by Samir Saran and Vivan Sharan
Please find here the link to the PDF-version of the article: ria novosti article
by Samir Saran and Vivan Sharan
Please find here the link to the PDF-version of the article: ria novosti article
29th of March, 2012
Please find here the link to the original article.
It may be an idiosyncratic club, but should it therefore be written off? As leaders of BRICS—Brazil, Russia, India, China and South Africa—gather in New Delhi for a summit to prove that their five-member group is something ‘solid’ (a word Indian PM Manmohan Singh has used in an Indo-Pak context), rather than just another talk shop, critics across the world have not been able to hide their derision. The interests of these countries are far too divergent, they mutter, to result in anything that could matter.
For exponents of the idea, however, the five represent not just a fifth of global output, but also a dynamic geo-economic bloc on the ascendant. It owes its name to a 2001 Goldman Sachs report that projected a world economy under BRIC domination (South Africa was admitted only in 2010) within half a century. Today, it is a club more than a clever acronym, and one with an agenda too. “[The group] seeks political dialogue towards a more democratic multipolar order,” says senior Indian bureaucrat Sudhir Vyas, adding that the global power shift currently underway calls for “corresponding transformations in global governance”.
The buzzword at the Delhi summit is cooperation. Says Bipul Chatterjee of Consumer Unity & Trust Society: “These leaders are likely to float the idea of a development bank to be capitalised by BRICS, or perhaps all developing nations, to fund the development aspirations of the poor world.” This aim has its origin in Manmohan Singh’s 2010 suggestion that the world’s surplus savings be funnelled into emerging economies short of capital for investment in infrastructure and other public utility projects. Says Samir Saran, a BRICS expert with the Observer Research Foundation: “The proposed bank could tap these savings by creating sovereign guaranteed debt instruments to leverage more money for these economies.”
The other area of mutual interest is trade. As a booster, of help would be an agreement among the five countries’ central banks to grant one another access to loans in local currencies. Saran says the BRICS platform would “offer the five ‘R’s: rupee, rouble, renminbi, rand and real” for trade payments as part of a test settlement mechanism, “before internationalising these currencies”. The goal here is to reduce dependence on the US dollar as an international means of exchange.
Sceptics do not see much coming of it. Yet, it is worth noting that the five have managed to get this far as a club without letting bilateral bickering get in the way. This in itself is commendable. Perhaps BRICS bashers should wait a while before writing it off.
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.
The BRICS countries’ leaders are preparing for their annual meeting. These countries make up 42 percent of the world’s population and a quarter of its landmass. They are also responsible for 20 percent of the Global GDP and
own a whopping 75 percent of the foreign reserve worldwide. In these tough times for world economics these countries are trying to find a solution for the situation.
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
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
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
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
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
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
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
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
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
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.
March 29, 2012
New Delhi, 27th of March 2012
Please find here the link to the original article
If conceptualised carefully, the Bank can help rebalance the global economy leading to equitable and resilient growth.
Even as New Delhi prepares for the arrival of BRICS Heads of States towards the later part of the week, media and experts across the world continue to debate the relevance, capacity and cohesiveness of the grouping. The common refrain in the western press is that it is a ‘motley crew’ with little in common and therefore with little capability to create institutions and multilateral platforms of substance. Well, they may be in for a surprise. In fact, BRICS may also surprise itself.
Besides the usual declarations on cooperation on political matters, social challenges, climate and energy, food and water, health and education, industry and trade, BRICS is likely to make two significant announcements this time, which will, in many ways, mark its coming of age. First — the formal launch of the “BRICS Exchange Alliance” in which the major stock exchanges of BRICS countries will offer investors index-based derivatives trading options of exchanges in domestic currency. This will allow investors within BRICS to invest in each other’s progress, expand the offerings of the individual exchanges, facilitate greater liquidity, while simultaneously strengthening efforts to deepen financial integration through market-determined mechanisms. From talking to people in the know, this alliance is good to go, and the operational modalities around currency, settlement cycles and inter-exchange regulatory coordination are all issues that have been thought through and resolved.
