There can’t be many international summits where a head of government stays away for fear of being arrested for war crimes, but the Brics grouping has managed it. Vladimir Putin will skip next month’s meeting of Brazil, Russia, India, China and South Africa in Johannesburg because the hosts, as a signatory to the International Criminal Court, would have to detain him under a warrant for Russia’s activities in Ukraine. It’s unlikely he will miss much policy substance. Apart from a lot of defiant rhetoric against the rich world, one of the main themes will be barely hidden tension around the role of China.
The Brics are now looking seriously lopsided. Famously invented by Goldman Sachs economists in 2001 as a marketing tool, the grouping became a political entity when the four countries (South Africa joined later) held their first summit in 2009. Dan Ciuriak, a former deputy chief economist at Canada’s trade department and now a senior fellow at the Centre for International Governance Innovation think-tank, has an illuminating paper on the Brics’ economic underpinnings. He notes that only a fortuitous confluence of events in the late 1990s and 2000s made the group look vaguely equal, even in aspiration.
While China’s low-cost manufacturing was benefiting from Deng Xiaoping’s economic reforms, Russia and Brazil were emerging from economic chaos (Russia after the fall of communism, Brazil from its stabilisation of the currency after 1994) to ride the commodities boom of the 2000s. India had a burst of growth after the economic liberalisation that followed a balance of payments crisis in 1990-91. South Africa was boosted by the end of apartheid in 1994.
But during the 2000s and 2010s, only China managed to move in any significant way towards rich-world status by adopting technological advances to become a knowledge-based economy. The others remained stuck in low-growth models overly dependent on commodities, their policy apparatus hampered by various combinations of political dysfunction and corruption.
The Chinese economy now rivals that of the US — it’s larger in purchasing power parity terms — and its size and income fund a belligerent foreign and military policy.
The idea of a new Brics currency, mooted in particular by Brazilian president Luiz Inácio Lula da Silva, is essentially fantasy: the renminbi is the only one of the five international currencies with any significant overseas role. The Brics nations set up the relatively small New Development Bank, which has so far extended $32.8bn in loans, while China has probably lent about $1tn bilaterally. Its Belt and Road Initiative not only builds infrastructure and digital projects but also aims at trade and political alignment.
Nor is China’s support for other Brics members exactly unconditional. Even leaving its longstanding military rivalry with India aside, while China has given Putin diplomatic cover after the invasion of Ukraine, Beijing is in effect charging for it by buying Russian oil below world market price.
Geopolitically, China also unbalances the club. It’s in an economic, technological and strategic rivalry with the US, while other Brics members are trying to stay on good terms with Brussels and Washington. Brazil wants access to European consumers by finalising a trade deal between the EU and the South American Mercosur bloc; India is part of the US’s Quad security alliance in the Asia-Pacific. If Beijing tries to force the other members of Brics to drop their non-aligned strategy and join a China-oriented camp, the strains on the grouping will become intense.
China mooted the idea of expanding Brics last year — South Africa claims more than 40 countries are interested in joining — but other existing members including Brazil seemed distinctly reluctant. If nations enter who are beholden to China through ties of debt or investment, Brics will look ever less like a steering group for the emerging world and more like a fan club for an aspiring hegemon.
If the Brics remain a pressure group united by resentment against overweening US power through sanctions or military intervention, they can be cohesive, if not particularly constructive. If the group tries to run the show itself, its disparate economic prospects and strategic interests will become a powerful centrifugal force. As Ciuriak points out, if you have a collection of emerging markets whose ambition is to become advanced economies and only the largest one is really on track, you don’t have a cohesive club.
It’s now established wisdom to say the Brics grouping has come a long way since it first got together as a political unit. Certainly, its rhetoric and ambition has. The disjointed and unbalanced reality has a lot further to go.
alan.beattie@ft.com
Source: Economy - ft.com
