Geopolitics

BRICS: A Strategic Self Appraisal
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Issue Vol. 30.4 Oct-Dec 2015 | Date : 19 Jan , 2016

All five members share weak exchange rates with respect to the US dollar, with the Indian Rupee being the weakest at 65.07 Rupees per USD followed by Russian Rouble at 64.63 and Chinese Yuan at 6.39. China exceeded approximately nine to ten times of that of other members within the group in total foreign exchange reserves with $3,821,315 million in 2013 followed by Russia ($473,110), Brazil ($373,147), India ($292,046) and South Africa ($50,735).

In terms of inflows of FDI (million US$) China registered itself as the most reliable destination for investment with $117,586 million…

In external debt as a percentage of GDP, South Africa led followed closely by Russia at 31.3 per cent and remained lowest for China at 8.9 per cent in 2012. International investment position (million US$) stood at $1,736,425 for China and $244,829 for India.

Intra-Trade Among BRICS

The intro-trade among BRICS grouping does not clear the threshold required for it be a significant player shaping global economic and political realities. Except for India and China, no two other members of BRICS have significant trade relations. Western European countries hold significant trade relations which cannot be wished away in near future, given the dependence of BRICS nations on EU nations for mechanical and electrical goods along with hi-tech goods.

Germany is Russia’s largest trade partner with its largest imports being meat and exports being energy. China is India’s largest trade partner and India is China’s second largest trade partner after Hong Kong. Brazil, China, India and South Africa have significant trade relations with Russia but not with each other. For example, the largest investor in Brazil is Netherlands followed by other European powers.

This factor remains a significant stumbling block in BRICS becoming a counter balance to the West-led economic world order and can be fixed with careful study of strengths in BRICS economy and finding ways to maximise intra-trade relations with each other. For example, in the recent crisis over Ukraine’s sovereignty has led to sanctions by EU on Russia and Russia now looks forward to import its requirement for meat from China. The strengths in India’s information technology, Russia’s science and technology, and China’s industrial capacity and finance must be channelised to increase BRICS intra-trade. India-Russia bilateral trade of about $7 billion has not only remained much below the potential, it has also remained highly skewed for a few items besides defence sector.16

Dynamics of the Gdp of Advanced Economies and Brics Countries. BRICS Joint Statistical Publication, 2014

Conclusion: Eradicating Inequality Among the Unequals

While it is early to align with President Putin’s remark that “BRICS has already become an influential factor in world policy and economy,”17 the present trend for the future is certainly poised in favour of BRICS to realise such a remark. Apart from working on economic and financial security related policies, BRICS stands to benefit from resolving inherent deficiencies within the grouping such as intra-trade, military relationships, science and technology sharing and common front at leading world institutions such as UN, IMF and WB.

The projection of BRICS as an alternative to the existing world order is based on its “potential” than “reality”…

From a policy perspective, the intra-trade relation between BRICS members must resemble that of Sino-Indian trade relations. China and India are each other’s largest trading partner. Russia must re-divert its import requirements from Western Europe to Asia and other BRICS members. A trend to maximise investment into BRICS economy must come from BRICS economy and a temptation to secure such funds from the West must be avoided. However, such shifts require structural changes and a definite long term planning and policy implementation.

Along with the need for economic and financial independence, a methodological approach towards a strengthened political alignment is crucial. While Sino-Russian relations and Sino-Indian relations have improved in the post-Cold War era, trouble spots do exist. A power struggle within BRICS is likely with inequality among BRICS members. Russia’s relation with India has not yet realised its full potential.18 Russia’s defence relations with China and Pakistan and India’s defence cooperation with US and NATO is a cause of concern.

The projection of BRICS as an alternative to the existing world order is based on its “potential” than “reality”. A comprehensive understanding of the existing world system built over centuries is unlikely to be overruled in an instant by coming together of BRICS members and will require a multi-front approach and not limited to banking, maritime and innovation centre. However, despite the limitations, the BRICS initiative is likely to emerge as a significant centre of international political power.