The second announcement that has people most interested is on the much discussed “BRICS Bank” or the “South-South Bank” that many consider to be an Indian proposal for creating an institution that can serve the development needs and aspirations of the emerging and developing world. This proposal saw much debate (some heated) at the recent BRICS Academic Forum and surely was a key issue for deliberations at the recently concluded BRICS Finance Ministers Meeting. There are many complex and some contested issues that need to be discussed and thought through, but due to the growing support for such an institution among BRICS it is almost certain that the leaders will, at the very least, announce a working group to study the feasibility and operational modalities of such a multilateral bank. Whether they are bold enough to suggest a time line for its establishment remains to be seen but in the opinion of many, it is an idea whose time has come.
Foremost amongst the reasons for the creation of the institution is the need for BRICS to assume pole position in global financial governance. BRICS nations represent nearly half the world’s population. Two of them are already among the top five economies in purchasing power parity terms, and four are in the top 10. If conceptualised carefully, such an institution will have the potential to reshape and realign the global development agenda positively. It can also help to efficiently redistribute and redirect savings available with the emerging economies to infrastructure and social development in the same regions and, therefore, contribute to the rebalancing of the global economy.
Several multilateral banks already exist, that serve as templates for creating a new institution. The World Bank, which is deeply embedded in the global development narratives, serves as a particularly relevant example. If a multilateral BRICS bank is instituted, its functions would not supplant the role of existing multilateral banks that support development, but rather, supplement them. And this supplementary instrument is needed as multilateral banks such as the World Bank, ADB, etc., have not been growing significantly in terms of the total amount of loans disbursed. While there was a jump in disbursals following the financial crisis, the normalisation process is already under way. On the other hand, demand for funds for infrastructure and social transformation grows unabated in BRICS and the developing world.
But how would the BRICS Bank work? There are doubts expressed in some quarters on the process of capitalisation itself. The Bank would have to raise capital from open market operations; floating debt to finance lending operations. While the reliance on markets for raising capital would make the fiscal asymmetries within BRICS nations irrelevant, the sovereign ratings of some of the members, who will collectively be the shareholders of a BRICS Bank, are barely investment grade. This would limit the amount of capital that could be raised from the financial markets and also affect the cost of capital and therefore the cost of lending. One suggested solution is the sequestration of a proportion of foreign reserves of BRICS members into a trust fund that would back-stop the borrowed capital. In the case of the World Bank, the total paid-up capital is around 10 per cent while the rest is AAA rated ‘callable capital’, which has never been requisitioned. To enhance the creditworthiness further, existing multilateral banks, and other western countries could also be given minority stakes.
The second element that is always embedded in the discussions around the bank is the role of China. An impression is sought to be created that with its massive monetary reserves and political clout, China may exert undue influence in this bank. This is unlikely. Such a bank will not require too much paid-up capital (relative to the average size of respective sovereign reserves) if intelligent financial engineering can help sequester foreign reserves. This would mean that the smallest BRICS economy, South Africa, could easily commit an amount similar to that of China in the capital structure. Such doubts could be further allayed with the institution of a rotating Presidency of, say, a two-year term that could initially be restricted to the BRICS countries alone. In any case, the charter of any modern day banking institution with sovereign stakeholders would need to include the mandates of transparency and independence, which would make the institution as viable as any.
The third aspect that remains central to the viability of such a bank is the currency of business. There would be expectations that such a bank would transact in local currencies where possible and in international currency when needed. The bank would need to work with the right currency mix to mitigate credit risk while simultaneously balancing intricate political dynamics within BRICS. For instance, being a current account deficit country, India would not be averse to the U.S. dollar being the currency of disbursal while Brazil with its appreciating “Real’ may prefer local currency. The Chinese may see this bank as a platform for promoting the Renminbi as the currency of choice, especially among the emerging and developing countries. Ultimately, the right mix would need to take into account monetary policy and exchange rate imperatives of each of the primary sovereign stakeholders and in a manner that makes this venture uncomplicated and attractive to other stakeholders as well.
The fourth aspect is the business mandate of such a bank. An effective development bank would have to integrate the multiple economic priorities. Key areas such as infrastructure and the medium and small scale enterprises sector could be natural starting points. The Brazilian Development Bank (BNDES) could be considered an exemplar. The BNDES disbursed close to $140 billion in 2011, with around 30 per cent going to the medium to small enterprises sector (MSME) and about 40 per cent going to large infrastructure projects. The BNDES also played a crucial role in stabilising the Brazilian economy after the financial crisis by stepping up development assistance. Similarly, a BRICS Bank could also assume the role of a financial support mechanism which appropriately responds to the variabilities in the global economy.
