4th BRICS Academic Forum

BRICS, Steel, Mortar….and Money – Analysis of the 4th BRICS Summit in New Delhi

by Samir Saran and Vivan Sharan
4th of April 2012
Please find here the original link to the article.

With the Delhi Declaration, BRICS nations, which met recently in the Indian capital, have shown that they have the steel to stand up to traditional power structures, a cohesive vision to jointly respond to development challenges through institutionalisation of concrete mechanisms, and the determination to channel monetary power to strengthen markets, businesses and trade. The Declaration indeed gives insight into the gradual transformation of BRICS, from essentially a response mechanism crafted to address the various development challenges posed by the global financial crisis, to a forward looking entity seeking to enact and enable real global transformation.

The Delhi Declaration extends over 50 paragraphs which are all encompassing in some sense and address many relevant themes for BRICS countries and the developing world at large. The Declaration is significantly more impressive and comprehensive than the 16 paragraph Joint Statement of the BRICS Leaders at the first summit held at Yekaterinburg in 2009 and the sketchy and macro statement of purpose at Sanya last year. The Action Plan within the Delhi Declaration consists of 17 steps which will deepen intra-BRICS engagements. There are three prominent narratives that define the Delhi Declaration – reaffirmation of the UN framework for global governance, disappointment with financial regimes shaped in the mid 20th century and a confidence to tap into economic opportunities that exist within BRICS.

The Delhi Declaration has stamped the intent of BRICS nations to coordinate and collectively respond to global security challenges within appropriate frameworks that give precedence to fundamental principles such as international law, transparency and sovereignty. BRICS members have recognised and re-emphasised the centrality of the UN in dealing with regional tensions and they have explicitly outlined this for specific cases including the Arab-Israeli conflict, the Syrian imbroglio and the contentious Iranian nuclear programme.

The Declaration unambiguously states that “plurilateral initiatives” that go against the fundamental principles outlined earlier, will not be supported by BRICS. The Declaration is clearly against actions such as asymmetric trade protectionism, unilaterally imposed sanctions and taxes imposed on businesses. The EU’s Aviation Tax is one such example from contemporary policymaking. In terms of trade, there is strong emphasis on operating within legal instruments such as the WTO and institutions such as the UNCTAD for furthering the inclusive development efforts through consensus and technical cooperation.

The aftershocks from the financial crisis are still a cause of concern to the BRICS nations. The pre-occupation with Europe has distracted attention from the social transformation programmes and poverty alleviation efforts among BRICS members. The Delhi Declaration has spelt out the “immediate priority” of restoring market confidence and getting global growth back on track. The steps to address such concerns will include attempts to rebalance global savings and consumption, furthering of regulatory and supervisory oversight in the financial markets, increasing the voice of developing and emerging nations in global financial governance and the institutionalisation of financial mechanisms to redirect existing capital to tackle development imperatives.

The BRICS members have therefore announced a working group led by the Finance Ministers of the individual nations, in order to examine the “feasibility and viability” of a BRICS Development Bank. When formed, such an institution will likely be able to shift and contextualise the development discourse within and outside BRICS and therefore is one of the most significant actionable outcomes. It is evident that such a multilateral institution is not meant to compete with existing ones, but rather, to enhance lending and investment to create sustainable development trajectories. Contrary to expectations several high ranking Chinese policymakers, including the Assistant Foreign Minister, Ma Zhaoxu, have supported the idea.

The BRICS members have clearly outlined that the purpose and nature of Bretton Woods Institutions such as the World Bank, must shift from being essentially a mediation instrument to enable North-South cooperation, to one which can actually prioritise “development issues” and overcome the “donor-recipient dichotomy”. They have also called upon the World Bank to mobilize greater directed resources and enable development financing at reduced costs through financial innovations and improved lending practices. Indeed for BRICS, the focus on World Bank and IMF reforms has remained constant through the years, yet the Delhi Declaration articulates these concerns more lucidly than ever before.

