripartite meeting. From 2007 onwards, the foreign ministers are conducting regular annual meetings.
During this period, the motivations driving the three countries in the RIC underwent a change. If Primakov’s fear in 1998 was a hegemonic U.S., by 2005 Russia was more concerned about China and its possible duopoly with the U.S. – the G2 scenario. Therefore, Russia was keen to support multilateral initiatives, which involved China, but kept the US out. RIC fitted the bill perfectly. China also appeared to be keen on such a formation as it realized its increasing influence and envisioned RIC as a group dominated by China. India’s motivation perhaps was not to upset the Russians. It was also the age of clublateralism and therefore the RIC was an opportunity to get into an influential circle. Some hesitation, if any, was probably because these were the heady days of Indo-U.S. friendship.
Today the situation has changed again. The uni-polar moment of the U.S.A. is evidently over. A multi-polar or polycentric world is emerging. China has emerged as an alternate power centre and no longer requires props like the RIC. It is following an assertive foreign policy that relies more on promoting bilateral relations with the established and emerging powers. Similarly, Russia is now less nervous about the emergence of a G-2. It is enjoying the “reset” in its relations with the US and has become a little more wary about China’s spectacular rise in stature. Moscow, like New Delhi, also realises that its efforts to restructure and modernise its economy will succeed only if it able to convince the West to buy into this effort. While China-India trade is at historic highs (at over $ 60 billion), India is also focusing on developing its ties with the US and the 27-nation European Union. RIC appears stymied by the proliferation of groupings like the SCO, BRIC, and BASIC and does not as yet offer a unique ‘agenda’ to differentiate it. And most importantly, the three countries consider the US much more important than any other bilateral or multilateral relationship. Therefore, the “glue” that held the RIC together is drying up.
This inevitably affects prospects for RIC. The lack of interest and expectation from this format has led to little of any substance emerging from the interactions, despite identifying early on a vast arena for mutual cooperation such as terrorism, drug trafficking, climate change, agriculture, disaster management and relief, health and medicine, information technologies, pharmaceuticals, infrastructure and energy. Given this backdrop, is RIC now irrelevant? Is it time to bury this body? The answer has to be an unequivocal “NO”. So can regional trade and economics be that ‘glue’. Russia and India, through their own recent policy announcements, have recognized the arrival of the yuan as a global currency and it is likely that in the coming months India also decided to denominate some of its reserves in the currency of our Northern neighbour. Russia is already engaged in yuan based trade and maintains a stock of this currency. That over $ 130 billion of trade takes place between India and China, China and Russia and Russia in India also places weight of volume behind the grouping. Irrespective of political ambitions and differences there is no denying the growth of economic interactions and the only limit to the economic story is politics. Can RIC be the political response to an economic arrangement?
RIC appears to be the only format which can help to create a truly Asian Trading Region, an idea that must be pursued based on the remarkable shift of global trade to within the region. The contiguous land mass, the size of the three economies and the growing levels of consumption, each provide a basis to make this trading region viable and worth investing in. The energy and transport corridors may be the place to start. While China’s rapid advances in the energy landscape in Asia can appear intimidating, it can also be seen as an opportunity to respond to the Chinese dynamism and be a part of the project. Would India consider providing access to the Indian Ocean to China? And through China for Russia? Would this create a dependency that could serve India’s interests? Would it be beneficial to open land and pipeline routes to Central Asia and Russia through China? Would these not create mutual dependencies between the two countries that would offset some of the key imbalances that exist today? India helps de-risk China its current hydrocarbon and trade flows through the Indian Ocean, while China offers alternatives to routes that would require India to traverse Afghanistan and Pakistan. At the opportune time can Russia and China be a part of the IPI and TAPI? Can China extend pipelines from Central Asia and Russia to India? With increased volumes of trade, the pipelines become viable in spite of the distance. The participation of all the three countries in these pan-continent pipelines also reduces the political risk that these large trans-national project invariably face.