Corporations are the primary growth drivers of BRICS economies. They create economic momentum, new business opportunities and, most importantly, in the context of BRICS, employment. The creation of SPVs to cater to the investment and insurance needs of corporations would therefore complement the development agenda. The World Bank’s International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) provide readymade frameworks. The IFC provides investment solutions for the private sector through services such as equity finance and structured finance, while the MIGA provides non commercial risk insurance guarantees. Guarantees against political risk — which is a significant investment constraint in emerging markets — could facilitate a spurt of new business activity within BRICS, and lest we imagine this instrument to be risk-laden, MIGA has paid only six insurance claims since it was set up in 1988 and needs no counter guarantees.
Need for consensus
BRICS is in transition and cannot afford to lose growth momentum. Multilateral institutions such as a BRICS Bank can aid in sustaining directed, equitable and resilient growth. A consensus on the creation of such an institution would be a very real expression of intent by BRICS to craft alternative development trajectories to those passed down by the OECD countries. And it is also time to Bank with BRICS.
Samir Saran is Vice-President and Vivan Sharan an Associate Fellow at the Observer Research Foundation. The foundation hosted the BRICS Academic Forum in March this year.
Economic Times of India
14th of March 2012
Please find here the PDF version of Article – Building a new world1
The 4th BRICS Academic Forum recently concluded in New Delhi. Over 60 delegates representing academic institutions, think tanks and expert community from the member countries participated in substantial debates that covered virtually every challenge and opportunity of contemporary times. The debates were intense, sometimes combative but almost always conducted among friends. This was the key takeaway from this meeting. The community is strong, it is aware of the differences, eager to resolve those and is comfortable with the irresolvables. The skeptics of BRICS for four years, would now need to rethink, this group has evolved, this group sees potential in greater and deeper engagement, and this group is capable of proposing bold and visionary ideas at the New Delhi Summit later this month and in the other interactions before and after.
This was not always the case and we only have to recall the early days of the relationship. To anyone witnessing one of the early Track 2 interactions on a cold day in Moscow in 2008, it would have seemed improbable that the grouping would come this far. There was early hesitance and unformed agendas among each of the experts gathered from the four countries (at that time BRIC). The Brazilian experts were unsure of their being there in the first place. A very prominent diplomat from Brazil saying, “why are we here, why do you need us, you are all neighbours and should talk amongst yourselves”. The Russians at that time, and who must be credited for the inception of the BRIC idea, saw in it a political opportunity to create a grouping of that could counter the Atlantic alliance and the Western economic and political weight. They were to be dissappointed, India and China were already deeply integrated with the US and EU in the arena of trade and economics and would not play ball. The experts from China liked the BRIC idea, which could be another instrument for projecting their growing pole position in world affairs and India was beginning to manage the nuances of diverse relationships in multi-polar world. It had also learnt from the SCO experience and this time it would not demur.
However, the early days of the conversations amongst experts and indeed among the policy makers from these countries lacked detail. This has changed, from the macro discussions on global governance, financial architecture, security and greater coordination, the discussions today focus on the substantive, on experince sharing, on creating institutions and linking up existing ones. In the fourth year of the BRICS (South Africa joined last year), the group has come of age. This is attested to by two facts. First, the experts from the four countries have signed an agreement to step up their interactions which till now have been sporadic and on the sidelines of the Leaders Summit and two, the wide ranging recommendations that the experts forum has submitted for the consideration of the Leaders at the summit in New Delhi demonstrate the limitless possibilities for the grouping.
The Forum’s recommendations to the 4th BRICS Leaders Summit to be held in New Delhi on March 29th are relevant and actionable. They are the result of intense discussions, debates and negotiations between the delegates on common challenges and opportunities faced by BRICS members, as they seek to set the global agendas for governance and development going forward. The theme for this year’s Academic Forum was “Stability, Security and Growth” – all common imperatives for the emerging and developing BRICS nations.
17 policy recommendations were carefully crafted by the Forum and are centred on key priorities for BRICS within the aegis of governance, socio-economic development, security and growth. The mandate of the Forum was to provide concrete policy alternatives to BRICS Leaders and to the credit of the delegates this year, the recommendations may have lived up to the mandate. The Forum deliberated context specific micro debates embedded within larger narratives. Varied and significant themes were addressed including the articulation of a common vision for the future; a framework to respond to regional and global crises; climate change and sustainable resource use; urbanization and its associated challenges; improving access to healthcare at all levels; scaling up and implementing new education and skilling initiatives; the conceptualization of financial mechanisms to support and drive economic growth; and finally sharing technologies, innovations and improving the cooperation across industrial sectors and geographies.