Notes

  1. Ibid.
  2. Nidhi Raj Kapoor (2014), “Making a World of Difference: How BRICS Diaspora Give” The Resource Alliance, January 2014.
  3. BRICS summit in Russia to launch New Development Bank & currency pool – Putin” RT, 30 May, 2015. Available at http://rt.com/business/262813-brics-bank-summit-russia/
  4. Speech by Premier Chou En-lai, Chief Representative of the People’s Republic of China, at the Plenary Session of the Asian-African Conference, 19 April, 1955.
  5. Ibid
  6. Supplementary Speech by Premier Chou En-Lai at the Plenary Session of the Asian-African Conference, 19 April, 1955.
  7. Dorothy-Grace Guerrero (2013), “The Rise of China and BRICs: A multipolar world in the making?” Focus on the Global South, available at http://focusweb.org/content/rise-china-and-brics-multipolar-world-making.
  8. Ibid.
  9. 57 Countries Named as AIIB Founding Members” Hong Kong Economic Journal (ejinsight), 15 April, 2015, Available at http://www.ejinsight.com/20150415-57-countries-named-as-aiib-founding-members/ [Accessed on 12 May, 2015].
  10. S.Rajasimman (2015), “Who Said the Cold War Is Over?” Indian Defence Review, Vol:30, No:3; July-October Issue [Forth Coming – Print Edition]
  11. In 1997 the then Indonesian President Suharto announced a 1998 budget plan calling for a substantial increase in expenditures, which was contrary to IMF conditionality. S.Rajasimman (2009) “China-ASEAN Relations: Emerging Asian Security Architecture” in Srikanth Kondapalli and Emi Mifune (Eds), China and its Neighbours (2010) Pentagon Press: New Delhi.
  12. Maddison, Angus, 2006, “Asia in the world economy, 1500‐2030”, Asian Pacific Economic Literature, 20(2): 1‐37. Arends, Brett, “IMF bombshell: Age of America nears end, Commentary: China’s economy will surpass the US in 2016”, Marketwatch, The Wall Street Journal, November 20, 2012, http://www.marketwatch.com/story/imf-bombshell-age-of-america-about-to-end-2011-04-25?link=MW_home_latest_news. Shirley, Andrew (Ed), The Wealth Report 2012: A Global Perspective on Prime Property and Wealth, Knight Frank Research, 2012 http://www.thewealthreport.net/.
  13. Beams, Nick, “China Slowdown Deepens Global Crisis”, World Socialist Website, August 16, 2012,http://wsws.org/articles/2012/aug2012/pers-a16.shtml
  14. Hannon, Paul and Reddy, Sudeep, “China Edges Out US as Top Foreign Investment Draw amid World Decline”, The Wall Street Journal, October 23, 2012.
  15. BRICS Joint Statistical Publication, 2014, InstItuto BrasIleIro de GeoGrafIa e estatístIca – IBGe Av. Franklin Roosevelt, 166 – Centro 20021-120 – Rio de Janeiro, RJ – Brasil. P. (Note: All statistical data used for analysis are based on this report)
  16. Press Trust of India (PTI) (2015), “PM Narendra Modi’s Russia, Central Asia visit to boost energy, trade ties” Economic Times, 05 July, 2015. Available at http://economictimes.indiatimes.com/news/economy/foreign-trade/pm-narendra-modis-russia-central-asia-visit-to-boost-energy-trade-ties/articleshow/47945808.cms
  17. BRICS summit in Russia to launch New Development Bank & currency pool – Putin” RT, 30 May, 2015. Available at http://rt.com/business/262813-brics-bank-summit-russia/
  18. Maj Gen Alok Deb (2015), “Strengthening the Indo Russian Relationship” Indian Defence Review, 08 July, 2015. Available at http://www.indiandefencereview.com/news/strengthening-the-indo-russian-relationship/
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About the Author

Dr Rajasimman Sundaram

teaches history, politics, and culture and a member of the Institute of BRICS Studies and College of Multi-Languages at Sichuan International Studies University [四川外国语大学] (The People’s Republic of China)". 

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