OECD

BRICS and mortar for India’s global role

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

 

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

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

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

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

Role for three

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

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

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

Barrier against slowdown

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

For inclusive growth

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

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

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

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

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

Article in “The Hindu”: Giving BRICS a non-western vision.

by Samir Saran and Vivan Sharan
New Delhi, February 14, 2012

Please find here the link to the original article.

India is all set to host the Fourth BRICS Summit in March this year. The journey from Yekaterinburg to New Delhi has demonstrated that the political will amongst member nations to sustain this contemporary multilateral process is strong. Along the way South Africa has been welcomed into the original “group of four.” Yet, the challenge for BRICS has always been, and continues to be, the articulation of a common vision. After all, the member nations are at different stages of political and socio-economic development. While some have evolved economically and militarily they are yet to succeed in enabling plural governance structures, while others who represent modern democratic societies are being challenged domestically by inequalities and faultlines created by caste, colour, religion and history. The BRICS nations do have a historic opportunity — post the global financial crisis and the recent upheavals in various parts of the world — to create or rebuild a new sustainable and relevant multilateral platform, one that seeks to serve the interests of the emerging world as well as manage the great shift from the west to the east.

Way forward

Indeed, two out of the five economies in BRICS, China and Russia, have already emerged, and are veritable heavyweights in any relevant global political and economic discourse. Why then should BRICS depend on sluggish multilateral channels such as the World Trade Organisation (WTO), or try to imbibe didactic, non-pragmatic western perspectives on issues purely of common interest? It is amusing to be offered solutions to poverty and inequality, bottom of the pyramid health models, low cost housing options, education delivery, energy and water provision, et al by the wise men from organisations and institutions of the Atlantic countries. When was the last time they experienced poverty of this scale, had energy deficiency at this level and suffered from health challenges that are as enormous? The responses to the challenges faced by the developing world reside in solutions that have been fashioned organically.

BRICS could systematically create frameworks offering policy and development options for the emerging and developing world and assume the role of a veritable policy think tank for such nations, very similar to the role played by the Organisation for Economic Co-operation and Development (OECD) in the 20th-century world. Thus BRICS must create its own research and policy secretariat (for want of a better term) for addressing specific issues such as trade and market reforms, urbanisation challenges, regional crises responses, universal healthcare, food security and sustainable development (many of these issues are being discussed year at the BRICS Academic Forum in March).

Non-traditional security

The OECD’s stated mission is to “promote policies that will improve the economic and social well-being of people around the world.” Although the BRICS nations account for a fourth of global GDP and represent over 40 per cent of the total global population, none of them are OECD members as yet; instead what they have is “enhanced engagement” with the OECD. The BRICS nations have already created a viable platform for “enhanced engagement” with each other through the institutionalisation of the annual Leader’s summit, preceded by an Academic Forum of BRICS research institutions and a Financial Forum of development banks (and this year, a newly instituted Economic Research Group will focus on specific economic issues). The dominant discourses within each of the BRICS nations today are centred on non-traditional security, which can be efficiently addressed through collective market based response mechanisms.

Despite intra-BRICS trade volumes rising exponentially over the past decade, there are few instances of actual financial integration within the consortium (aside from the case of Russia and China starting bilateral currency trading last year). A useful first step to enable this would be to institute a code of liberalisation of capital movements across the five countries, as a modern day parallel to the 1961 OECD code with an equivalent mandate. In the current environment of global economic uncertainty, multinational corporations are perhaps the most adaptable and profitable drivers of economic growth. Therefore, at the outset, the creation of favourable policies for multinationals to conduct business across BRICS would be well justified. Moreover, just as the OECD has a comprehensive set of guidelines that set benchmarks for various economic activities, from testing standards for agricultural goods to corporate governance of state owned enterprises, the BRICS nations could create their own guidelines on the best practices and standards within the consortium.

Finally, within the BRICS nations, there are both import and export centric economies. This provides an excellent template for a realistic multilateral negotiating platform where obdurate self serving bargaining positions are natural starting points. The stalled discussions at the Doha Round of the WTO are an example of the difficulties of consensus building. Since the BRICS nations are already addressing a plethora of issues covered by the Doha Round, they are well placed to move ahead of it, and resolve mutual positions and common concerns.

What started as an investment pitch by Goldman Sachs (BRIC) has evolved into a useful multilateral instrument, for the BRICS nations. BRICS must now move on from being a grouping of individual nations, discussing agendas, to becoming a “go-to” institution for setting regional and global agendas. The essence and ethos of such an institution must in turn, flow from the inorganic prism of stability, security and growth for all. Stability from business cycles and financial governance failures, security from traditional and non-traditional threats posed to humans and the environment, and unbiased growth and prosperity are common aspirations for all BRICS nations, and they must be achieved and delivered from within. The Fourth BRICS Academic Forum will attempt to address these imperatives.

Samir Saran is Vice-President and Vivan Sharan an Associate Fellow at the Observer Research Foundation. The foundation is the Indian coordinator for the Fourth BRICS Academic Forum on March 5-6, in New Delhi.