Generosity within BRICS offers China passport to power

The original article is available here

George Orwell once remarked “Whoever is winning at the moment will always seem to be invincible.” China’s long-running growth juggernaut has resulted in a steady conversion of China skeptics into believers, so much so that a Pew Global Attitudes report released in July 2011 indicated a widespread perception that China has either replaced or will replace the US as the world’s sole superpower, with the Americans themselves just about equally divided on the subject.

For the Chinese establishment, even as being the preeminent global power remains their ultimate aspiration, China’s own outlook has been far more pragmatic.

There is a realization that the critical vectors that fuelled China’s impressive growth have either played out or are near to playing out their potential.

Exports are slowing, and the near double-digit growth in domestic consumption leaves little room for additional growth without triggering unbridled inflation.

Compounding this is fast depleting surplus labor in China’s rural backyard and steady increase in wage costs, which have grown at an annual rate of 15 percent over the past years.

This and stagnating Western demand for goods are impacting China’s growth algorithm built around the premise of inexpensive labor and competitive exports.

China’s redemption as the preeminent global power is hinged as much on its capacity to sustain its economic momentum as in its ability to influence the principles, values and rules that define global institutional mechanisms and frameworks.

However, China’s stellar economic engagement with the world has not resulted in commensurate political weight or perceptional dividends within global institutions.

To realize its aspirations, China urgently needs to find a way around this predicament, and BRICS offers it a plausible option and opportunity.

BRICS is today the most promising entente of high growth economies. BRICS’ national economic and political transformation agendas are fuelling huge domestic demand for newer types of products and services. China is uniquely positioned to gain enormously from this dispensation.

Standard Bank estimates China is party in over 85 percent of intra-BRICS trade flows, which have grown by about 1,000 percent over the last decade to over $300 billion, and are estimated to reach $500 billion by 2015.

While intra-BRICS trade accounted for close to 20 percent of BRICS’ total trade in 2012, it remains disproportionately weighed in China’s favor. Hence in any BRICS growth story, China will be the biggest net gainer.

While the BRICS nations have formed a close bond between themselves, they haven’t consummated any traditional model of interstate alliance.

The model affords sufficient space to accommodate intra-group differences and independent strains of national discourse.

It is still bilateral relationships rather than allegiance to group ethos that predominantly inform the intra-BRICS economic and political dynamic.

Group identity and collective consciousness will result from co-creating and co-managing institutions and instruments. A BRICS development bank, a stock exchange alliance and a BRICS fund are all vital next steps.

For China to unleash and benefit from the full potential of the group, it needs to work on such initiatives. These will offer it a new economic landscape and will also help take the edge out of bilateral relationships.

However, for China to command the moral weight to realize its power ambitions through BRICS, it needs to morph from a trading partner seeking profits to a strategic ally helping shape a common world.

As the partner that stands to benefit the most from any expanded BRICS play, China needs to be singularly more magnanimous and mindful in accommodating the legitimate interests and aspirations of other member states.

A disproportionate generosity, whether it is in resolving bilateral disputes or legacy issues, or, sharing of power at BRICS institutions, independent of economic contribution and effort, will reap very rich political and economic dividends, while also permanently insulating China from the politics of power imbalance within the group.

Samir Saran is vice president at Observer Research Foundation and Jaibal Naduvath is a communications professional in the Indian private sector. opinion@globaltimes.com.cn

Uncategorized

Terror attacks: A call to look within

SAMIR SARAN

Terrorists have struck again in India. This time, they targeted the city of Hyderabad. Two bombs, which exploded on Thursday evening in a span of few seconds, have so far killed 16 people, besides injuring scores of people. Last year, 13 people were killed in the capital city of Delhi when bombs exploded outside the High Court in September. One month before, low tensity bombs, planted in Pune, had injured one person.

According to the Global Terrorism Index, India is now among the top five terror-hit nations in the world. The others are Iraq, Pakistan, Afghanistan and Yemen. The terror index, published by the US and Australia-based Institute for Economics and Peace think tank, was based on data from the Global Terrorism Database run by a consortium based at the University of Maryland, a commonly used reference by security researchers.

Despite being a victim of terrorism for decades, India has demonstrated remarkable consistency in the irrational and incoherent response of its policy makers, people and sections of its mass media to dramatic and outrageous terrorist violence inflicted on the country. Most terror attacks have been followed by a typical though distinctly more pronounced response from all quarters. Much of the public debate following these terrorist attack has focussed on internal security systems (or the lack thereof) and the effort to punish the perpetrators. The public sphere including the media and academic dialogue seem to be preoccupied with ways to bring in line the truant Pakistan.

Such approach has failed consistently. The major flaw with placing the blame entirely on Pakistan is the premise that Pakistan or its proxy warriors could have executed any of these outrageous acts in the absence of serious internal vulnerabilities. Though some of these vulnerabilities are acknowledged by many after the Mumbai attacks, they remain limited to the domain dealing with foreign policy, internal security and intelligence gathering.

Even now there is complete silence on a most crucial aspect that we must recognise; Indian Nationals collaborated with the Pakistani perpetrators in planning and executing this barbaric incident. The law enforcement agencies and the politicians are yet to provide us any clue on the identity of the perpetrators who were killed and on the countless others who helped in the various stages of this act. India, its media and its polity have not even attempted to articulate this dimension in their prescription for preventing these events from occurring again. The increasing presence of radicals in India, in this case those who justify violence in the name of Islam, is a clear and present danger and must be halted if any degree of success is to be achieved in India’s endeavour to tackle the menace of terrorism. It is imperative that Islamic radicalism be recognised as such and then efforts be made to prevent its spread. It is equally important to enact policies that resolve conditions that aid the spread of this violent radicalism.