The Forum deliberated upon two distinct sets of engagement. One set of engagements is through research and initiatives that are “Intra-BRICS” in nature. These involve experience sharing across social policy, resource efficiency, poverty alleviation programmes, sustainable development ideas, innovation and growth. Each of these themes can be effectively mapped to help tailor policy within BRICS. The recommendations highlight the possibilities for enhancing such engagements through exchange of institutional experiences and processes, free flow of scholars and students, joint policy research, capacity and capability building for facilitating such interactions.
The second set of engagements and outcomes pertain to interaction of BRICS with other nations, external actors and groupings at various multi-lateral forums and institutions. These are reflected in the recommendations pertaining to climate policies, Rio +20, financial crisis management, traditional security threats, terrorism and other new threats and global challenges around health, IPR and development.
The Forum provided a valuable platform for exchange of perspectives between delegates without adhering to national positions or party loyalties. There were heated debates on issues such as the possible institutionalisation of a BRICS Development Bank and an Infrastructure Investment Fund that could assist in the development aspirations of the BRICS and other developing countries. The discussions on the setting up on new, credible institutions to initially supplement and eventually substitute existing financial institutions such as the World Bank and IMF reflect the strong desire of BRICS to move ahead and away from the traditional development agendas of 20th century institutions that are today incapable of empathising with some of the realities and aspirations of the 21st century. This is perhaps a reflection on the way Bretton Woods Institutions are managed and governed and indeed to their legitimacy itself.
The recommendations reveal that BRICS view the sustainable development agenda through the lens of inclusive growth and equitable development primarily. The recommendations have also clarified that BRICS will continue to focus on achieving efficiency gains in resource use. Both these outcomes point towards resolute and far sighted policy guidance by the Forum. Climate change mitigation debates which have become a proxy for “Promoting Green Technology” and indeed are an outcome of “re-industrialisation policy” of some EU countries were conspicuous by their absence from the debates. Instead, with “plurality in prosperity” as a common ideal, the outcomes also signify that the research community within BRICS want the sustainability discourse to shift from one that emphasises common responsibility to one that emphasises common prosperity. This means that BRICS must attempt to reorient consumption patterns and energy use globally, towards sustainable trajectories. The BRICS Leaders would do well to replicate the cohesiveness of the BRICS academics in the articulation of their vision for creating sustainable economies, ecologies and societies. Similarly the promotion of cultural cooperation, establishing innovation linkages, sharing pathways to universal healthcare and medicine for all, strenghthening indigenous knowledge are all recommendations that are timely and appropriate.
The gradual transition process of BRICS becoming the global agenda setters has been one of the more exciting developments to watch and study. While sceptics may still dismiss the possibility of BRICS being “rule-makers”, it is unlikely that they will not influence “rule-making” processes. The experts at the forum were unambiguous in their vision for the grouping. While recognising that in many instances BRICS might eventually yield to sub optimal policy formulations due to national agendas and geo-political constraints, they were determined that the incubation period is over and now the bar must always be set high and the leaders must be ambitious. In the words of one of the delegates at the 4th BRICS Academic Forum, BRICS have indeed created a “new geography of cooperation” and opportunities are boundless.
Samir Saran is Vice-President and Vivan Sharan an Associate Fellow at the Observer Research Foundation. The foundation hosted the 4th BRICS Academic Forum.
Please download here the full document: Forum Declaration Final
March 06, 2012, New Delhi: The 4th BRICS Academic Forum comprising experts and scholars from the research and academic institutions of Brazil, Russia, India, China and South Africa met on March 4th, 5th and 6th, 2012 in New Delhi. Given that the BRICS have covered significant ground from the first meeting of Leaders in Yekaterinburg, the Forum believes that they must seek and set concrete agendas for articulating a clear, bold and ambitious vision.
The theme for this year’s Forum, “Stability, Security and Growth”, represents the common aspirations of BRICS for strengthening progressive development trajectories and seeking transformations for optimal representation and participation in matters of global political, economic and financial governance. Sovereignity and International law serve as the fundamental principles for BRICS members in world affairs and these are prerequisites for ensuring stability, security and growth.