Given that intra-BRICS trade has been consistently on the rise over the past decade, BRICS Leaders have endorsed the conclusion of the Master Agreement on Extending Credit Facility in Local Currency under the BRICS Interbank Cooperation Mechanism and the Multilateral Letter of Credit Confirmation Facility Agreement between their respective EXIM/Development Banks. Such steps to mitigate market risks and enable local currency transactions will only add to the existing momentum and build resilience in BRICS economies to global business cycle fluctuations and exchange rate volatilities. Notably, BRICS have also endorsed the market led efforts to set up a BRICS Exchange Alliance between the major stock exchanges of BRICS, which will enable investors to efficiently allocate capital across BRICS economies and invest in the BRICS growth story.

The unity and purpose of BRICS has been the target of speculation and scepticism from various quarters. With the Delhi Declaration, BRICS members have been able to assuage such doubts as they have begun to create a credible hedge against traditional global narratives of security and development. They have simultaneously been able to project that there is resolution within the group to deal with issues that are not only of immediate concern but even those that will need attention in the future. The Delhi Declaration paves the way for the institutionalisation of BRICS cooperation, making BRICS a significant transcontinental and politically united force. In Sanya BRICS spread wide to include South Africa; in Delhi they went deep to include substance.

Samir Saran is Vice-President and Vivan Sharan an Associate Fellow at Observer Research Foundation. The Foundation hosted the BRICS Academic Forum in March this year. 

4th BRICS Academic Forum: Recommendations to the 4th BRICS Leaders Summit in New Delhi

Please download here the full document: Forum Declaration Final

March 06, 2012, New Delhi: The 4th BRICS Academic Forum comprising experts and scholars from the research and academic institutions of Brazil, Russia, India, China and South Africa met on March 4th, 5th and 6th, 2012 in New Delhi. Given that the BRICS have covered significant ground from the first meeting of Leaders in Yekaterinburg, the Forum believes that they must seek and set concrete agendas for articulating a clear, bold and ambitious vision.

The theme for this year’s Forum, “Stability, Security and Growth”, represents the common aspirations of BRICS for strengthening progressive development trajectories and seeking transformations for optimal representation and participation in matters of global political, economic and financial governance. Sovereignity and International law serve as the fundamental principles for BRICS members in world affairs and these are prerequisites for ensuring stability, security and growth.

The imperative of economic growth cannot be substituted, and the Forum believes that BRICS must continue to create synergies for enhancing this growth through greater engagement with one another as well as with the rest of the world.

The Forum proposes the following recommendations to the BRICS Leaders for their consideration:

1)    Given the state of the euro zone and the continued ripples created by the global financial crisis, greater emphasis must be given to creating frameworks for enabling viable and timely responses to both endogenous and exogenous financial shocks within and outside BRICS. To this end, a systematic approach must be articulated to respond to any further economic downturns in the global economy.

2)    The BRICS nations must seek to create institutions that enable viable alternatives for enhancing inclusive socio-economic development agenda within and outside BRICS. Such institutions must eventually seek to set global benchmarks for best practices and standards.

3)    BRICS agreed to “strengthen financial cooperation” among their individual development banks at the Leaders Summit at Sanya in 2011. For furthering this objective, the Forum recommends studying the establishment and operational modalities of financial institutions such as a Development Bank and/or an Investment Fund that can assist in the development of BRICS and other developing countries.

4)    BRICS must evolve as a platform for creating contextualised multilateral policies, and by mutual consultation develop viable and credible mechanisms to respond to local, regional and international political and social turbulence such as the events being witnessed in West Asia and North Africa.

5)    The increasing involvement of non state actors and the dilution of the principle of non-interference are dual challenges that need to be met. Appropriate policies consistent with International Law need be be studied by BRICS academic institutions.

6)    The BRICS are home to some of the most bio-diverse regions in the world and they must work together to preserve such diversity through exchanges and consultations. They also must share experiences of integrating natural assets with their national macro-economic policies.