This reluctance to look within, it may be argued, is due to the inherent predisposition of nations and societies to externalise such incidents. The US and much of the western world has frequently treated terrorist violence as a distant third world phenomenon attributing its cause and origin to the ’impoverished and backward regions’ of Afghanistan, Pakistan and the Middle-East. This propensity of the western world is a legacy of the colonial/orientalist discourse. It also prevents societies from looking within and engaging with shortcomings in their own socio-political landscape. This is evident from the alacrity with which the West categorises its Muslim citizenry as ’Moderate and Progressive’ while denouncing the Muslim perpetrators (even when they are from their own populace) as ’Islamic Terrorists’ motivated and created in alien societies devoid of freedom and liberty. To admit to the existence of discontent and outrage amongst its own Muslim population would be to admit to shortcomings within their own brand of liberal pluralism.

India, its government and people, have responded to the Mumbai attacks and other terrorist action in the past in much the same manner. The origin of these violent incidents have been distanced from within and located entirely in the ’fundamentalist and undemocratic’ Pakistan. This is simplistic and dangerous. The sophistication, planning and increasing frequency of terror violence in India demonstrates strong local support for this radical Islamist ideology that propagates violence. Irrespective of the existence, contours and construct of a global Jihadi network, it is irrefutable that social conditions do exist within India that create disaffection and hopelessness and allow this population within the Indian Muslim community to be lured to the ideology that many today term ’Radical Islam’. The existence of SIMI and their violent brand of political agitation confirm to this growth of radicalism in the local Muslim community. The participation of home grown terrorists from educated and middle class backgrounds points to the presence of this radicalism in all strata of society and within the urban mainstream of India.

Radical Islam is not a primeval phenomenon, nor is it unsophisticated. It is now a post-modern ideology able to attract a diverse demography. It also makes use of modern media and communication platforms and positions itself effectively as an alternative and preferred form of habitation for persons seeking an outlet and release from their existing social reality. This presence of Radical Islam demands two specific investigations that India must undertake if it is to effectively respond to its dangerous proliferation. The first must involve an honest study of political, economic and sociological factors that shape anxieties of the Indian Muslim today. This would help in identifying vulnerable sections and vulnerabilities in our systems that may be exploited. The second investigation must construct how Radical Islam offers its ideology to the Indian Muslims as a relief from their current anxieties. It should understand the substantive messages that are communicated by the supporters of this ideology that address the current day issues of the Indian Muslims across the social spectrum.

An understanding of these vulnerabilities and the messages may offer a point of departure for the policy makers and civil society and help to develop a response comprising of both, security and socio-economic dimensions. This would aid policies and processes that would not only make India safer but also enhance its democratic depth.

Books / Papers, Water / Climate

“Mitigating Carbon Emissions in India: The Case for Green Financial Instruments”

New Delhi, 18th of February 2013
Please find here the link to download the report.

Executive Summary
With the sun gradually setting on the Kyoto Protocol (Phase One), it has become quite apparent that the global response to resource scarcity and climate change is going to be variable and disaggregated. Increasingly, countries and businesses across the globe are adopting various financial mechanisms and policies in order to manage such challenges. However, many such responses are restricted to advanced, developed countries, whereas the effects of climate change and the increasing cost of resources such as fossil fuels are likely to be more severe for developing countries. This dichotomy in response measures needs to be urgently addressed, and this report is an attempt to highlight the benefits of an inclusive growth oriented financial response mechanism with particular focus on India.

In its first chapter the report briefly outlines the relevance of GHG emissions mitigation through in- clusive market based mechanisms in India. With shifting patterns of economic growth and increased global demand volatility companies and investors in emerging economies, such as India, need to rec- ognise the value created through the supply chain of business deliverables by mitigating emissions. Mechanisms which exclude companies that do not meet global benchmarks, whether by way of share- holder advocacy and investment exclusion, or regulatory policies, will have a significant impact on the way that these companies choose to grow.

Low carbon strategies can only be implemented if the emissions landscape and its effects on sustainable growth are clearly defined and understood. The second chapter outlines emissions trends in India in order to map the carbon landscape and set the context for the rest of the discourse. Chapter 3 examines the trends of energy consumption and emissions at a sector specific and firm specific level (within the assessed sector). It is found that firms in the assessed sector (cement) are operating in sub optimal con- ditions, along with a lack of policy frameworks and market based emissions reduction incentives – there are no indigenous market based mechanisms to incentivise and stimulate change.
A firm level case study of one of the bigger private players in the Indian cement sector has revealed that the firm’s financial performance could have been better. At the same time, capacity additions and increased output have caused the total emissions of the company to increase, which is not sufficiently offset by the revenue gains. As a result, the firm’s emissions intensity has been rising consistently for clinker production. However, enhanced use of additives has kept the overall GHG intensity of cement based revenue lower. The average emissions intensity of the company was higher for three years than the sector average for the same period. The high correlation between the firm’s environmental perfor- mance and its financial performance has been highlighted.
The results of chapter 3 are aligned with the philosophy that environmental performance must not be excluded from the range of parameters that are used by investors while choosing a stock, especially a long term investment. This is true since the two concepts are inherently interlinked under the overall aegis of sustainable growth. It highlights the need for developing market based mechanisms to signal investment opportunities based upon carbon efficiency and financial performance, as both tend to complement each other in the medium to long term.

Chapter four concludes that; companies preparing for risk are not risk averse, but rather are risk prepared. The difference is subtle but important. Market based mechanisms which incentivise good performance by channelling investments to firms that respond to risk better than their competitors in a given environment, help investors realise this distinction clearly. For “green” market mechanisms and investment vehicles to be viable and effective, they must efficiently ensure that the transmission mecha- nism works and only performance based, credible signals are relayed to the open markets. This becomes even more important in the context of a developing country due to the nascent capital markets, and urgent need for scaling up sustainability initiatives – both at the firm and policy levels.

