BRICS Development Bank

Samir Saran & Vivan Sharan: Behind the lines of credit

The government should use lines of credit to transition India’s economic engagements towards a more durable, defined framework

by Samir Saran & Vivan Sharan 

March 28, 2015 Last Updated at 21:48 IST, Business Standard
Original link is here

Last year Indian PM announced a $1 billion concessional line of credit (LoC) on his maiden visit to Nepal. More recently he announced a concessional in his March visit to of $500 million for civil infrastructure projects, and a similar line to of $318 million for development of railway infrastructure. Clearly, LoCs are becoming a key arrow in India’s economic diplomacy quiver.

The Indian government subsidises the interest rate on concessional LoCs under its Development Cooperation Programme. Since LoC projects are demand-driven, recipient countries first have to make a request for a LoC to the ministry of external affairs, which considers political and economic aspects before handing over the structural and disbursement process to the ministry of finance and the Export Import Bank, respectively. The sheer size of the LoCs committed to and Mauritius in particular is indicative of the shift in India’s foreign policy priorities towards its neighbours.

The importance given to LoCs comes at a critical juncture in the global development discourse. There is little agreement on a ‘universally applicable’ global development agenda. The heydays of structural macroeconomists arguing for deficit reduction as a precondition to ‘development assistance’ are perhaps behind us. In the aftermath of the global financial crisis, countries are racking up large debts in an attempt to spend their way out of deflation. As world leaders prepare to negotiate Sustainable Development Goals to succeed the Millennium Development Goals, key development questions will be up for debate.

The negotiations will be rough and tough. A number of politically sensitive questions must be addressed if a truly inclusive and sustainable development agenda is to be crafted: What should be the measure of effectiveness of financial flows, such as LoCs? Who or which body should have the mandate to measure this effectiveness? How critical a role will financial markets play in the maximisation of development impact? What should be the criterion for assistance? How can economic incentives between development partners be aligned?

A study by the Observer Research Foundation on India’s concessional LoCs to East Africa has helped shed light on some of these issues. One of India’s largest LoC tranches, of $640 million, has been given to the Ethiopian government for expanding sugar refining operations. According to the Ethiopian Sugar Corporation, production from three assisted plants, which would total close to 1.6 million tonnes of sugar annually, would help Ethiopia become a net sugar exporter. The effectiveness of LoCs, therefore, is closely tied to the shift away from structural import dependence. The Ethiopian exchequer could earn $376 million annually through sugar exports from 2015, but the qualitative impact is perhaps wider. The credit extended will help generate livelihoods both directly and indirectly through infrastructure and supply chain creation; it will generate additional revenues for development objectives and create a new industrial ecosystem. Given that this entire process was demand-led, local stakeholders are perhaps best-equipped to measure the developmental and economic impact of the LoC.

From the Indian perspective, two aspects must be revisited to exponentially increase the impact of such LoCs. First, the role of the local agency is central. Often, countries from where LoC demands originate require handholding and technical support. The commercial sections of Indian missions in countries to which large development flows have been committed require support of experts and technocrats. Since the Indian Foreign Service is smaller than New Zealand’s, it is vital that the government breaks down silos reserved for diplomats, and supplements its missions with professionals possessing the requisite expertise in handling and supporting commercial projects. Prime Minister Modi would know that economic outcomes are not going to wait for the Indian bureaucracy to reform or for officials to reconcile themselves to the fact that horizontal hires need to be paid market wages. Billions of dollars are at stake, important relationships need nurturing and none of this should be jeopardised by a handful of egos.

The second key issue is the involvement of Indian vendors in funded projects. Under the concessional LoC framework, recipient countries have to procure a variable proportion of goods and services (between 65 and 75 per cent) from Indian firms towards project implementation. Anecdotal evidence gathered for the ORF study suggested that the pre-tendering and tendering processes have much scope for improvement. Given this government’s emphasis on expanding the Indian industrial base, there is an opportunity to make the LoC-linked tendering process more competitive and inclusive. Many stakeholders privately confessed that the process is not transparent and is geared to cater to a select few. The government must, therefore, use the new commitments to Nepal and Mauritius as an opportunity to revise the tendering process and to offer a level playing field. The bureaucracy must be kept at arm’s length from market operations in order not to replicate the very system of state patronage that the Indian PM hopes to dismantle.

