Another talkfest

BRICS needs a reboot if it wants to be taken seriously

Just a few days ahead of the Eighth BRICS (Brazil, Russia, India, China and South Africa) Summit scheduled to take place on October 15 and 16 in Goa, China has mooted the idea of a free trade area for the five-member bloc. It has claimed that such a move would constitute a "significant form of cooperation" among the countries. Doing so would enable countries to remove tariff and non-tariff barriers, advance trade and liberalise investments among member nations and boost growth at a time when global trade flows have decelerated faster than expected. This is an ambitious idea, but if history is anything to go by, BRICS Summits have hardly led to any real substantive change. It is true that some progress has been made with regard to the New Development Bank (NDB), yet this too has come after a long delay. Moreover, China finds the Asian Infrastructure Investment Bank of far greater significance than the NDB. The hard truth is that, for the most part, BRICS has resembled a talking shop, with its members and its leaders using the platform as an image-building exercise.

This year marks the 15th anniversary of the term "BRICs" (South Africa joined the grouping in 2010) coined by Jim O'Neill, the former chairman of Goldman Sachs Asset Management. In his 2001 paper, O'Neill had said that "these emerging economies should be the building blocks of freshly overhauled global financial and governance systems". A decade and a half later, instead of becoming the next growth engine for the world, BRICS members still have a long way to go. And there are enough reasons why their efforts to form a bloc challenging the collective power of the Group of Seven largest industrial economies have largely been viewed with scepticism. Take Brazil, which has experienced the most spectacular collapse. By the end of this year, its per capita gross domestic product (GDP) will be more than 10 per cent less than what it was in 2013, while the unemployment rate soars into the double digits. And even the impeachment of its two-time president Dilma Rousseff is unlikely to spur a turnaround. Similarly, the Russian economy, too, is battling recession and low prices of oil - a key export commodity - apart from international sanctions for its aggression towards neighbours. China is struggling with three-decade low economic growth, while South Africa has not only slowed down but continues to be plagued by endemic corruption.

Attention has also been drawn repeatedly to the artificial character of this grouping, the conflicting interests of its constituents and the disparate nature of their political systems. The key objective for BRICS countries seems to be to keep up the illusion before the advanced economies that these middle-level powers are interested in making changes in international governance. But on the sidelines, each member wants to deal with the big boys and seek carve outs for themselves. Of course, there are complementarities within the bloc - it has both big exporters and importers of commodities - that could be exploited. The countries are in differing stages of demographic transition and face unique challenges. However, it has never become clear how exactly are the members going to exploit their differences and go beyond optics.