The biggest gainer would, however, be Russia. They would have a market for their resources outside of the EU and China. As the demand in West Asia is released in the next 10 years due to growing commercialization of green technologies and production of shale and frontier gas in US and East Europe, Russia would increasingly depend on the growing demand from China and India. Without a cooperative arrangement or transport infrastructure, large volumes of Russian resources may have only one buyer – China.
Russia and China have already established significant cooperation in the area of energy. It is time that India becomes part of this equation and the three countries start the process of developing an Asian Gas Grid. The first steps could be modest. Russia could ship some of its piped gas landing in China through the Chinese eastern board to India, a step both symbolic and political and a harbinger of Asian tri-lateral trade. Over the years it could result in the grid that a former Indian petroleum minister strongly advocated and a gas market in the region that could evolve its own price and commercial dynamics. The next stage could involve jointly owned SEZs in Russia’s Far East with each of the countries within the SEZ enjoying privileges of home country. This could also be the experiment to test the free movement of men, material and ideas across Asia.
Samir speaks at the China-South Asia Dialogues on ‘Shaping India’s Foreign Policy: Domestic Drivers in Policy and Practice’
March 23, 2011
Bejing, China
Link to original website
India is often described as an emerging economy, yet rarely are adequate linkages made between the domestic and foreign drivers of its growth. In the fifth installment of its “China-South Asia Dialogues” series, the Carnegie-Tsinghua Center for Global Policy invited Samir Saran, vice president and senior fellow at the Observer Research Foundation (ORF) in New Delhi, to discuss the domestic forces that shape India’s foreign policy. He was joined by ORF distinguished fellow, Ambassador H.H.S. Viswanathan, who offered a targeted analysis of these policies in practice, discussing India’s engagement of African countries. Carnegie’s Lora Saalman moderated.
India’s Economic Transformation
After twenty years of economic reform, nearly half of India’s Gross Domestic Product is linked to the global economy. Yet, while India is an important and sizeable market, it is still not a large economy in terms of per-capita income and the depth and range of its economic activity, Saran said. With the bottom 80 percent of the population contributing over 60 percent of Indian consumption, India remains sensitive to the rise and fall of prices for both goods and infrastructure. Saran suggested that India’s designation as an “emerged economy” needs to be re-assessed.
- Wealth Disparity: Saran spoke of the vast wealth disparity in India between the extremely wealthy—including approximately 600 millionaires and billionaires—and the 800 million people who subsist on less than $2 per day. India possesses nearly half of the world’s poor, which strains its ability to deal with issues such as healthcare, education, energy, and water supplies.
- Population Bulge: With the growing number of teenagers set to enter the domestic job market, India also faces some daunting challenges in creating adequate employment. One of the Chinese participants asked whether India’s youthful population was a source of instability for the country. Saran agreed that the country’s large young population exacerbates some of the threats that India already faces, such as left wing religious and political extremism, Islamic radicalism and an unstable neighborhood that at times leaks its impulses and intentions across its border.
- IT Not a Panacea: Saran argued that while India is known for its booming information technology industry, this sector has only been able to provide 15 million jobs in the past decade-and-a-half, in a country with a population exceeding 1.1 billion. He estimated that India will need to add 10-15 million new jobs each year to fully employ to its youth. Saalman asked whether in the wake of China’s shift from a labor-intensive to a capital-intensive economic base, India might be able to absorb some of China’s manufacturing jobs. Saran doubted that this would occur on a large scale given the inability of India to devote the tracts of land necessary for major industry to thrive.
India and the Global Community
- Diaspora and Outsourced Governance: One Chinese participant asked about the role of the Indian Diaspora in meeting India’s development goals. Saran noted that, with the exception of the United States and parts of the European Union, much of India’s Diaspora in other parts of the world remains at the lower rungs of the local society, such as those working in the Middle East. This group often exerts an indirect rather than direct political influence.