In 2012, the total amount of open LoCs crossed $10 billion and this instrument is only likely to gain further prominence. Yet India is itself a developing country with urgent development needs of its own, and a limited budget. Thus the Modi administration must extract maximum ‘bang for the buck’ from LoCs, while making sure that the concessional lending programme can stand the strictest tests of public scrutiny. For this, the first step is to institute a stakeholder feedback process that would include the private sector, civil society and perhaps even unbiased voices from recipient countries. Recipient governments rarely critique the Indian government, as it would be considered ‘undiplomatic’. What would distinguish the new administration from its predecessors would be the willingness to actively solicit criticism and refine existing processes for the larger public good and efficacy of its primary instrument for economic diplomacy.

In the early post-independence years, the thrust of India’s external engagements and economic diplomacy (not necessarily described as such) was with countries with similar colonial experiences and economic realities in the neighbourhood and Africa. More recently, its engagements in groupings such as have resulted in new development financing instruments like the recently announced New Development Bank. The country’s involvement in the G20 following the financial crisis compelled India to commit to an IMF-led euro zone-focused stabilisation fund. The new government must now attempt to transition India’s towards a more deliberate, durable and definitional framework. Well-administered LoCs offer a great avenue to do this – and therefore must be given commensurate strategic priority and attention.


The writers are with the Observer Research Foundation, New Delhi

A LONG-TERM VISION FOR BRICS

Original link is here 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Why BRICS is important to Brazil

Image

Original article can be found here

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

                       

HOT TOPICS: BRICS

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

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

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

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

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

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

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

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

Generosity within BRICS offers China passport to power

The original article is available here

panda

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

 

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.

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

 

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, 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. 

Fourth BRICS Summit – Delhi Declaration / Samir live on BBC World News

Was on BBC this morning….was asked to discuss BRICS….

Ques 1 – China will dominate BRICS because of its money and might?

Ques 2 – How will India counter China at the BRICS?

Ques 3 – How can this group work together without common ideology (or something like that)?

Was at my charming best while basically saying…China will be an important player in any grouping – why only BRICS….the questions are posed incorrectly…BRICS is not a platform for India countering China….it is indeed an opportunity to take the edge of the bilateral …..and some people do not see common ideology as being necessary….(this Euro Centric fetish for “Common Humanity”) and with our individual and rich experiences we can find ways to developing pathways (unique) for an equitable and prosperous future….

Synergy and Complimentarity are the operative words and BRICS are rich with these possibilities.

For some in India as well – it is all a zero sum game….maybe it is …but they need to know the rules of arithmetic are changing and the nation state may not be the unit of measurement any more – The BRICS Stock Exchange is the business thumbs up to BRICS and the 4th Academic Forum was the “experts” support to it….many more to follow….

The skeptics can continue to earn their salaries…while we build a new platform 🙂

The Political will is expressed in the Delhi Declaration and it is positive, decisive and firm on what the BRICS need to do together and how they need to interact with the developed world on many common issues. I am certain that in this instance the BRICS surprised themselves …..in what they were able to agree to ….In Sanya the BRICS went wider and added South Africa….In Delhi the BRICS went deeper and added substance….

Happy BRICS Day

———————————————–

Fourth BRICS Summit – Delhi Declaration
March 29, 2012
Please find here the full version as PDF: Declaration Fourth_BRICS_Summit

1. We, the leaders of the Federative Republic of Brazil, the Russian Federation, the

Republic of India, the People’s Republic of China and the Republic of South Africa,

met in New Delhi, India, on 29 March 2012 at the Fourth BRICS Summit. Our

discussions, under the overarching theme, “BRICS Partnership for Global Stability,

Security and Prosperity”, were conducted in an atmosphere of cordiality and warmth

and inspired by a shared desire to further strengthen our partnership for common

development and take our cooperation forward on the basis of openness, solidarity,

mutual understanding and trust.

2. We met against the backdrop of developments and changes of contemporary global

and regional importance – a faltering global recovery made more complex by the

situation in the euro zone; concerns of sustainable development and climate change

which take on greater relevance as we approach the UN Conference on Sustainable

Development (Rio+20) and the Conference of Parties to the Convention on Biological

Diversity being hosted in Brazil and India respectively later this year; the upcoming

G20 Summit in Mexico and the recent 8th WTO Ministerial Conference in Geneva;

and the developing political scenario in the Middle East and North Africa that we

view with increasing concern. Our deliberations today reflected our consensus to

remain engaged with the world community as we address these challenges to global

well-being and stability in a responsible and constructive manner.