Capital generation should not be looked at as the problem. Rather, redirecting existing and planned capital flows from traditional high-carbon to low-emission; resilient investment is the key challenge of financing transition to a low-emission economy. In order to facilitate such transitions, a universally replicable model will be used – a multipronged approach to achieve the above objectives. This would involve creation of innovative financial products based on purely quantitative data, create and publish sector wise and cross sectoral market reports, and facilitate progressive policy advocacy in order to en- able market realisation for its products. It will further seek to replicate the model in other developing countries through a hub and spoke approach to expansion.

Books / Papers

Chapter in ORF publication: “The Global Economic Meltdown”

Samir wrote one chapter in the new ORF publication “The Global Economic Meltdown”.
Please find here the original link

Please find here the full document (PDF version): Deconstructing India’s Inclusive Development Agenda

The Global Financial Crisis (GFC) of 2008 is widely recognized across the globe as the most severe economic downturn since the Great Depression. The prolonged global economic slowdown has stymied the US economy, brought the Eurozone to the precipice, and continues to retard growth momentum throughout the world. Even developing economies that were previously thought to be crisis-averse are now experiencing the rough waters after an economic tsunami.

The writers in this compendium address the many complexities of the GFC and present a holistic overview of its background, how it unfolded and how many nations sought to respond to it. This publication is unique in its approach of the crisis from a global perspective, with pieces focusing on India, Europe and the United States. Furthermore, the book provides a thorough examination of the economic, political, environmental and social implications of the crisis and offers glimpses of the road ahead, replete with policy recommendations for a more stable and prosperous future.

BRICS, Columns/Op-Eds

Thinking the Russian Choice: BRICS v/s OECD

Please find here the link to the official publication.

After a long wait, come 2014, that most exclusive club of nations, Organization of Economic Co-operation and Development (OECD) will have a new member – Russia, which at one point was its most vocal critic. With the grouping’s influence arguably on the wane, despite efforts to make it more reflective of the zeitgeist, Russia’s eagerness to join it makes for an interesting study. By itself, it may largely be emblematic of Russia’s aspirations for a slice of imagined glory on the high table of the rich. Apart from saving denizens of St Petersburg a drive across the border to Finnish supermarkets, thanks to reduction in import tariffs, it brings to the fore the dichotomies that define Russia’s foreign policy, and more notably, its unique position within the BRICS. Russia’s impending accession to OECD, will see it attempting to align to an arrangement that could be characterized ‘old world’, with attitudes to political and economic models that compete and collide with those the developing world consider optimum to their own needs. This OECD membership will be at odds with the BRICS aspiration of offering a credible alternative to extant western systems currently governing international trade and economic exchange.

Strategic Expectations

Up until the disintegration of Soviet Union, the anxious need for this ‘super-power’ to shape an equally prevailing alternative to US domination of world affairs was central to the bipolar architecture that informed world politics. While bipolarity is now a remnant of history, lingering anxieties have continued to play a visceral role in shaping Russia’s foreign policy discourse. Russia’s presence in BRICS and other multi-lateral organizations such as SCO or G-20, its play at the UN, and response to issues such as opposition to proposed NATO missile shields in erstwhile client states of Poland and Romania, can be consistently traced to this arc of alternate leadership challenging legitimating discourses of the US led Western bloc.

Russia stands at the crossroad of global power flows today, where the signboards often appear fuzzy. On the one hand, the exclusivity of OECD beckons it. Even as Russian policymakers see OECD accession as natural fit, Russia may have to remain content with a seat at the periphery of OECD policy play. Powerful, entrenched lobbies within OECD, and Russia’s own political and economic architecture, could scupper effective integration and any gains thereof. On the other hand, Russia is rightly upping her engagement ante at BRICS. Even though BRICS agenda and agency may have been shaped by characteristic developing world priorities such as urban renewal, universal health and poverty alleviation, yet it is the only capable agent on the horizon that can offer a credible political and economic alternative to extant western systems. These nations have ‘emerged’ more ‘despite’ than ‘because’ of the developed world’s hand in their own journeys of growth. Their homegrown brews of practical logic in economics and governance, which helped them over the threshold, hold valuable lessons for Russia, which needs customized rather than copybook solutions.

Economic Priorities

Russia has the highest per capita GDP in the BRICS grouping, with Brazil a close second. Viewed in isolation, this means little. However, figures have a peculiar ability to obscure reality. For, Russia’s growth is based on skewed planning logic, spindled around commodity leverage aiding wealth concentration that has created physical and economic habitations literally at the opposite ends of the spectrum, with little in the middle. So, while Russia may have one of the largest populations of billionaires on the globe, the country does not figure anywhere in the top fifteen in the world millionaires chart, even as a significant mass of people struggle to make a decent living. Even today, commodities, especially oil and gas, which contribute the biggest slice of income to the national exchequer retains high policymaking attention in the Russian schema, even as the financial sector tethers at frontier market levels with subprime level interest rates for even high quality assets. While the predictability of such economic logic is close to the Russian roulette, even its frailty exposed by oil economy collapse in the aftermath of financial meltdown of 2008, has led to little meaningful change in planning behaviors.

Russia urgently needs systemic overhaul and its BRICS calling card offers it the maximum single point leverage in this regard. Economic ethos of BRICS historically has been pivoted around creating sustainable and inclusive institutional structures, which operate with high degree of predictability, posited as counterweight to overcome the highly negotiated nature of their national agency. Dipping into this rich collective experience, especially those of Brazil, India and China, who have long perfected models of sustainable reform with emphasis on equitable wealth distribution, could significantly alter Russia’s own learning curve, delivering quicker results with much less effort and fiscal pain.

Social Priorities

With close to cent per cent literacy, healthy sex ratio, high education levels, and, almost ten hospital beds and over four physicians per thousand individuals, Russia’s social statistics rival the best in the developed world. Years of disciplined social planning by the erstwhile Soviet regime had created one of the best national social architectures anywhere. Whereas the disintegration of the Soviet Union, and the economic chaos that ensued, consumed most other national institutions, strong fundamentals anchored in robust institutional frameworks helped Russia’s social architecture negotiate adverse headwinds of over two decades or so of policy challenges and spending cuts. However this fabled resilience is now showing unmistakable signs of fracture, with income inequity, rising unemployment levels and falling living standards, all of which are making the population increasingly restive.

