Mon03272017

Last update01:35:06 PM

Back You are here: Home Business Business News Caribbean Business BRICS: Prospects for Cooperation

BRICS: Prospects for Cooperation

BRICS

Since the fifth and most recent BRICS summit, which took place in March 2013 in Durban, South Africa, the unified participation of the «fivesome» (Brazil, Russia, India, China, and South Africa) in international affairs has become even more noticeable. And it is no exaggeration to say that Russia is playing the role of the conceptual leader of BRICS.  This is demonstrated by the «Concept of Participation of the Russian Federation in BRICS», which in particular states:

 «The establishment of BRICS reflects an objective trend in global development, one towards the formation of a polycentric system of international relations, which is increasingly characterized by the use of noninstitutionalized  mechanisms of global governance and network-based diplomacy and the growing economic interdependence of states. BRICS' authority in the international arena is based on the growing economic power of the participating states, the importance of their activities as a major driving force of the global economy, their significant share of the world population and their rich natural resources.» 

The main event of the BRICS summit in South Africa was the politically-motivated decision to create a BRICS Development Bank. It can be expected that at the next BRICS meeting, which will take place in 2014 in Brazil, the questions of where the bank's headquarters will be located, what the management principles will be, the total capital and the amount each participating country will contribute will be resolved as work proceeds.

As V. Putin noted before the summit in South Africa, «BRICS defines its work based on the Plans of Action adopted at the yearly summits. Last year's Delhi Plan of Action defined seventeen areas for cooperation. Among them are meetings of foreign ministers on the sidelines of the UN General Assembly; joint meetings of ministers of finance and central bank governors on the sidelines of G-20, World Bank, and International Monetary Fund meetings; and contacts among other agencies.» 

But most importantly, the BRICS countries confirmed their common strategic aim of changing the world financial system and bringing it into conformity with the true weight of the largest national economies in world rankings.

The idea of creating the BRICS Development Bank started from a simple fact: the West blocked the redistribution of votes (country quotas) in the IMF to reflect changes in the relative economic weight of certain states… The decision to redistribute quotas as part of a reform of the IMF which was to be carried out by January 2013 was made at the IMF summit in Seoul back in 2010. In 2012 the formula for formation of quotas was supposed to be determined during consultations, and in 2013 the actual quotas for those countries whose role in the world economy has grown over the past several years were to be determined. However, this didn't happen. If the issue does not move forward at the G-8 summit in June and the G-20 summit in September of this year, that will probably only hasten BRICS' creation of a new world financial institution. 

In essence, the cooperation of the BRICS countries in seeking solutions for global financial and economic problems marks the establishment of a new economic pole in the world. One may also suppose that if the West attempts to resist the development of fairer rules for international economic relations, consolidation within BRICS will begin to take new forms.  The expansion of the association's membership is entirely possible. As Venezuelan president Nicolas Maduro noted in an interview on May 2 with the French newspaper Le Monde, BRICS «is a bloc which could equalize the balance of power on a global scale».

An interesting article on BRICS' initiative called «A New World's New Development Bank» appeared on May 3 on the site Project Syndicate (http://www.project-syndicate.org/). The article's authors are Nicholas Stern (President of the British Academy and Professor of Economics and Chair of the Asia Research Center at the London School of Economics and Political Science), Joseph Stiglitz (a Nobel laureate in economics and University Professor at Columbia University), Amar Bhattacharya (Director of the G-24 (1)) and Mattia Romani (Deputy Director General of the Global Green Growth Institute).

Noting that the significance of the idea of creating the BRICS Development Bank «cannot be overemphasized», they write:  «A new development bank is clearly needed. The infrastructure requirements alone in emerging-market economies and low-income countries are huge... At the same time, an estimated two billion people will move to cities in the next quarter-century... To meet these and the other challenges confronting the developing world, infrastructure spending will have to rise from around $800 billion to at least $2 trillion annually in the coming decades...

The new bank can make a major contribution to the global economy’s health by facilitating the transition to new poles of growth and demand, helping to rebalance global savings and investments, and channeling excess liquidity to productive use. It will not only be a driver for sustainable growth in the developing and emerging world, but will also foster reform in the existing multilateral financial institutions – changes from which all of us, in the developed and developing world alike, will benefit.»

These assessments from well-known specialists, the meeting in Durban, and the subsequent negotiations in Moscow between V. Putin and South African president J. Zuma in mid-May all confirm the fact that BRICS currently has everything it needs to make the transformation into a full-scale mechanism of strategic cooperation.  The time for such a step has come, and time does not wait.

G-24 (the Group of 24) was created in 1971 to coordinate the positions of developing countries on issues of international finance and development.

Tags: BRICS China India South Africa Stiglitz