3. BRICS is a platform for dialogue and cooperation amongst countries that represent

43% of the world’s population, for the promotion of peace, security and development

in a multi-polar, inter-dependent and increasingly complex, globalizing world.

Coming, as we do, from Asia, Africa, Europe and Latin America, the transcontinental

dimension of our interaction adds to its value and significance.

4. We envision a future marked by global peace, economic and social progress and

enlightened scientific temper. We stand ready to work with others, developed and

developing countries together, on the basis of universally recognized norms of

international law and multilateral decision making, to deal with the challenges and the

opportunities before the world today. Strengthened representation of emerging and

developing countries in the institutions of global governance will enhance their

effectiveness in achieving this objective.

5. We are concerned over the current global economic situation. While the BRICS

recovered relatively quickly from the global crisis, growth prospects worldwide have

again got dampened by market instability especially in the euro zone. The build-up of

sovereign debt and concerns over medium to long-term fiscal adjustment in advanced

countries are creating an uncertain environment for global growth. Further, excessive

liquidity from the aggressive policy actions taken by central banks to stabilize their

domestic economies have been spilling over into emerging market economies,

fostering excessive volatility in capital flows and commodity prices. The immediate

priority at hand is to restore market confidence and get global growth back on track.

We will work with the international community to ensure international policy

coordination to maintain macroeconomic stability conducive to the healthy recovery

of the global economy.

6. We believe that it is critical for advanced economies to adopt responsible

macroeconomic and financial policies, avoid creating excessive global liquidity and

undertake structural reforms to lift growth that create jobs. We draw attention to the

risks of large and volatile cross-border capital flows being faced by the emerging

economies. We call for further international financial regulatory oversight and reform,

strengthening policy coordination and financial regulation and supervision

cooperation, and promoting the sound development of global financial markets and

banking systems.

7. In this context, we believe that the primary role of the G20 as premier forum for

international economic cooperation at this juncture is to facilitate enhanced

macroeconomic policy coordination, to enable global economic recovery and secure

financial stability, including through an improved international monetary and

financial architecture. We approach the next G20 Summit in Mexico with a

commitment to work with the Presidency, all members and the international

community to achieve positive results, consistent with national policy frameworks, to

ensure strong, sustainable and balanced growth.

8. We recognize the importance of the global financial architecture in maintaining the

stability and integrity of the global monetary and financial system. We therefore call

for a more representative international financial architecture, with an increase in the

voice and representation of developing countries and the establishment and

improvement of a just international monetary system that can serve the interests of all

countries and support the development of emerging and developing economies.

Moreover, these economies having experienced broad-based growth are now

significant contributors to global recovery.

9. We are however concerned at the slow pace of quota and governance reforms in the

IMF. We see an urgent need to implement, as agreed, the 2010 Governance and Quota

Reform before the 2012 IMF/World Bank Annual Meeting, as well as the

comprehensive review of the quota formula to better reflect economic weights and

enhance the voice and representation of emerging market and developing countries by

January 2013, followed by the completion of the next general quota review by

January 2014. This dynamic process of reform is necessary to ensure the legitimacy

and effectiveness of the Fund. We stress that the ongoing effort to increase the

lending capacity of the IMF will only be successful if there is confidence that the

entire membership of the institution is truly committed to implement the 2010 Reform

faithfully. We will work with the international community to ensure that sufficient

resources can be mobilized to the IMF in a timely manner as the Fund continues its

transition to improve governance and legitimacy. We reiterate our support for

measures to protect the voice and representation of the IMF’s poorest members.

10. We call upon the IMF to make its surveillance framework more integrated and

even-handed, noting that IMF proposals for a new integrated decision on surveillance

would be considered before the IMF Spring Meeting.

11. In the current global economic environment, we recognise that there is a pressing

need for enhancing the flow of development finance to emerging and developing

countries. We therefore call upon the World Bank to give greater priority to

mobilising resources and meeting the needs of development finance while reducing

lending costs and adopting innovative lending tools.