There is an increasing constituency within Russia’s policy-making apparatus, which realizes the long-term consequences of this trajectory. A rethinking of national priority, away from the overdependence on oil economy to improving social conditions is underway, as Russian planners realize this is perhaps the only sustainable option going forward. In this, Russia can draw and adapt from the immense experience and resource within the BRICS, especially those of post reform Brazil, India and China, where creating sustainable social architectures that balance opportunity and growth with improved living standards has been key to managing large and diverse population groups with disparate interests, and certainly with differing degrees of success.

BRICS Play

Even while BRICS will continue to make the right noises towards providing an alternative to the extant global system, its short to medium term agenda will continue to be dominated by shared domestic priorities and their interplay with global governance frameworks. For realizing their dreams of expanded geopolitical influence, member states are already operating outside the BRICS ambit, and will continue to do so. Brazil has waddled into issues in far off Middle East while China has embraced Latin America, as a single point alternative to United States. As emerging states, they are situated uniquely, being both competitors and partners at the same time. For instance, India has been romancing Japan and United States as counterbalance to China in the political play, while Brazilian policymakers are responding to China’s increasing foothold in Latin America, by establishing closer economic and political collaboration with regional states, a move away from its traditional Euro centricity.

At the same time, on the more substantive issues such as climate change, Doha rounds and WTO which hold real potential to impact the life and times of their citizens, they have functioned as a cohesive unit, even compromising stated national positions, in the finest spirit of give and take. Their development emphasis notwithstanding, BRICS agency remains sufficiently reflective of global commons, and, their interactions are witnessing an increasing play of heavy political content. BRICS have taken firm and independent positions, on the Israel-Arab conflict, Iran and Syria, broader issues of sanctions, transnational interventions and the UN system that governs peace and stability. However, BRICS are unlikely to morph into a security bloc or alliance, and neither are they likely to be anti-western in their orientation. Yet, together they have shown to be able to stand-up and take an effective position against irrational acts stemming from whimsical or partisan objectives that hold potential to disturb global stability. And, that will be the moral space BRICS will seek to occupy in global political consciousness.

Promiscuous Future

We live in a world awash with promiscuous choices. But, the high rush in such flirtation is not without matching dangers. Russia will find reasons and perhaps even the wherewithal to court both BRICS and OECD simultaneously. Even so, Russia will have to delicately balance divergent expectations of the two groups who situate themselves at different ends in an uneven spectrum.

Inclusive growth, prosperity and a stable environment (internal and external) is what each of the BRICS seek as they transform their national economic and political landscapes. While this development emphasis within the BRICS agenda (which will only increase as South Africa assumes leadership) may appear to disturb the role Russia envisaged for BRICS, and herself within it, in reality Russia stands to gain immensely from this dispensation. Considering Russia’s own urgent need for systemic overhaul, there can be no better reference point than countries at the forefront of shaping the new global order. Staying the course will also see the BRICS increase the political content of their engagement, something the Russians always sought from the group of five.

Gains from accession to the OECD, which some feel Russia is speed-gating, may yet be notional. For, reduction in tariff barriers or better access to cutting edge technologies may all be part of the solution, but by themselves, they hold little value unless fundamental changes are effected in governance and planning behaviors to release energy and vibrancy into its national system, which is incidentally the signature BRICS objective.

Jaibal Naduvath is a communication professional and Samir Saran is Vice President at theObserver Research Foundation, a premier Indian Think Tank. The article is a revised version of the column that appeared in the Russia India Report on Jan 21, 2012.

BRICS, Columns/Op-Eds

Column in SAFPI: More than just a catchy acronym: six reasons why BRICS matters

by Samir Saran and Vivan Sharan
Please find here the link to the original article.

New Delhi: There have been heated discussions over the role of BRICS recently. Ian Bremmer, President of the Eurasia Group, a political risk consulting firm, wrote an eye-catching article in the New York Times in late November, proclaiming that BRICS is nothing more than a catchy acronym. The BRICS nations represent over 43 percent of the global population that is likely to account for over 50 percent of global consumption by the middle class – those earning between $16 and $50 per day – by 2050. On the other hand, they also collectively account for around half of global poverty calculated at the World Bank’s $1.25 a day poverty line. What, then, is the mortar that unites these BRICS?

First, unlike NATO, BRICS is not posturing as a global security group; unlike ASEAN or MERCOSUR, BRICS is not an archetypal regional trading bloc; and unlike the G7, BRICS is not a conglomerate of Western economies laying bets at the global governance high table. BRICS is, instead, a 21st-century arrangement for the global managers of tomorrow.

At the end of World War II, the Atlantic countries rallied around ideological constructs in an attempt to create a peaceful global order. Now, with the shifts in economic weights, adherence to ideologies no longer determines interactions among nations.

BRICS members are aware that they must collaborate on issues of common interest rather than common ideologies in what is now a near “G-0 world,” to borrow Bremmer’s own terminology. Second, size does not matter and it never has. Interests do and they always will. Intriguingly, Bremmer expresses his concern over China being a dominant member within BRICS. Clearly, Bremmer has chosen to ignore the fact that the US accounts for about 70 percent of the total defense expenditure of NATO countries or that it contributes nearly 45 percent of the G7’s collective GDP.

Third, BRICS is a flexible group in which cooperation is based on consensus. Issues of common concern include creating more efficient markets and generating sustained growth; generating employment; facilitating access to resources and services; addressing healthcare concerns and urbanization pressures; and seeking a stable external environment not periodically punctuated with violence arising out of a whim of a country with means.
Fourth, it is useful to remember that the world is still in the middle of a serious recession emanating from the West. As Bremmer himself points out, systemic dependence on Western demand is a critical challenge for BRICS nations. Indeed, it is no surprise that they have begun to create hedges. The proposal to institute a BRICS-led Development Bank, instruments to incentivize trade and investments, as well as mechanisms to integrate financial markets and stock exchanges are a few examples.