- The China Dream: Saran explained that Chinese corporations are now entering Indian economic sectors like power, telecom, and infrastructure, sometimes replacing Western countries in key projects. They have even started offering commercial loans and finance. While India does not want to be overly dependent on China, the price sensitivity of the Indian market and the reality of the global economy may compel greater Sino-Indian cooperation. Yet, China offers India a more realistic goal than the “American Dream,” Saran contended. While India will have to stand up to a more demanding China in a geo-political context, he argued a segment of Indian industry already views China as an economic opportunity.
India’s Transformation in Practice in Africa
The international perception of Africa is changing, with the traditional view of its colonial past and lack of strong institutions giving way to economic revitalization, impressive growth rates, increased consumption levels, and expanded resource extraction and exports. The political resurgence in Africa has made African leaders more responsive to good governance, argued Viswanathan. As part of this process, India and China are engaging the newly resurgent Africa and creating new paradigms.
- Beijing and Delhi Consensus: India, much like China, has taken a much more business-oriented and less politically driven approach to Africa, Viswanathan said. Both countries anticipate a shift in global institutions, where the traditional Western dominated power structure will be faced with alternatives from the developing world.
- China and India Into Africa: Viswanathan spoke of the need for India to make greater investments in agriculture, infrastructure, health, and human resource development, alongside cooperative measures in combating terrorism, drug smuggling, and human trafficking within Africa. Noting the Western media’s strong focus on China’s role in Africa and India’s lengthy history on the continent, Saalman asked for a comparison of the role the two countries can play in the continent’s economic renaissance. Viswanathan answered that while China has had a varied level of engagement with Africa since the 1950s, India has maintained a consistent presence and strong level of integration in Africa. Many Indians immigrated to Africa and often hold citizenship in African nations, placing India in an advantageous position to boost Africa’s growth from within the continent.
- Dispelling the Colonial Mindset: China and India are not out to dominate or control Africa, asserted Viswanathan. While both countries are engaged in the extraction of resources from Africa, they have also made strides toward helping Africa develop its infrastructure and human resources. For example, India has also brought some of its telecommunication savvy to bear in Africa, through business ventures to provide lower cost connectivity to Africa.
- Between Hard and Soft Power: Viswanathan emphasized that much of India’s military aid has been non-lethal, such as providing uniforms and supplies. There had been some small arms trade with some countries but the greater concentration has been on defense training and the sharing of military personnel. Ultimately, Viswanathan argued that for both India and China, the soft power element of having their citizens on the ground and establishing cultural institutions like the Confucius Institutes has been more effective at penetrating Africa than hard power mechanisms.
Summary of BRICS Think Tanks Symposium, March 2011
March 2011
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Scholars and experts from BRICS (Brazil, Russia, India, China and South Africa) countries have said that the current crisis in the Middle East and North Africa (MENA) regions should be resolved expeditiously in the interest of regional stability and in conformity with the aspirations of the peoples of MENA and said that the current crisis demonstrated that the global governance system needed to be more responsive.
This formed part of a recommendation document prepared for the Third Leaders Summit to be held at Sanya, China in April this year. At a meeting of 60 scholars of think tanks from the five BRICS countries, held in Beijing on March 24 and 25, 2011. A seven-member delegation of Indian experts, led by Observer Research Foundation, took part in the meeting of the BRICS Think Tank Symposium, hosted by the China Centre for Contemporary World Studies (CCCWS) and the China Foundation for Peace and Development (CFPD). It comprised of former Indian ambassadors Mr. HHS Viswanathan (Distinguished Fellow, ORF) and Mr. T.C.A. Rangachary, Mr. Samir Saran, Vice President and Senior Fellow, ORF, Dr. Ravni Thakur Banan, Associate Professor, Delhi University, Dr. Saroj Kumar Mohanty, Professor and Senior Fellow, Research and Information Systems for Developing Countries, Dr. Jyotirmoy Bhattacharya, Fellow, Indian council for Research on International Economic Relations and Sriparna Pathak, Junior Fellow, ORF.