12. We welcome the candidatures from developing world for the position of the

President of the World Bank. We reiterate that the Heads of IMF and World Bank be

selected through an open and merit-based process. Furthermore, the new World Bank

leadership must commit to transform the Bank into a multilateral institution that truly

reflects the vision of all its members, including the governance structure that reflects

current economic and political reality. Moreover, the nature of the Bank must shift

from an institution that essentially mediates North-South cooperation to an institution

that promotes equal partnership with all countries as a way to deal with development

issues and to overcome an outdated donor- recipient dichotomy.

13. We have considered the possibility of setting up a new Development Bank for

mobilizing resources for infrastructure and sustainable development projects in

BRICS and other emerging economies and developing countries, to supplement the

existing efforts of multilateral and regional financial institutions for global growth and

development. We direct our Finance Ministers to examine the feasibility and viability

of such an initiative, set up a joint working group for further study, and report back to

us by the next Summit.

14. Brazil, India, China and South Africa look forward to the Russian Presidency of

G20 in 2013 and extend their cooperation.

15. Brazil, India, China and South Africa congratulate the Russian Federation on its

accession to the WTO. This makes the WTO more representative and strengthens the

rule-based multilateral trading system. We commit to working together to safeguard

this system and urge other countries to resist all forms of trade protectionism and

disguised restrictions on trade.

16. We will continue our efforts for the successful conclusion of the Doha Round,

based on the progress made and in keeping with its mandate. Towards this end, we

will explore outcomes in specific areas where progress is possible while preserving

the centrality of development and within the overall framework of the single

undertaking. We do not support plurilateral initiatives that go against the fundamental

principles of transparency, inclusiveness and multilateralism. We believe that such

initiatives not only distract members from striving for a collective outcome but also

fail to address the development deficit inherited from previous negotiating rounds.

Once the ratification process is completed, Russia intends to participate in an active

and constructive manner for a balanced outcome of the Doha Round that will help

strengthen and develop the multilateral trade system.

17. Considering UNCTAD to be the focal point in the UN system for the treatment of

trade and development issues, we intend to invest in improving its traditional

activities of consensus-building, technical cooperation and research on issues of

economic development and trade. We reiterate our willingness to actively contribute

to the achievement of a successful UNCTAD XIII, in April 2012.

18. We agree to build upon our synergies and to work together to intensify trade and

investment flows among our countries to advance our respective industrial

development and employment objectives.We welcome the outcomes of the second

Meeting of BRICS Trade Ministers held in New Delhi on 28 March 2012. We support

the regular consultations amongst our Trade Ministers and consider taking suitable

measures to facilitate further consolidation of our trade and economic ties. We

welcome the conclusion of the Master Agreement on Extending Credit Facility in

Local Currency under BRICS Interbank Cooperation Mechanism and the Multilateral

Letter of Credit Confirmation Facility Agreement between our EXIM/Development

Banks. We believe that these Agreements will serve as useful enabling instruments

for enhancing intra-BRICS trade in coming years.

19. We recognize the vital importance that stability, peace and security of the Middle

East and North Africa holds for all of us, for the international community, and above

all for the countries and their citizens themselves whose lives have been affected by

the turbulence that has erupted in the region. We wish to see these countries living in

peace and regain stability and prosperity as respected members of the global

community.

20. We agree that the period of transformation taking place in the Middle East and

North Africa should not be used as a pretext to delay resolution of lasting conflicts but

rather it should serve as an incentive to settle them, in particular the Arab-Israeli

conflict. Resolution of this and other long-standing regional issues would generally

improve the situation in the Middle East and North Africa. Thus we confirm our

commitment to achieving comprehensive, just and lasting settlement of the Arab-

Israeli conflict on the basis of the universally recognized international legal

framework including the relevant UN resolutions, the Madrid principles and the Arab

Peace Initiative. We encourage the Quartet to intensify its efforts and call for greater

involvement of the UN Security Council in search for a resolution of the Israeli-

Palestinian conflict. We also underscore the importance of direct negotiations

between the parties to reach final settlement. We call upon Palestinians and Israelis to

take constructive measures, rebuild mutual trust and create the right conditions for

restarting negotiations, while avoiding unilateral steps, in particular settlement

activity in the Occupied Palestinian Territories.

21. We express our deep concern at the current situation in Syria and call for an

immediate end to all violence and violations of human rights in that country. Global

interests would best be served by dealing with the crisis through peaceful means that

encourage broad national dialogues that reflect the legitimate aspirations of all

sections of Syrian society and respect Syrian independence, territorial integrity and

sovereignty. Our objective is to facilitate a Syrian-led inclusive political process, and

we welcome the joint efforts of the United Nations and the Arab League to this end.