Fifth, through the war on Iraq, some countries undermined the UN framework. The interventions in Libya reaffirmed that sovereignty is neither sacrosanct nor a universal right. While imposing significant economic costs on the world, they failed to produce the desired political outcome. By maintaining the centrality of the UN framework in international relations, BRICS is attempting to pose a counter-narrative.
Sixth, in the post-Washington Consensus era, financial institutions such as the IMF and the World Bank are struggling to articulate a coherent development discourse. BRICS nations are at a stage where they can collectively craft a viable alternative development agenda.

In the Fourth BRICS Summit in New Delhi in March 2012, there was clear emphasis on sharing development knowledge and further democratizing institutions of global financial governance within the cooperative framework. BRICS is a transcontinental grouping that seeks to shape the environment within which the member countries exist. While countries across the globe share a number of common interests, the order of priorities differs. Today, BRICS nations find that their order of priorities on a number of external and internal issues which affect their domestic environments is relatively similar.

BRICS is pursuing an evolving and well thought out agenda based on this premise. And unlike Bremmer, we are not convinced that they are destined to fail.

* Samir Saran is vice president and Vivan Sharan an associate fellow at the Observer Research Foundation, New Delhi.

BRICS, Columns/Op-Eds

Article in ‘Global Times’: More than just a catchy acronym – six reasons why BRICS matters

by Samir Saran and Vivan Sharan
Please find here the link to the original article.

There have been heated discussions over the role of BRICS recently. Ian Bremmer, President of the Eurasia Group, a political risk consulting firm, wrote an eye-catching article in the New York Times in late November, proclaiming that BRICS is nothing more than a catchy acronym.

The BRICS nations represent over 43 percent of the global population that is likely to account for over 50 percent of global consumption by the middle class – those earning between $16 and $50 per day – by 2050. On the other hand, they also collectively account for around half of global poverty calculated at the World Bank’s $1.25 a day poverty line.

What, then, is the mortar that unites these BRICS?

First, unlike NATO, BRICS is not posturing as a global security group; unlike ASEAN or MERCOSUR, BRICS is not an archetypal regional trading bloc; and unlike the G7, BRICS is not a conglomerate of Western economies laying bets at the global governance high table. BRICS is, instead, a 21st-century arrangement for the global managers of tomorrow.

At the end of World War II, the Atlantic countries rallied around ideological constructs in an attempt to create a peaceful global order. Now, with the shifts in economic weights, adherence to ideologies no longer determines interactions among nations.

BRICS members are aware that they must collaborate on issues of common interest rather than common ideologies in what is now a near “G-0 world,” to borrow Bremmer’s own terminology.

Second, size does not matter and it never has. Interests do and they always will. Intriguingly, Bremmer expresses his concern over China being a dominant member within BRICS.

Clearly, Bremmer has chosen to ignore the fact that the US accounts for about 70 percent of the total defense expenditure of NATO countries or that it contributes nearly 45 percent of the G7’s collective GDP.

Third, BRICS is a flexible group in which cooperation is based on consensus. Issues of common concern include creating more efficient markets and generating sustained growth; generating employment; facilitating access to resources and services; addressing healthcare concerns and urbanization pressures; and seeking a stable external environment not periodically punctuated with violence arising out of a whim of a country with means.

Fourth, it is useful to remember that the world is still in the middle of a serious recession emanating from the West. As Bremmer himself points out, systemic dependence on Western demand is a critical challenge for BRICS nations. Indeed, it is no surprise that they have begun to create hedges. The proposal to institute a BRICS-led Development Bank, instruments to incentivize trade and investments, as well as mechanisms to integrate financial markets and stock exchanges are a few examples.

Fifth, through the war on Iraq, some countries undermined the UN framework. The interventions in Libya reaffirmed that sovereignty is neither sacrosanct nor a universal right. While imposing significant economic costs on the world, they failed to produce the desired political outcome. By maintaining the centrality of the UN framework in international relations, BRICS is attempting to pose a counter-narrative.

Sixth, in the post-Washington Consensus era, financial institutions such as the IMF and the World Bank are struggling to articulate a coherent development discourse. BRICS nations are at a stage where they can collectively craft a viable alternative development agenda.

In the Fourth BRICS Summit in New Delhi in March 2012, there was clear emphasis on sharing development knowledge and further democratizing institutions of global financial governance within the cooperative framework.

BRICS is a transcontinental grouping that seeks to shape the environment within which the member countries exist.

While countries across the globe share a number of common interests, the order of priorities differs. Today, BRICS nations find that their order of priorities on a number of external and internal issues which affect their domestic environments is relatively similar.

BRICS is pursuing an evolving and well thought out agenda based on this premise. And unlike Bremmer, we are not convinced that they are destined to fail.

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

BRICS, In the News

India, South Africa and the IBSA-BRICS equations of 2013: Francis A. Kornegay responds to Samir Saran

New Delhi, 2nd of January 2013
Please find here the original link.

