Brics highlight skewed nature of global power

WORLD VIEW: Emergent nations are rightly challenging status quo in western- dominated institutions

RESENTMENT OVER the distribution of power in global institutions pervades the declaration of the five Brics powers at their summit in Delhi this week. Otherwise politically diverse, and slow to take concrete initiatives at this their fourth meeting, Brazil, Russia, India, China and South Africa share a sense of frustrated entitlement given the mismatch between their collective demographic and economic strengths and what has been well described as this “frozen configuration of privilege and bias”.

They remain deeply committed to multilateralism, but want representation, decision-making and norms changed in the United Nations, International Monetary Fund, World Bank and other institutions set up after the second World War by the victorious powers. Brics, they say, “is a platform for dialogue and co-operation amongst countries that represent 43 per cent of the world’s population, for the promotion of peace, security and development in a multi-polar, interdependent and increasingly complex, globalising world”.

They go on to spell out these commitments: “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 recognised 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.”

Speaking in Dublin last week Jim O'Neill of Goldman Sachs, the economist who coined the acronym Brics in 2001, insisted they should now be seen as "growth" not "emergent" markets (see video at www.iiea.com). Most global growth over the next decade will come from them, and from similar states like Indonesia, Mexico, Turkey or South Korea that jostle for competing acronyms, even though they are now represented in the Group of 20, which is meant to take over from the G8 as an informal organ of economic governance.

The term Brics caught on because it contained a seminal insight into one of the main world trends, anticipating emergent growth markets for international investors. South Africa added the “s” when it was asked to join at their 2010 summit.

Even though these are no longer emergent markets or economies but have mostly arrived, three of them are still emergent powers.

While Russia and China, both UN Security Council members, are decidedly arrived too in that respect, it suits them to court allies in this semi-structured way, notwithstanding the evident bilateral tensions between the group’s individual members.

Both India and Russia have problems with China, Brazil suffers from China’s currency value, Russia is prospectively weakening and India is most vulnerable to shock, while many say South Africa hardly deserves a place at this table. Three are democracies, two authoritarian states. Thus they are bricks in search of cement. Such disparaging comment is easy to make, but misses the main point of what is going on here.

As the declaration says, this is a “multi-polar, interdependent and increasingly complex, globalising world”, in which they want more equal representation. Their political summitry is an ad hoc way of exerting pressure to hasten that transition.

The document points the way to other multilateral meetings: of the G20 on economics, climate change, trade, biodiversity, the IMF and development aid, at which they want to maintain this momentum. The World Bank has an outdated North-South mediation, donor-recipient outlook, they say, echoing other critiques of western conditionality now heard much more often.

They criticise the most developed economies in the US and Europe for creating excessive liquidity in world markets, which spills over on to them. O’Neill pointed out that compared to the most developed world the Brics have exemplary budgetary and fiscal performances and would largely walk into membership of EU’s monetary union if qualified.

As former Brazilian president Lula put it, the global financial crisis “was created by white men with blue eyes”. It has discredited Anglo-American deregulated neoliberal capitalism worldwide, shifting the balance between states and markets. The mindset that privileges western powers and their biases must shift in recognition of these new realities.

Compared to that major political point, the concrete measures discussed in Delhi are more tentative, even though they travel in a similar direction. There is to be more co-operation between currency transactions, bypassing the dollar as a semi- monopoly reserve currency, and they are exploring a development bank and joint equity markets.

International relations researchers describe the present period as one of “diminished multilateralism” in which emergent powers jostle for competitive advantage in global, regional and ad hoc institutions like this.

Forum shopping or picking and choosing mechanisms to suit individual political agendas is characteristic of such transitions. The Brics exemplify that trend, but point beyond it, potentially to a more principled and balanced world order.

It is hard to quarrel with their critique of actually existing multilateralism, which reflects a redundant distribution of power badly in need of change.