We encourage the Syrian government and all sections of Syrian society to

demonstrate the political will to initiate such a process, which alone can create a new

environment for peace. We welcome the appointment of Mr. Kofi Annan as the Joint

Special Envoy on the Syrian crisis and the progress made so far, and support him in

continuing to play a constructive role in bringing about the political resolution of the

crisis.

22. The situation concerning Iran cannot be allowed to escalate into conflict, the

disastrous consequences of which will be in no one’s interest. Iran has a crucial role to

play for the peaceful development and prosperity of a region of high political and

economic relevance, and we look to it to play its part as a responsible member of the

global community. We are concerned about the situation that is emerging around

Iran’s nuclear issue. We recognize Iran’s right to peaceful uses of nuclear energy

consistent with its international obligations, and support resolution of the issues

involved through political and diplomatic means and dialogue between the parties

concerned, including between the IAEA and Iran and in accordance with the

provisions of the relevant UN Security Council Resolutions.

23. Afghanistan needs time, development assistance and cooperation, preferential

access to world markets, foreign investment and a clear end-state strategy to attain

lasting peace and stability. We support the global community’s commitment to

Afghanistan, enunciated at the Bonn International Conference in December 2011, to

remain engaged over the transformation decade from 2015-2024. We affirm our

commitment to support Afghanistan’s emergence as a peaceful, stable and democratic

state, free of terrorism and extremism, and underscore the need for more effective

regional and international cooperation for the stabilisation of Afghanistan, including

by combating terrorism.

24. We extend support to the efforts aimed at combating illicit traffic in opiates

originating in Afghanistan within the framework of the Paris Pact.

25. We reiterate that there can be no justification, whatsoever, for any act of terrorism

in any form or manifestation. We reaffirm our determination to strengthen

cooperation in countering this menace and believe that the United Nations has a

central role in coordinating international action against terrorism, within the

framework of the UN Charter and in accordance with principles and norms of

international law. We emphasize the need for an early finalization of the draft of the

Comprehensive Convention on International Terrorism in the UN General Assembly

and its adoption by all Member States to provide a comprehensive legal framework to

address this global scourge.

26. We express our strong commitment to multilateral diplomacy with the United

Nations playing a central role in dealing with global challenges and threats. In this

regard, we reaffirm the need for a comprehensive reform of the UN, including its

Security Council, with a view to making it more effective, efficient and representative

so that it can deal with today’s global challenges more successfully. China and Russia

reiterate the importance they attach to the status of Brazil, India and South Africa in

international affairs and support their aspiration to play a greater role in the UN.

27. We recall our close coordination in the Security Council during the year 2011, and

underscore our commitment to work together in the UN to continue our cooperation

and strengthen multilateral approaches on issues pertaining to global peace and

security in the years to come.

28. Accelerating growth and sustainable development, along with food, and energy

security, are amongst the most important challenges facing the world today, and

central to addressing economic development, eradicating poverty, combating hunger

and malnutrition in many developing countries. Creating jobs needed to improve

people’s living standards worldwide is critical. Sustainable development is also a key

element of our agenda for global recovery and investment for future growth. We owe

this responsibility to our future generations.

29. We congratulate South Africa on the successful hosting of the 17th Conference of

Parties to the United Nations Framework Convention on Climate Change and the 7th

Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol

(COP17/CMP7) in December 2011. We welcome the significant outcomes of the

Conference and are ready to work with the international community to implement its

decisions in accordance with the principles of equity and common but differentiated

responsibilities and respective capabilities.

30. We are fully committed to playing our part in the global fight against climate

change and will contribute to the global effort in dealing with climate change issues

through sustainable and inclusive growth and not by capping development. We

emphasize that developed country Parties to the UNFCCC shall provide enhanced

financial, technology and capacity building support for the preparation and

implementation of nationally appropriate mitigation actions of developing countries.

31. We believe that the UN Conference on Sustainable Development (Rio+20) is a

unique opportunity for the international community to renew its high-level political

commitment to supporting the overarching sustainable development framework

encompassing inclusive economic growth and development, social progress and

environment protection in accordance with the principles and provisions of the Rio

Declaration on Environment and Development, including the principle of common

but differentiated responsibilities, Agenda 21 and the Johannesburg Plan of

Implementation.