The imperative of economic growth cannot be substituted, and the Forum believes that BRICS must continue to create synergies for enhancing this growth through greater engagement with one another as well as with the rest of the world.
The Forum proposes the following recommendations to the BRICS Leaders for their consideration:
1) Given the state of the euro zone and the continued ripples created by the global financial crisis, greater emphasis must be given to creating frameworks for enabling viable and timely responses to both endogenous and exogenous financial shocks within and outside BRICS. To this end, a systematic approach must be articulated to respond to any further economic downturns in the global economy.
2) The BRICS nations must seek to create institutions that enable viable alternatives for enhancing inclusive socio-economic development agenda within and outside BRICS. Such institutions must eventually seek to set global benchmarks for best practices and standards.
3) BRICS agreed to “strengthen financial cooperation” among their individual development banks at the Leaders Summit at Sanya in 2011. For furthering this objective, the Forum recommends studying the establishment and operational modalities of financial institutions such as a Development Bank and/or an Investment Fund that can assist in the development of BRICS and other developing countries.
4) BRICS must evolve as a platform for creating contextualised multilateral policies, and by mutual consultation develop viable and credible mechanisms to respond to local, regional and international political and social turbulence such as the events being witnessed in West Asia and North Africa.
5) The increasing involvement of non state actors and the dilution of the principle of non-interference are dual challenges that need to be met. Appropriate policies consistent with International Law need be be studied by BRICS academic institutions.
6) The BRICS are home to some of the most bio-diverse regions in the world and they must work together to preserve such diversity through exchanges and consultations. They also must share experiences of integrating natural assets with their national macro-economic policies.
7) As home to nearly half of the world’s population, BRICS have a responsibility to create pathways for sustainable development. BRICS could learn from policy successes as well as failures of the past from within and outside BRICS, and seek to implement policy solutions for sustainable development. In this context BRICS must bring to the fore inclusive growth and equitable development as the central narrative at global fora such as Rio+20.
8) BRICS must study the role of financial and non-financial policy instruments in promoting innovation, strengthening University-Industry linkages and evolving TRIPS compatible IPR policies.
9) The BRICS nations have a responsibility to respond to the increase in terrorist activities, illicit narcotics trade, money laundering, human trafficking and other new challenges. They must work together to neutralise the threats posed to each of them by sharing resources and information where appropriate, and through collaboration between relevant institutions in the member countries.
10) The Forum noted that a website has already been created by the Indian coordinator on BRICS issues. This could be further evolved into a virtual platform for the academic community for dissemination of developments, research and ideas. The Forum also suggests that the academic community and governments must work towards enhancing visibility of BRICS in their own countries and create an identifiable brand value.
11) Recent trends have shown that the BRICS are still very vulnerable to food and commodity price volatility. This, in turn, has exposed gaps in existing market policies and regulations as well as highlighted the imperative of resource efficiency. The BRICS should increase intra-BRICS cooperation in order to provide stable economic anchors for price volatility while simultaneously enhancing efficiency of resource use through better management, standards and technologies.
12) Urbanization is both a common challenge and an opportunity for BRICS. Additional capability and capacity building within urban agglomerations must be prioritized through sharing knowledge, policies and skills. Key actionable areas need to include infrastructure development, investments in mass transport, and programmes to enable social transformation.
13) The BRICS members must study the efficacy of their individual education policies and policies on Affirmative Action in promoting Inclusive growth. Documenting and sharing related outcomes could prove mutually beneficial. As a first step each of the member countries could use the Internet-based platform for distance learning about one another’s history and socio-economic development.
14) Cultural cooperation and connectivity between BRICS countries should be promoted. Instituting scholarships to promote student exchange between BRICS and creation of platform for dialogue and interface between representatives from legislative bodies, political parties and young leaders of the member nations could complement such efforts.
15) The BRICS are replete with instances and examples of innovative technologies, policies and practices. They must create linkages and institutions to share such learning, in order to promote economic growth and human development. An exchange programme of scholars, experts and business leaders in the area of innovation and entrepreneurship would present a good opportunity to enable this. In this context diversified linkages could be established among the business schools and other institutions of the five countries.
16) BRICS experts must undertake a thorough assessment of indigenous knowledge and practices to deal with common challenges such as eco-friendly agricultural practices, efficient water use, disaster management and other humanitarian issues.