In the recommendations proposed for the consideration of the Third BRICS Leaders Meeting to be held in April in China, the scholars said that the leaders should give attention to the changing international context, sluggish economic recovery, governance issues, reform of the international economic and financial architecture, Sustainable Development and Climate Change.
In the opening speech, Mr. Sun Jiazheng, Vice Chairman of the National Committee of the Chinese People’s Political Consultative Conference and President of CFPD, made three suggestions regarding cooperation among BRICS: (1) Undertaking intensive studies, and recommendations on issues that concern BRICS. (2) Focusing on major areas of international finance, international order, world peace and stability (3) Strengthening exchanges between think tanks of BRICS.
At the opening session, delegates from the five countries spoke on the need for reforming the global financial institutions, democratising global governance system, avoiding unilateralism, increasing discussions within the grouping on issues of wages, poverty, energy, health and education, defining a BRICS identity and mission and widening the BRICS’ agenda.
The first session discussed “Challenges and Opportunities- Environment and Background for the Development of BRICS Countries”. The presentations focused on the opportunities and challenges for BRICS post the financial crisis and the way ahead on issues of development and global governance Delegates from BRICS countries also spoke on issues of technological innovations, moving away from reliance on OECD countries, and greater engagement with other developing countries to enable sustainable growth.
On the topic of ‘Changes and Responsibilities: Agenda and Items for BRICS Countries in Advancing Global Economic Governance’, participants elaborated the need to realise inclusive growth and emphasised on stability, peace, shared prosperity, and development, South- South cooperation, open markets and mutual trade and investment among BRICS.
The theme of the third session was ‘Unity and Cooperation- Practical Cooperation and Institutional Building of BRICS Countries’. This panel discussed how BRICS can be a bridge for North- South cooperation, and the need within the BRICS grouping to resolve differences and seek common goals. Presenters also spoke on strengthening trade among BRICS, strengthening framework for polycentric world, promoting cooperation and engaging private sector actors in agriculture and other sectors among BRICS.
‘Exchanges and Mutual Trust- Cooperation Among Think Tanks of BRICS Countries’ was the final theme of the symposium. The discussions delved into ways to deepen BRICS interactions and the need to convene international seminars on areas of bilateral and multilateral areas interests. There was a strong emphasis on the need to establish a BRICS institutional framework at the governmental and non governmental level and to create working groups on select projects. It was also agreed to create a BRICS Think Tanks website for scholars to contribute to.
The interactions were free and friendly and there were no contentious issues. It was obvious that the delegates were trying to find the relevance, mandate and evolution of the Group.
One high level political interaction was organised for the delegates to meet Mr. Dai Bingguo, a State Councillor, where he praised the work of the delegates in coming up with new ideas. He also cautioned that the leaders may not have the same ideas. He spoke of “broadening” the Organisation, a concept not liked by the Russians.
Some divergences on issues like trade and currencies notwithstanding, there was a general feeling that BRICS is here to stay and contribute to a change in global governance. How this will be achieved is the question to which nobody seemed to have a clear answer. There were references to the need for an alternative model of development in which BRICS countries do not repeat the same mistakes committed by the developed world. There were also statements that BRICS should act as a bridge between the developing and the developed countries. But would the other developing countries (particularly potential aspirants to the Group like Indonesia, Turkey and Mexico) like BRICS to play this role?
One theme that came up constantly was the lack of intra-BRICS cooperation in comparison to the potential that exists. For example, BRICS contributes to about 20% of global GDP. Further, 60% of the global Foreign Exchange Reserves today are held by BRICS. But these are parked mainly in Western countries when BRICS themselves desperately need capital for development.