32. We consider that sustainable development should be the main paradigm in

environmental issues, as well as for economic and social strategies. We acknowledge

the relevance and focus of the main themes for the Conference namely, Green

Economy in the context of Sustainable Development and Poverty Eradication

(GESDPE) as well as Institutional Framework for Sustainable Development (IFSD).

33. China, Russia, India and South Africa look forward to working with Brazil as the

host of this important Conference in June, for a successful and practical outcome.

Brazil, Russia, China and South Africa also pledge their support to working with

India as it hosts the 11th meeting of the Conference of Parties to the Convention on

Biological Diversity in October 2012 and look forward to a positive outcome. We will

continue our efforts for the implementation of the Convention and its Protocols, with

special attention to the Nagoya Protocol on Access to Genetic Resources and the Fair

and Equitable Sharing of Benefits Arising from their Utilization, Biodiversity

Strategic Plan 2011-2020 and the Resource Mobilization Strategy.

34. We affirm that the concept of a ‘green economy’, still to be defined at Rio+20,

must be understood in the larger framework of sustainable development and poverty

eradication and is a means to achieve these fundamental and overriding priorities, not

an end in itself. National authorities must be given the flexibility and policy space to

make their own choices out of a broad menu of options and define their paths towards

sustainable development based on the country’s stage of development, national

strategies, circumstances and priorities. We resist the introduction of trade and

investment barriers in any form on the grounds of developing green economy.

35. The Millennium Development Goals remain a fundamental milestone in the

development agenda. To enable developing countries to obtain maximal results in

attaining their Millennium Development Goals by the agreed time-line of 2015, we

must ensure that growth in these countries is not affected. Any slowdown would have

serious consequences for the world economy. Attainment of the MDGs is

fundamental to ensuring inclusive, equitable and sustainable global growth and would

require continued focus on these goals even beyond 2015, entailing enhanced

financing support.

36. We attach the highest importance to economic growth that supports development

and stability in Africa, as many of these countries have not yet realised their full

economic potential. We will take our cooperation forward to support their efforts to

accelerate the diversification and modernisation of their economies. This will be

through infrastructure development, knowledge exchange and support for increased

access to technology, enhanced capacity building, and investment in human capital,

including within the framework of the New Partnership for Africa’s Development

(NEPAD).

37. We express our commitment to the alleviation of the humanitarian crisis that still

affects millions of people in the Horn of Africa and support international efforts to

this end.

38. Excessive volatility in commodity prices, particularly those for food and energy,

poses additional risks for the recovery of the world economy. Improved regulation of

the derivatives market for commodities is essential to avoid destabilizing impacts on

food and energy supplies. We believe that increased energy production capacities and

strengthened producer-consumer dialogue are important initiatives that would help in

arresting such price volatility.

39. Energy based on fossil fuels will continue to dominate the energy mix for the

foreseeable future. We will expand sourcing of clean and renewable energy, and use

of energy efficient and alternative technologies, to meet the increasing demand of our

economies and our people, and respond to climate concerns as well. In this context,

we emphasise that international cooperation in the development of safe nuclear

energy for peaceful purposes should proceed under conditions of strict observance of

relevant safety standards and requirements concerning design, construction and

operation of nuclear power plants. We stress IAEA’s essential role in the joint efforts

of the international community towards enhancing nuclear safety standards with a

view to increasing public confidence in nuclear energy as a clean, affordable, safe and

secure source of energy, vital to meeting global energy demands.

40. We have taken note of the substantive efforts made in taking intra-BRICS

cooperation forward in a number of sectors so far. We are convinced that there is a

storehouse of knowledge, know-how, capacities and best practices available in our

countries that we can share and on which we can build meaningful cooperation for the

benefit of our peoples. We have endorsed an Action Plan for the coming year with

this objective.

41. We appreciate the outcomes of the Second Meeting of BRICS Ministers of

Agriculture and Agrarian Development at Chengdu, China in October 2011. We

direct our Ministers to take this process forward with particular focus on the potential

of cooperation amongst the BRICS to contribute effectively to global food security

and nutrition through improved agriculture production and productivity, transparency

in markets and reducing excessive volatility in commodity prices, thereby making a

difference in the quality of lives of the people particularly in the developing world.