17) BRICS need to collaborate on the realization of the ideal of ‘universal healthcare and medicines for all’. They must enable sharing of policies, practices, standards and experiences on public healthcare and create a community of healthcare professionals across BRICS. It is also suggested that the members must collaborate in strengthening the understanding and dissemination of traditional medicines and therapeutic practices. BRICS members must also coordinate and cooperate in international fora such as the WTO and work towards the effective transformation of WHO programmes.
The BRICS academic institutions and governments must share their hosting experiences from the annual Academic Forums and Summits in order to make successive interactions more productive and efficient.
BRICS engagements must be increased in range and frequency. To this end a Memorandum of Understanding has been signed between BRICS coordinating research institutions. BRICS must explore and make use of such avenues and partnerships among member countries.
The BRICS Academic Forum wishes the Indian government the very best for hosting the 4th BRICS Leaders Summit and is confident that the Forum’s recommendations will be considered.
The Forum appreciates the warm hospitality and expresses a hearty thank you to the Observer Research Foundation for all arrangements.
The Forum looks forward to the next meeting of academics in 2013, to be held in South Africa and they will continue their active engagement and offer full support to the organisers.
by Samir Saran and Jaibal Naduvath
February 17th, 2012
Please find here the original article
At the 17th round of the Indo-Russian Inter-governmental Commission on Trade, Economic, Technological, Scientific and Cultural Cooperation (IRIGC-TEC) held in November last year, the two governments agreed to set up an investment fund with public-private partnership to finance projects in the two countries. Barely a month later, after almost 18 years of negotiations, Russia was formally invited to join the World Trade Organization (WTO), and, has until June of this year to ratify the accession agreement. Beyond reducing tariff barriers and eliminating non-tariff barriers, accession to WTO is also expected to reduce government interference in business, a key pre-condition for free enterprise. Russia’s evolving economy has been witness and victim to continued government interventions.
Nevertheless, given the impending WTO accession, the India-Russia joint investment fund has managed to get its timing right. Current India-Russia bilateral trade, estimated at around USD 9 billion, is admittedly far below its potential. Trade promotion initiatives such as this investment fund, a possible Comprehensive Economic Cooperation Agreement (CECA) with the Russia, Belarus, Kazakhstan Customs Union combined with the business confidence the WTO accession would inspire, is expected to double bilateral trade to USD 20 billion by 2015, an ambitious, though very achievable feat. With a Price to Earning (P/E) ratio of 6, compared to India’s 14, China’s 15 and Brazil’s 8.5, Russia’s market is attractively priced amongst the emerging markets with traditional industries such as oil and gas, metals and minerals remaining hugely undervalued.
Despite warm bilateral ties, and close political engagement and co-operation extending well over 55 years, India-Russia trade has rarely managed to go beyond the legacy confines of defense equipment, space, energy, metals and minerals, and, commodities, even while, ironically, both countries have independently managed to very successfully leverage new vistas of opportunity in economies they stood together against for a better part of the 20th century. Russia-European Union (EU) trade in 2010, for instance, stood at around USD 191 billion, with the bloc accounting for over 47% of Russia’s total trade turnover, representing a three-fold increase in just ten years. On the other hand, India-EU trade has grown to USD 107 billion this year and is expected to double in two years on the back of a Free Trade Agreement (FTA) currently being negotiated. Compared to this, India-Russia bilateral trade of around USD 9 billion today pales in significance even though it represents a quantum leap from about USD 3 billion in 2006-07.
Russia-India two-way trade and investment has rarely ventured beyond government-controlled domains, which are also accompanied with government-backed guarantees of some kind. Russia’s active participation in several military, aerospace and nuclear projects in India and Indian investment in Russia’s energy sector and preferred trade in controlled commodities are part of this broader trend. But, the true test of any meaningful business relationship lies in the unmitigated ability of private enterprise on either side to confidently engage, invest and gain from each other’s economies, outside the security of sovereign assurance, even if notional. This is not so in the case of Indo-Russian trade.