Apart from some general references to the need for reforms of global financial institutions and replacement of dollar by SDR as the global currency, no in-depth discussions took place on these issues. However, the increase in the voting shares of China, Brazil and India was referred to as a beginning of a change in the mind-set of the developed world. One theme that was very evident was the need to coordinate BRICS positions in G-20 so as to have a greater voice.
China.org.cn reports on BRICS Think Tank meeting, 2011
April 15, 2011
Xinhua, China
Link to original website
Representatives from think tanks of the BRIC countries (Brazil, Russia, India and China) discussed ways to fight climate change at a seminar here Wednesday. The seminar, called BRIC Think-Tank Summit, gathered members of think tanks from the BRIC countries to examine the global economic situation and the role of BRIC countries in the post-crisis global transformation.
World countries need to take joint action to fight climate change, said Indian representative Samir Saran from the Observer Research Foundation. Chinese representative Wu Enyuan, with the Institute of Russian, Eastern European and Central Asian Studies, Chinese Academy of Social Sciences, said the developed countries had a bigger responsibility on carbon emission reduction as the current climate change is a result of some 150 years of industrialization process of the developed nations.
But he said the developing countries, including the BRIC nations, should take their fair share of responsibility as well, and adopt measures to fight global warming. “China has fulfilled its responsibility by taking practical actions in either energy conservation or environmental protection,” he said, adding that other BRIC countries have also committed themselves to carbon emission reduction.
Brazil’s representative Eduardo Viola said that implementing these measures is more important than holding discussions. Russian representative Nikolai Mikhailov said climate change unveiled the notion that human beings can treat nature as they want without caring about the consequences. Only a radical change in their attitude could make a difference, he said.
The two-day seminar was held on the eve of the second BRIC summit scheduled for Friday in the Brazilian capital.
Chinese Crienglish.com reports on BRICS Think Tank meeting, 2011
March 26, 2o11
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BRICS think-tanks call for closer economic ties
Think-tanks from five major developing economies are now calling for closer economic ties among the BRICS countries, just ahead of the group’s summit in Hainan, China next month. BRICS countries include China, Brazil, India, Russia and South Africa.
International relations expert Jin Canrong from China’s Renming University says, despite booming economies, the five countries still do not have enough say in global economic dialogues.
“The top agenda of the next summit is still the economy, and especially the top ten topics talked about at this year’s G20 summit in France. For instance, the fluctuating raw material prices, and the possibility of giving an index for economic imbalance – those are all important.” Samir Saran, senior researcher with India’s Observer Foundation, says the BRICS countries could find more shared interests economy-wise. “For the BRICS countries, there is still enough room to enhance their cooperation in energy, electricity, food security, agriculture and technology. Also, the five countries could learn from each other regarding eliminating poverty, improving healthcare and education.”
Institute for Applied Economic Research, Brazil reports on BRIC Summit of Think Tanks
April 14-15, 2010
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Consumption dream based on the American way is unsustainable
Participants in the BRIC Summit of Think Tanks demand radical change in the productive sector and new global governance
The researchers who participated in the BRIC Summit of Think Tanks agreed unanimously that the citizens of their countries have consumption dreams based on the American way of life. For many, this is a dream that the planet will not stand. The debates led to the conclusion that the way out entails new global governance and a radical change in the productive sector, with lower production of private automotive vehicles and more investments in public transportation. Who will volunteer to try to lead a new world order?
The Indian researcher Samir Saran, from the Observer Research Foundation, noted that U.S. president Barack Obama has demonstrated political will to lead the transition to clean energy in the world. He quoted part of a speech delivered by the U.S. president: “We know that the leaders in the new energy matrix may lead the 21st century economy”.
According to Chinese researcher Zhang Yuyan, from the Institute of World Economics & Politics, Chinese Academy of Social Sciences, BRIC nations must unite to take the lead and “avoid that tariffs on carbon emissions be used as protectionist measures by developed countries”. The researcher believes that relations between the BRIC countries and other emerging nations should safeguard the right to quality of life to all citizens.
Samir Saran 