42. Most of BRICS countries face a number of similar public health challenges,

including universal access to health services, access to health technologies, including

medicines, increasing costs and the growing burden of both communicable and noncommunicable

diseases. We direct that the BRICS Health Ministers meetings, of

which the first was held in Beijing in July 2011, should henceforth be institutionalized

in order to address these common challenges in the most cost-effective, equitable and

sustainable manner.

43. We have taken note of the meeting of S&T Senior Officials in Dalian, China in

September 2011, and, in particular, the growing capacities for research and

development and innovation in our countries. We encourage this process both in

priority areas of food, pharma, health and energy as well as basic research in the

emerging inter-disciplinary fields of nanotechnology, biotechnology, advanced

materials science, etc. We encourage flow of knowledge amongst our research

institutions through joint projects, workshops and exchanges of young scientists.

44. The challenges of rapid urbanization, faced by all developing societies including

our own, are multi-dimensional in nature covering a diversity of inter-linked issues.

We direct our respective authorities to coordinate efforts and learn from best practices

and technologies available that can make a meaningful difference to our societies. We

note with appreciation the first meeting of BRICS Friendship Cities held in Sanya in

December 2011 and will take this process forward with an Urbanization and Urban

Infrastructure Forum along with the Second BRICS Friendship Cities and Local

Governments Cooperation Forum.

45. Given our growing needs for renewable energy resources as well as on energy

efficient and environmentally friendly technologies, and our complementary strengths

in these areas, we agree to exchange knowledge, know-how, technology and best

practices in these areas.

46. It gives us pleasure to release the first ever BRICS Report, coordinated by India,

with its special focus on the synergies and complementarities in our economies. We

welcome the outcomes of the cooperation among the National Statistical Institutions

of BRICS and take note that the updated edition of the BRICS Statistical Publication,

released today, serves as a useful reference on BRICS countries.

47. We express our satisfaction at the convening of the III BRICS Business Forum

and the II Financial Forum and acknowledge their role in stimulating trade relations

among our countries. In this context, we welcome the setting up of BRICS Exchange

Alliance, a joint initiative by related BRICS securities exchanges.

48. We encourage expanding the channels of communication, exchanges and peopleto-

people contact amongst the BRICS, including in the areas of youth, education,

culture, tourism and sports.

49. Brazil, Russia, China and South Africa extend their warm appreciation and sincere

gratitude to the Government and the people of India for hosting the Fourth BRICS

Summit in New Delhi.

50. Brazil, Russia, India and China thank South Africa for its offer to host the Fifth

BRICS Summit in 2013 and pledge their full support.

Delhi Action Plan

1. Meeting of BRICS Foreign Ministers on sidelines of UNGA.

2. Meetings of Finance Ministers and Central Bank Governors on sidelines of G20

meetings/other multilateral (WB/IMF) meetings.

3. Meeting of financial and fiscal authorities on the sidelines of WB/IMF meetings as

well as stand-alone meetings, as required.

4. Meetings of BRICS Trade Ministers on the margins of multilateral events, or standalone

meetings, as required.

5. The Third Meeting of BRICS Ministers of Agriculture, preceded by a preparatory

meeting of experts on agro-products and food security issues and the second Meeting

of Agriculture Expert Working Group.

6. Meeting of BRICS High Representatives responsible for national security.

7. The Second BRICS Senior Officials’ Meeting on S&T.

8. The First meeting of the BRICS Urbanisation Forum and the second BRICS

Friendship Cities and Local Governments Cooperation Forum in 2012 in India.

9. The Second Meeting of BRICS Health Ministers.

10. Mid-term meeting of Sous-Sherpas and Sherpas.

11. Mid-term meeting of CGETI (Contact Group on Economic and Trade Issues).

12. The Third Meeting of BRICS Competition Authorities in 2013.

13. Meeting of experts on a new Development Bank.

14. Meeting of financial authorities to follow up on the findings of the BRICS Report.

15. Consultations amongst BRICS Permanent Missions in New York, Vienna and

Geneva, as required.

16. Consultative meeting of BRICS Senior Officials on the margins of relevant

environment and climate related international fora, as necessary.

17. New Areas of Cooperation to explore:

(i) Multilateral energy cooperation within BRICS framework.

(ii) A general academic evaluation and future long-term strategy for BRICS.

(iii) BRICS Youth Policy Dialogue.

(iv) Cooperation in Population related issues.

New Delhi

March 29, 2012