7)    As home to nearly half of the world’s population, BRICS have a responsibility to create pathways for sustainable development. BRICS could learn from policy successes as well as failures of the past from within and outside BRICS, and seek to implement policy solutions for sustainable development. In this context BRICS must bring to the fore inclusive growth and equitable development as the central narrative at global fora such as Rio+20.

8)    BRICS must study the role of financial and non-financial policy instruments in promoting innovation, strengthening University-Industry linkages and evolving TRIPS compatible IPR policies.

9)    The BRICS nations have a responsibility to respond to the increase in terrorist activities, illicit narcotics trade, money laundering, human trafficking and other new challenges. They must work together to neutralise the threats posed to each of them by sharing resources and information where appropriate, and through collaboration between relevant institutions in the member countries.

10) The Forum noted that a website has already been created by the Indian coordinator on BRICS issues. This could be further evolved into a virtual platform for the academic community for dissemination of developments, research and ideas. The Forum also suggests that the academic community and governments must work towards enhancing visibility of BRICS in their own countries and create an identifiable brand value.

11) Recent trends have shown that the BRICS are still very vulnerable to food and commodity price volatility. This, in turn, has exposed gaps in existing market policies and regulations as well as highlighted the imperative of resource efficiency. The BRICS should increase intra-BRICS cooperation in order to provide stable economic anchors for price volatility while simultaneously enhancing efficiency of resource use through better management, standards and technologies.

12) Urbanization is both a common challenge and an opportunity for BRICS. Additional capability and capacity building within urban agglomerations must be prioritized through sharing knowledge, policies and skills. Key actionable areas need to include infrastructure development, investments in mass transport, and programmes to enable social transformation.

13) The BRICS members must study the efficacy of their individual education policies and policies on Affirmative Action in promoting Inclusive growth. Documenting and sharing related outcomes could prove mutually beneficial. As a first step each of the member countries could use the Internet-based platform for distance learning about one another’s history and socio-economic development.

14) Cultural cooperation and connectivity between BRICS countries should be promoted. Instituting scholarships to promote student exchange between BRICS and creation of platform for dialogue and interface between representatives from legislative bodies, political parties and young leaders of the member nations could complement such efforts.

15) The BRICS are replete with instances and examples of innovative technologies, policies and practices. They must create linkages and institutions to share such learning, in order to promote economic growth and human development. An exchange programme of scholars, experts and business leaders in the area of innovation and entrepreneurship would present a good opportunity to enable this. In this context diversified linkages could be established among the business schools and other institutions of the five countries.

16) BRICS experts must undertake a thorough assessment of indigenous knowledge and practices to deal with common challenges such as eco-friendly agricultural practices, efficient water use, disaster management and other humanitarian issues.

17) BRICS need to collaborate on the realization of the ideal of ‘universal healthcare and medicines for all’. They must enable sharing of policies, practices, standards and experiences on public healthcare and create a community of healthcare professionals across BRICS. It is also suggested that the members must collaborate in strengthening the understanding and dissemination of traditional medicines and therapeutic practices. BRICS members must also coordinate and cooperate in international fora such as the WTO and work towards the effective transformation of WHO programmes.

The BRICS academic institutions and governments must share their hosting experiences from the annual Academic Forums and Summits in order to make successive interactions more productive and efficient.

BRICS engagements must be increased in range and frequency. To this end a Memorandum of Understanding has been signed between BRICS coordinating research institutions. BRICS must explore and make use of such avenues and partnerships among member countries.

The BRICS Academic Forum wishes the Indian government the very best for hosting the 4th BRICS Leaders Summit and is confident that the Forum’s recommendations will be considered.

The Forum appreciates the warm hospitality and expresses a hearty thank you to the Observer Research Foundation for all arrangements.

The Forum looks forward to the next meeting of academics in 2013, to be held in South Africa and they will continue their active engagement and offer full support to the organisers.