For South Africa and India, 2013 promises to be a year of “Chinese interesting times” in navigating the IBSA-BRICS equation at a pivotal juncture for both groupings. The BRICS forum convenes in Africa in March with South Africa hosting the 5th Leaders’ Meeting in Durban. Later in the year, in October, India will host the 6th IBSA summit marking the 10th anniversary of the Brasilia Declaration which launched this troika. Meanwhile, the fact that South Africa’s hosting of BRICS will reflect a special Afrocentric twist in its thematic emphasis on ‘BRICS and Africa’ has drawn a sharp reaction from one of India’s leading civil society BRICS intellectuals, Samir Saran. And this is a good thing.
More often than not the coterie of academics and intellectuals networking the BRICS and IBSA confabs skirt around contradictions amongst ourselves which might upset individual and collective apple carts known as ‘polite company.’ This is by avoiding candidly expressing some of what is eating us.
In as much as this reticence tends to be at the expense of genuinely edifying intellectual discourse advancing mutual understanding, Samir Saran has done a much needed service in raising ‘The Africa Question’ in Indian media. And SAFPI has done a great service in disseminating this ‘question’ throughout its African network.
Saran, senior fellow and Vice-President of the Observer Research Foundation (ORF), the think-tank that did the initial spade work on BRICS for its founding summit in Russia in 2009, penned an op-ed in the December 12th edition of The Indian Express voicing exception with South Africa taking upon itself the “onerous task of discovering and representing a unified African voice.”
In the process of arguing this point, Saran demonstrates why it is critical that intellectual as well as governing elites of the five countries really make an effort to get to know one another in more depth, where we are all respectively coming from – and really get a handle on what BRICS is all about apart from, as seems to be suggested, simply a collectivity of national interests converging on reforming global governance generally, global economic governance in particular.
From Saran’s vantage point there are several flaws in South Africa’s approach to BRICS:
* Presumptuously taking it upon itself to speak on behalf of all of Africa;
* Misunderstands why it has been included in BRICS which is not to be a ‘proxy’ for Africa but, as an emerging power with a unique perspective, to add value to BRICS by itself;
* It’s misunderstanding reflects a lack of appreciation for the objective of BRICS which is to convey a counter-narrative on global governance to that of the West and to collectively leverage their individual weights in engaging western incumbents at “the global high table.”
Now presumptuous as it might seem for SA to take it upon itself to speak on behalf of Africa, the same question could be posed about who anointed BRICS countries to engage the West at this hierarchical ‘ global high table’ and on whose behalf? Their own individual behalf separately and collectively without regard for the interests of other emerging and developing economies?
And to what purpose if global governance is not about how various and sundry national interests are to be coordinated and if possible harmonized in a manner acknowledging how global economic integration has eroded the prerogatives of national sovereignty? No country is an island in today’s world, least of all in its own region.
Some countries are more capacitated than others within their regions to articulate aspirations that are transnational even though there may be (indeed are) national jealousies about the capacity of given regional powers to convey a regional agenda which, in concert with other regional agendas, may add up to a continental agenda. It is not for nothing that, in southern Africa there is a SADC to which South Africa belongs or a Mercosur to which Brazil belongs which, in turn, feed into the respective continental agendas of the African Union and the Union of South American Nations. The same might apply to India within the South Asian Association of Regional Cooperation though it is often pointed out that India aspires to escape its region in ascending to ‘the high table.’
No, no one anoints these members of IBSA as well as BRICS to represent them at the ‘global high table.’ Yet there is an unspoken if often grudging understanding that by default, South Africa, Brazil and India are better placed than their neighbors to engage at a global governance level which includes other emerging powers within the G20: Indonesia, Turkey, South Korea, Saudi Arabia, Mexico, Argentina.
Now honing in specifically on South Africa, what pray tell informs this “unique perspective” for adding value to BRICS if this uniqueness is not informed by an African identity on a continent saddled by history with a unique set of problems at a time when all of the BRICS countries are scrambling to avail themselves of Africa’s resources? This question strikes at the very heart of what constitutes ‘The Africa Question’ in a manner in which South Asia cannot compare, saddled by history as India and South Asia are with their own unique challenges which, again, ought to inform a South Asian regional sensibility underpinning efforts to come to terms with those challenges.
Now perhaps India is so big, constituting a subcontinental region in itself that some of its sons and daughters may not be able to appreciate a transnational vocation to the same degree that applies to South Africa within Africa. Be that as it may, the national sovereignty that Indians are so attached to simply does not work for South Africa in its relations within a fragmented Africa where national sovereignty is the essence of the continent’s weakness; a weakness that South Africa along with other AU members must work to overcome.
This is a contemporary and historical circumstance compelling a pan-Africanist perspective and agenda for any country on the continent that aspires to continental leadership as does South Africa. This what SA brings to BRICS which is widely understood if not appreciated by some.
South Africa, within its African context, therefore stands apart from other BRICS whose perspectives are informed by what might be termed ‘big country sovereignty’ which is tantamount to continental sovereignty. This is what Africa aspires to and informs South Africa’s African and BRICS agendas. This is a perspective informed by the realities of global economic integration which dictates a pan-African future as the only scenario that makes sense for South Africa and Africa – which by the way does not mandate a ‘united African voice’ as such.
Unless BRICS as individual countries and as a collective begin to more consciously approach global governance from the vantagepoint of making economic integration work within their respective continents and regions, its long-term role as a revisionist actor in the politics of the global economy may be limited. Indeed, this is a challenge facing the IBSA countries within BRICS as it relates to their trilateral relations as the Brasilia Declaration approaches its 10 anniversary in 2013. Thus, whereas Saran asks if BRICS should not also concern itself with South Asian “tensions and imperatives” and those exercising China regarding the South China Sea, as South Africa wants to do regarding Africa, in a qualified sense, the answer is ‘yes.’
BRICS should concern itself with these and other regions in which its members are embedded where issues of transnational economic governance arise having a direct bearing on regional and continental integration. This is what South Africa’s African agenda relating to its hosting of BRICS is intended to address and Tshwane-Pretoria would open itself to major criticism from elsewhere on the continent if this was not its intent. Other BRICS members may not share the urgency of this imperative regarding their regions and continents as does South Africa regarding Africa.
The urgent need for Africa to overcome its fragmentation through advancing an integrationist agenda cannot be contested and if other members of BRICS cannot be sensitive to this special predicament facing the continent and South Africa’s need to address it within the context of BRICS then this raises serious questions about the raison d’etre of South Africa’s membership in this grouping if pure ‘national interest’ narrowly defined is the be all and end all of BRICS. BRICS’ relevance for Africa and the individual agendas of BRICS members in Africa would consequently come under question.
Regional and continental integration and, indeed, inter-regional cooperation are even more explicit in IBSA given the geostrategic architecture of this grouping in two respects: the economic potential of the Mercosur-SACU-India preferential trade talks, difficult as they are; and the added dimension of security community-building in the Indian and South Atlantic oceans.
If New Delhi fails to hone in on strengthening this southern sea lanes comparative strategic advantage in its hosting of the IBSA summit later in 2013 (while also chairing the Indian Ocean Rim-Association for Regional Cooperation) this trilateral grouping could face declining multilateral utility. This would be in spite of India’s strongly held position, with China hovering in the background, of IBSA maintaining its autonomy and identity viz-a-viz BRICS.
2013 therefore should tell a lot about how important IBSA is in New Delhi’s strategic calculus regarding BRICS as it cannot avoid the demand of showing leadership on the occasion of the 10th anniversary of the Brasilia Declaration. Will it show the vision and political will to jointly take IBSA to another level with South Africa and Brazil?
As central as its building on IBSAMAR is to a re-energizing of IBSA, Indian Ocean-South Atlantic maritime cooperation is by no means the only challenge facing India in its hosting of the troika’s summit.
Here are few other considerations for the three governments:
* Given the elaborate sectoral working group agenda of IBSA and its uneven achievement together with its business, parliamentary and academic forums plus the geostrategic maritime cooperation potential of IBSAMAR, should not this troika contemplate a more formalized structure in the form of a secretariat, perhaps situated in Brasilia? Otherwise, there is a certain superficiality to IBSA and its initiatives which, compared to BRICS, may more and more take on little more than purely symbolic imaging with the real substance of India, Brazil and South Africa residing in BRICS where the leadership edge significantly resides with Sino-Russia.
* Can the three governments continue their south-south tokenism via the IBSA Development Fund run by UNDP’s South-South Joint Cooperation Unit with the prospect of the BRICS development bank coming on stream? Could they not negotiate some complementary synergy between the development fund under IBSA and the development bank under BRICS and up the funding level? Additionally, given the pressing developmental needs in all three countries, could not the development fund house a grassroots development ‘window’ or facility for small-scale income-generating community-level projects in the three countries?
* Why did India and Brazil reportedly shoot down a South African proposal that IBSA establish a working group on women/gender instead of addressing gender and status of women’s issues at a purely forum level? Given the epidemic of violence against women in South Africa as well as India and how the matrix of issues surrounding law enforcement, the judiciary and general vulnerability and brutalizing of women were exposed in India at the end of 2012, will New Delhi revisit the more substantive working group versus the superficiality of a forum for gender and women when it hosts the summit in 2013?
Finally, the structure of the parliamentary forum in particular deviates from the original concept of such an IBSA structure tied as it is under the ministerial focal points of all three governments. The original intent was that it would operate more autonomously like the SADC Parliamentary Forum as one step removed from an actual legislative body. Given the 10th anniversary crossroad challenges facing an IBSA in need of reinvigorating, should not the status of the parliamentary forum be revisited as well and how it would interact with the various sectoral working groups?
All said, as some in India ponder South Africa’s commitment to interrogating the BRICS-Africa connection while reflecting on what New Delhi will make of its own hosting of IBSA, there are a raft of issues on the table for the IBSA-BRICS civil society and academic constituencies to grapple with as they try to influence the direction in which these two groupings will develop.
The question we should ask ourselves is whether we are up to it, whether we are able to move from being arm chair theorists into the agenda-setting real world of action!
* This rejoinder to Samir Saran’s analysis, ‘The Africa question’, was commissioned from Dr Kornegay by SAFPI.