Russia, of course, dominates the Indian defense sector and is comfortable navigating through Indian officialdom, which still retains much of its controlled economy character from the 70s and 80s. However, this may not remain the case for long. Under greater media scrutiny and public glare, the defense relationship will need to become far more efficient in terms of reliability, time lines and price points, else Russian dominance in the sector could be potentially challenged. Further, as the offset policy starts playing out and thereafter as the Indian private sector becomes engaged in defense production and R&D, Russia may no longer be a competitive player in this segment. To really be a beneficiary of India’s transformation over the coming 2 decades, Russia needs to expand its portfolio by diversifying into the arenas of industry and infrastructure in India. In doing so, its ability to confront India’s dynamic and loud democracy, and an increasingly uncompromising civil society will be as severely tested as its ability to navigate the country’s highly regulated business terrain arising from complex land use norms, environment clearances, and fiscal regimes, all of which have shown to evolve over time.
On the other hand, Russia offers India minerals and land, besides a huge market for software, services, value added goods and consumables. The resource sector in Russia, though, continues to be dominated and overwhelmed by its government with significant self-interest. Agriculture and land based activities too would be prone to similar dynamics and one can expect Indian private sector’s trepidations to be strong on investing in either. Apart from large Public Sector Companies and select large Indian Multi National Corporations, it is unlikely that Indian private sector will invest in Russia, despite undervaluation and potential for attractive return. Indian businesses’ traditional risk aversion is demonstrated by flight of capital to low return economies of the Atlantic that have corresponding low risk political ecosystems as well.
When Indian businesses consider making investments in Russia, they still seem daunted by perceptions constructed by imagery of the powerful and manipulative oligarchy, political nepotism and uncertainty, and seemingly poor judicial and legal recourse frameworks. Fears to do business in Russia have been hyped by experiences of companies such as ExxonMobil, Total and Shell in Russian Oil Sector, which were divested of their interests by Russian political class in a manner that was viewed as ad-hoc, if not vindictive. This imagination has often resulted in investments by Indian entrepreneurs being channeled into markets such as UK, EU and US, which are far more taut than Russia in terms of economic opportunity.
Ironically, Russian investors feel the same way towards India, drawing from a regular narrative of chaotic democracy, policy inconsistency, political fickleness, and civil instability with commitment cycles perceived to not exceed the life of the dispensation in power. One of the collaterals of the 2G verdict of the Supreme Court, which saw the revocation of 21 of Sistema Shyam Telecom’s (SSTL) 22 telecommunications licenses, could be the flickering and faint Russian Interest in Indian business opportunity. Russia’s USD 28 billion telecom to tourism conglomerate, Sistema JSFC, operating in India through its subsidiary MTS, had invested USD $2.5 billion over the past three years into the project, in arguably, the largest private sector intervention by a Russian company in India’s new economy to date. Further, Russian state owned Federal Agency for State Property Management acquired a 17.4% stake in SSTL by investing a hefty $600 million just last year. Fortunately, there is a growing business constituency, which views such re-calibrations as an inevitable part of polity evolution, but nonetheless the experience of Sistema, which may see itself as a victim of judicial overreach as some argue, could well define Russia’s appetite for India’s growth story.
Russia’s accession to WTO this summer and the consequent abolishment of tariff and non-tariff barriers will heighten global interest in Russia. Pro-investment initiatives such as the proposed joint public–private investment fund combined with demonstrable political and economic will on both sides should result in heightened interest in private enterprise on both sides to explore and invest in each other. Multi-billion dollar National Minerals Development Corporation – Severstal Joint Venture steel project in Odisha or Indian companies negotiating long-term agreements for supply of diamonds from Russia are positive signs for medium to long term economic engagement between the two countries.
Link to original website
Scholars and experts from BRICS (Brazil, Russia, India, China and South Africa) countries have said that the current crisis in the Middle East and North Africa (MENA) regions should be resolved expeditiously in the interest of regional stability and in conformity with the aspirations of the peoples of MENA and said that the current crisis demonstrated that the global governance system needed to be more responsive.
This formed part of a recommendation document prepared for the Third Leaders Summit to be held at Sanya, China in April this year. At a meeting of 60 scholars of think tanks from the five BRICS countries, held in Beijing on March 24 and 25, 2011. A seven-member delegation of Indian experts, led by Observer Research Foundation, took part in the meeting of the BRICS Think Tank Symposium, hosted by the China Centre for Contemporary World Studies (CCCWS) and the China Foundation for Peace and Development (CFPD). It comprised of former Indian ambassadors Mr. HHS Viswanathan (Distinguished Fellow, ORF) and Mr. T.C.A. Rangachary, Mr. Samir Saran, Vice President and Senior Fellow, ORF, Dr. Ravni Thakur Banan, Associate Professor, Delhi University, Dr. Saroj Kumar Mohanty, Professor and Senior Fellow, Research and Information Systems for Developing Countries, Dr. Jyotirmoy Bhattacharya, Fellow, Indian council for Research on International Economic Relations and Sriparna Pathak, Junior Fellow, ORF.
