BRIC Promises to Become a New Center of World Economy
22.06.2009 14:31
Maxim Krans, a columnist for InfoSCO

The summit in the format of BRIC that was held in Yekaterinburg has marked the appearance of a new center of force in the multipolar world system being created now, within our sight. How viable will this construction turn out to be, will it be able to find its level in the forming scheme of the world order?

It will be recalled that this association's name is an abbreviation consisted of the first letters of its participants’ names – Brazil, Russia, India and China. The idea to unite these countries belongs to Chief Economist of one of the biggest in the world commercial banks - Goldman Sachs - Jim O'Neill. As far back 2001 he foretold that this group of four by the middle of the century will get ahead of the leading countries of the world by economic power and will become a foundation of the world economies new arrangement. Now his forecast seems to begin to come true, and the fantasy of BRIC is turning into a concrete international formation.

It must be told that the three of these states are members of another influential organization – SCO: Russia and China as its permanent participants, India – as an observer. But all the same BRIC and SCO do not compete against each other, but rather complement each other in the dynamic architectonics of the world. Both associations showed themselves to be serious players in the international field, requiring attention to themselves and consideration of their interests. As other organizations do though, such as EurAsEC, CIS, CSTO, whose structure intersects but not coincides. They all settle the common issues appearing today on the agenda of the world community.

BRIC’s present bid could not go unnoticed. As noted by the London Times, “Brazil, China, India and Russia are trying to find them an idea, around which they could unite.” This idea, according to the Yekaterinburg statement of the group’s of four leaders, essentially lies in the economic plane. But on the West they also see another BRIC's profile: in the reportage of The Times correspondent Tony Halpin it is stated that “a new political bloc has been created challenging the USA’s world domination. In the final declaration of the first BRIC summit in the history there is an appeal for a multipolar world order. In terms of diplomacy it means disagreement with the USA’s status as the only global superpower."

The Spanish El Pais evaluates the summit results as follows: “The goal of the BRIC summit that was held in Yekaterinburg was the creation of a mechanism directed to the strengthening of the role of the countries with developing economy in world’s decision making.” Its main message, according to the newspaper, is that “the institutional architecture created after 1945 does not correspond to the present international realities.” And The Financial Times underlines that “these countries fairly require the greater influence in those organs where there is too much Europe, such as IMF and UN. They are also right, offering alternatives to the world economy's excessive dependence on the U.S. dollar.”

Certainly, there were a lot of sceptical opinions too. What is clear: any new organization in the already formed structure of international blocs and associations must prove its viability and justifiability. And this happens not at once, but during a long period of time. Suffice it to mention the European Community’s history that has been formed for decades and down to date has not taken shape as a single all-European formation. Nevertheless, many analysts are agreed that BRIC – in spite of differences in political, economic and financial systems – has good perspectives and excellent potential enabling it to really become a new powerful economic community, the well-established international institutions will have to take into consideration too. These forecasts are by no means groundless. Today the territory of Brazil, Russia, India and China makes about 26% of land where 40% of the planet’s population lives. The share of their economy is 15% of the world’s economy volume and 42% of the world’s monetary reserves. You must admit that it can become a good basis for bid for equal participation in the world differentiation of labour.

The United States' National Intelligence Council in the report "Global Trends 2025: A Transformed World" has recently foretold that China and India will enter the group of three economic giants along with the USA, and Russia and Brazil will increase their potential manyfold. In the report it is noted that in the 2040s the BRIC countries’ gross product will turn out to be more than that of the Great Seven.

Moreover, as predicted by some analysts, it is thanks to the developing economies that the present crisis will be overcome. And, in the judgment of Citigroup CEO Vikram Pandit he expressed at the St. Petersburg International Economic Forum that was held in June, China, India and Russia will become an engine of the world long-term growth.

BRIC becomes some sort of a center of accommodation of the four big powers’ national interests that by no means always coincide with interests of the leading political and economic groups. But, as analysts underline, BRIC does not intend to be regard as a competitor of other international organizations – neither the Eight, nor the G-20. It may be said that it is an additional format. This association member states emphasize the G20 summits’ central role in counteraction to the financial crisis and call all the countries and international organizations to actively try to achieve implementation of decisions made last April in London. But herein the Four wants to make partners have self-respect and consider their consolidate opinion.

According to the Russian government, the first BRIC summit was a complete success and became a really historical event. Exactly so it was estimated by the President of Russia Dmitry Medvedev. “I believe that all the leaders will agree with me: our first, our starting summit has justified expectation. The talk was not just serious and detailed – it was absolutely substantial, oriented to practical ways, to looking for ways to solve the most burning problems of the present,” he said to journalists upon completion of the meeting.

It is clear that in the first place the question was about ways of surmounting the financial and economic crisis. The Four agreed to coordinate their actions in struggle against it, decided to discuss parameters of a new financial architecture, which, according to all accounts, is to be created in the coming years. With this end in view ministers of finance, central banks chairmen and heads of other interested agencies of these countries will be assigned to prepare their proposals that will be discussed at forthcoming meetings of the BRIC leaders.

As is evident from the Four leaders’ joint statement, the economies of transition and development must have more votes in the international financial institutions. They also believe that there need to be a stable, predictable and more diversified exchange system.

According to Dmitry Medvedev, the participants of the meeting in Yekaterinburg “have determined tasks, whose solution can bring the international cooperation to a brand new level, ensure more smooth, operational coordination of all countries, not only in view of the need for the crisis negotiation and formation of fair world architecture, but also in other very serious, significant questions. They are food security, we told about, and energy security we have also discussed and other questions appearing on the global agenda.”

Certainly, during some hours of discussion it was not possible to solve all the problems. But, thanks to intensified work of expert groups from the Four countries, the principal points of contact and ways of joint advance were found though. And this is the main result of the summit.

Before the latest meeting in Yekaterinburg a new economic alliance was just an abstract notion. But, as the expert from the Indian Observer Research Foundation Institute Nandan Unnikrishnan noted, “this block thanks to the summit is no more virtual and has got real outlines, enabled this format to get real outlines.” According to him, “it was a positive start; the parties decided it was necessary to continue to work together.”

The next BRIC summit will be held in 2010 in Brazil. During next year it will be clear, whether this association will be able to prove its justifiability, whether its bid for a new influential force in the world arena is justified.