BRICS, Columns/Op-Eds

BRICS FORUM: The Africa Question – now also available in Russian

Please find here the link to the original publication
By Samir Saran

It will be counterproductive for BRICS if South Africa’s chairmanship ends up representing the continent.

If recent conversations with South African scholars are any indication, the country’s chairmanship of BRICS may be conditioned by a strong impulse to represent Africa. In two recent conferences in China, interventions by South African delegates on BRICS matters introduced a heavy dose of Africa, issues that currently engage the African Union and the state of the continent generally. In the run up to the 2013 BRICS summit, the country seems to be placing upon itself the onerous task of discovering and representing a unified African voice. While this has drawn criticism, it is also flawed in more ways than one and has the potential of undermining the progress so far.

The first problem is the inherent moral hazard. South Africa must not see its role as the voice of Africa at BRICS. It would be presumptuous and a number of African countries may take strong exception. And is it anyone’s case that it is only Africa that somehow needs a special relationship with BRICS? Home to half of the world’s poverty and any number of development and social challenges, South Asia may deserve such attention as well. Should India then be the voice of South Asia and represent the subcontinent? Surely, some South Asian countries would have a reason to challenge this. This can also be argued in the case of Brazil and South America, Russia and Eurasia, China and East Asia. Such ambassadorial roleplay for larger regions is dangerous and can weigh down the lithe and nimble platform that BRICS seeks to be.

On the other hand, almost every BRICS member has robust bilateral engagements with the continent. While the Chinese may be more recent partners to many African nations, India has both civilisational and contemporary ties. Many Indians are settled in Africa; India has maintained among the largest peacekeeping forces; and of course Indian businesses, much like their Chinese counterparts, are taking increasing interest in the continent. Brazil also has a fair constituency in Lusophone Africa. Africa’s immense resource wealth, and underdeveloped infrastructure, have attracted a large amount of commercial interest from Brazil. Hence, can the premise that South Africa represents Africa and is best positioned to serve its interests pass muster?

The second flaw with the “South Africa for Africa” formulation is that it misunderstands the reason for South Africa’s inclusion in the group. Only a rather naive (and linear) rationale will attach the responsibility for Africa to South Africa. While it is undeniable that one of the key reasons for the inclusion was to have a voice from the continent, the voice was meant to speak for itself alone. South Africa is an emerging economy that offers a unique perspective and adds value to BRICS by itself. It is counterproductive and self-defeating for a small club to allow proxy memberships.