In the recommendations proposed for the consideration of the Third BRICS Leaders Meeting to be held in April in China, the scholars said that the leaders should give attention to the changing international context, sluggish economic recovery, governance issues, reform of the international economic and financial architecture, Sustainable Development and Climate Change.
In the opening speech, Mr. Sun Jiazheng, Vice Chairman of the National Committee of the Chinese People’s Political Consultative Conference and President of CFPD, made three suggestions regarding cooperation among BRICS: (1) Undertaking intensive studies, and recommendations on issues that concern BRICS. (2) Focusing on major areas of international finance, international order, world peace and stability (3) Strengthening exchanges between think tanks of BRICS.
At the opening session, delegates from the five countries spoke on the need for reforming the global financial institutions, democratising global governance system, avoiding unilateralism, increasing discussions within the grouping on issues of wages, poverty, energy, health and education, defining a BRICS identity and mission and widening the BRICS’ agenda.
The first session discussed “Challenges and Opportunities- Environment and Background for the Development of BRICS Countries”. The presentations focused on the opportunities and challenges for BRICS post the financial crisis and the way ahead on issues of development and global governance Delegates from BRICS countries also spoke on issues of technological innovations, moving away from reliance on OECD countries, and greater engagement with other developing countries to enable sustainable growth.
On the topic of ‘Changes and Responsibilities: Agenda and Items for BRICS Countries in Advancing Global Economic Governance’, participants elaborated the need to realise inclusive growth and emphasised on stability, peace, shared prosperity, and development, South- South cooperation, open markets and mutual trade and investment among BRICS.
The theme of the third session was ‘Unity and Cooperation- Practical Cooperation and Institutional Building of BRICS Countries’. This panel discussed how BRICS can be a bridge for North- South cooperation, and the need within the BRICS grouping to resolve differences and seek common goals. Presenters also spoke on strengthening trade among BRICS, strengthening framework for polycentric world, promoting cooperation and engaging private sector actors in agriculture and other sectors among BRICS.
‘Exchanges and Mutual Trust- Cooperation Among Think Tanks of BRICS Countries’ was the final theme of the symposium. The discussions delved into ways to deepen BRICS interactions and the need to convene international seminars on areas of bilateral and multilateral areas interests. There was a strong emphasis on the need to establish a BRICS institutional framework at the governmental and non governmental level and to create working groups on select projects. It was also agreed to create a BRICS Think Tanks website for scholars to contribute to.
The interactions were free and friendly and there were no contentious issues. It was obvious that the delegates were trying to find the relevance, mandate and evolution of the Group.
One high level political interaction was organised for the delegates to meet Mr. Dai Bingguo, a State Councillor, where he praised the work of the delegates in coming up with new ideas. He also cautioned that the leaders may not have the same ideas. He spoke of “broadening” the Organisation, a concept not liked by the Russians.
Some divergences on issues like trade and currencies notwithstanding, there was a general feeling that BRICS is here to stay and contribute to a change in global governance. How this will be achieved is the question to which nobody seemed to have a clear answer. There were references to the need for an alternative model of development in which BRICS countries do not repeat the same mistakes committed by the developed world. There were also statements that BRICS should act as a bridge between the developing and the developed countries. But would the other developing countries (particularly potential aspirants to the Group like Indonesia, Turkey and Mexico) like BRICS to play this role?
One theme that came up constantly was the lack of intra-BRICS cooperation in comparison to the potential that exists. For example, BRICS contributes to about 20% of global GDP. Further, 60% of the global Foreign Exchange Reserves today are held by BRICS. But these are parked mainly in Western countries when BRICS themselves desperately need capital for development.
Apart from some general references to the need for reforms of global financial institutions and replacement of dollar by SDR as the global currency, no in-depth discussions took place on these issues. However, the increase in the voting shares of China, Brazil and India was referred to as a beginning of a change in the mind-set of the developed world. One theme that was very evident was the need to coordinate BRICS positions in G-20 so as to have a greater voice.