When Brazil, Russia, India and China were identified by a Goldman Sachs analyst in 2001 as the “emerging markets” to watch because they also had clout going beyond their economic capabilities on the world stage, he certainly did not expect that it would actually lead them to come together as as a group – BRIC. But they did, had their first summit in 2009, and have been meeting annually since. South Africa was added in 2010 to form BRICS.
There was great anticipation in the world, because here were five countries out of the UN’s 193 that alone had had a combined GDP of almost $20 trillion, and had produced almost one-quarter of the entire world’s production, and have almost half of the world’s population. This was real clout, and since they were all not from the western countries that had dominated the world for the last three centuries, the expectation was that maybe we were witnessing the beginning of a new world order, in which the overweening economic, political and military power of the US might be counterbalanced.
For instance, the BRICS countries do not have a proportionate share of voting rights to their present capabilities in critical multilateral institutions such as the International Multilateral Fund (IMF). They therefore have a common vested interest in taking a common position on these issues. Another and related area was in control of financial flows through the reality of the US dollar being the most common denominated currency in world trade. This gives the US a powerful advantage, since they can merely print greenbacks to finance their deficits with other countries. However, this can be a double-edged sword, since the countries holding US dollar reserves can acquire assets in critical areas in the US, as China, with its over US$3 trillion, has been doing. Be that as it may, the BRICS have initiated a process in which they have been swapping currencies directly, as well as denominating sales in local currencies, which protect the latter from swings in US dollar value.
BRICS have also launched a New Development Bank (NDB) with starting assets of $50 billion, consisting of equal contributions of $10 billion from the members, and which is planned to be increased to US$100 billion. This will be providing loans especially for infrastructure as an alternative to the World Bank. They have also initiated steps to provide an alternative to the SWIFT financial clearing facility that is based in Europe. The group has cooperated intensely in several areas, such as crime. Another instance has been against a background of suspicions as to the origin of the COVID-19 virus that swept the world in the most virulent pandemic in a century. In the last virtual Summit last September, India’s PM Modi asked for a transparent investigation to be conducted. President Xi Deng Ping merely noted that the inquiry not be “politicised”.
But, in retrospect, the initial American skepticism that the grouping would never amount to a coherent entity to counterbalance its influence appears to have some merit. The reasons preferred at the time was that the members were at such divergent points on the development scale that they would be challenged to remain on the same page on any number of issues. South Africa and Brazil are not nuclear powers, for instance, and might have different positions on non-proliferation, since they may want to join the Nuclear Club.
But the biggest possible destabilising element by the US calculus was the rivalry between China and India, which they felt could not be papered over, especially with the disputed territory in the Himalayas coming out of their 1962 clash. And so it was that the US appeared to be on the ball when, on May 5th 2020, troops of the two behemoths once again clashed violently in the same mountains.
But this year’s summit, which was hosted virtually by India, did come off as indicated above, and this is positive for the developing world, which includes Guyana. When the elephants don’t fight, the grass can grow.