The third and central weakness of this proposition is its lack of appreciation of the core BRICS objectives. It is indisputable that the purpose of this group is to offer a counter-narrative on global governance to the one scripted by the incumbents in the Western hemisphere. BRICS is not and must not become another “trade union” or voice of the “global opposition”. It is a club that allows these five nations to pitch their collective weight behind efforts to shape and change rules for the road, old and new, at the global high table. There is a lot at stake. The world is in flux and governance is being re-imagined, redefined and indeed renegotiated. BRICS allows each country an exponentially weightier presence while parleying with the incumbents. That must remain the group’s salience.

It is time for BRICS to ask themselves some blunt questions. Should the resources and time devoted by each country at this forum be invested in regional issues such as those important to Africa? Should the tensions and imperatives of South Asia find centrestage? Will it be in the interests of BRICS to be engaged with the problems of the South China Sea? Or should BRICS remain that unique proposition, where a group of emerging economies, with critical stake in the global future, create a platform for meaningfully engaging with the developed and developing countries on key issues?

There is no denying that South Africa will remain the continent’s economic powerhouse for the foreseeable future. It is also a veritable geographic fulcrum, which is viewed by some as a strategic node between Latin America and Asia. This gives South Africa a weight far greater than its military might or economic numbers. South Africa by itself completes BRICS. As the next summit draws closer, it must urgently conduct a strategic and realist re-evaluation of what it wants from BRICS against what is on offer.

The writer is senior fellow and vice president, Observer Research Foundation, Delhi

As published in The Indian Express.

BRICS, Columns/Op-Eds

Article in the Indian Express: “The Africa Question”

by Samir Saran
12th of December 2012
Please find here the link to the original article.

It will be counterproductive for BRICS if South Africa’s chairmanship ends up representing the continent.

With the impending handover of the chairmanship of BRICS by India to South Africa, there is a flurry of activities in BRICS capitals, including a visit of a high-powered South African delegation to New Delhi. While there would be discussions on the modalities of the handover, the central focus must remain on the BRICS agenda.

If recent conversations with South African scholars are any indication, the country’s chairmanship of BRICS may be conditioned by a strong impulse to represent Africa. In two recent conferences in China, interventions by South African delegates on BRICS matters introduced a heavy dose of Africa, issues that currently engage the African Union and the state of the continent generally. In the run up to the 2013 BRICS summit, the country seems to be placing upon itself the onerous task of discovering and representing a unified African voice. While this has drawn criticism, it is also flawed in more ways than one and has the potential of undermining the progress so far.

The first problem is the inherent moral hazard. South Africa must not see its role as the voice of Africa at BRICS. It would be presumptuous and a number of African countries may take strong exception. And is it anyone’s case that it is only Africa that somehow needs a special relationship with BRICS? Home to half of the world’s poverty and any number of development and social challenges, South Asia may deserve such attention as well. Should India then be the voice of South Asia and represent the subcontinent? Surely, some South Asian countries would have a reason to challenge this. This can also be argued in the case of Brazil and South America, Russia and Eurasia, China and East Asia. Such ambassadorial roleplay for larger regions is dangerous and can weigh down the lithe and nimble platform that BRICS seeks to be.

On the other hand, almost every BRICS member has robust bilateral engagements with the continent. While the Chinese may be more recent partners to many African nations, India has both civilisational and contemporary ties. Many Indians are settled in Africa; India has maintained among the largest peacekeeping forces; and of course Indian businesses, much like their Chinese counterparts, are taking increasing interest in the continent. Brazil also has a fair constituency in Lusophone Africa. Africa’s immense resource wealth, and underdeveloped infrastructure, have attracted a large amount of commercial interest from Brazil. Hence, can the premise that South Africa represents Africa and is best positioned to serve its interests pass muster?

The second flaw with the “South Africa for Africa” formulation is that it misunderstands the reason for South Africa’s inclusion in the group. Only a rather naive (and linear) rationale will attach the responsibility for Africa to South Africa. While it is undeniable that one of the key reasons for the inclusion was to have a voice from the continent, the voice was meant to speak for itself alone. South Africa is an emerging economy that offers a unique perspective and adds value to BRICS by itself. It is counterproductive and self-defeating for a small club to allow proxy memberships.

The third and central weakness of this proposition is its lack of appreciation of the core BRICS objectives. It is indisputable that the purpose of this group is to offer a counter-narrative on global governance to the one scripted by the incumbents in the Western hemisphere. BRICS is not and must not become another “trade union” or voice of the “global opposition”. It is a club that allows these five nations to pitch their collective weight behind efforts to shape and change rules for the road, old and new, at the global high table. There is a lot at stake. The world is in flux and governance is being re-imagined, redefined and indeed renegotiated. BRICS allows each country an exponentially weightier presence while parleying with the incumbents. That must remain the group’s salience.

It is time for BRICS to ask themselves some blunt questions. Should the resources and time devoted by each country at this forum be invested in regional issues such as those important to Africa? Should the tensions and imperatives of South Asia find centrestage? Will it be in the interests of BRICS to be engaged with the problems of the South China Sea? Or should BRICS remain that unique proposition, where a group of emerging economies, with critical stake in the global future, create a platform for meaningfully engaging with the developed and developing countries on key issues?

There is no denying that South Africa will remain the continent’s economic powerhouse for the foreseeable future. It is also a veritable geographic fulcrum, which is viewed by some as a strategic node between Latin America and Asia. This gives South Africa a weight far greater than its military might or economic numbers. South Africa by itself completes BRICS. As the next summit draws closer, it must urgently conduct a strategic and realist re-evaluation of what it wants from BRICS against what is on offer.

The writer is senior fellow and vice president, Observer Research Foundation, Delhi

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