)
The one significant proposal that could grab international attention is the establishment of a BRICS development bank. This could break the monopoly of Western-dominated international financial institutions as a source of development finance. This proposal was initially advanced by India and one hopes it is pursued with vigour at the Durban summit. In order to be credible, the proposed bank must be seeded with adequate capital. The proposed amount of $50 billion is too modest. It is also reported that China has been pitching for a larger share of the equity, hence voting power, in order to determine the bank's lending policies. This must be resisted. We should not end up creating a mere clone of the World Bank, where smaller shareholders are just bystanders.
Since the inception of BRICS, the grouping's leaders have been consistent in their calls for the restructuring of the global economic and financial order and a greater say for emerging economies in global governance. However, in their national approaches at the G20, the World Trade Organisation (WTO) and the United Nations (UN), the group's members often go their separate ways on issues on which their interests diverge. This is unlikely to change, given the considerable asymmetries among the member states and their differing political status and aspirations. As permanent members of the UN Security Council, neither Russia nor China is enthusiastic about the entry of Brazil, India or South Africa into the inner sanctum. Both Brazil and India are wary of China's mercantilist trade policies; while in Africa, India and China are often in competition for the same resources. Nevertheless, given the economic weight of the grouping, BRICS will remain a useful pressure group to nudge change in the increasingly outdated and dysfunctional global economic and financial architecture. It is also a convenient platform for some anti-West flag-waving on issues related to Iran and Syria.
The summit will see the debut of China's new leader, Xi Jinping. Russia's Vladimir Putin, too, is attending the event for the first time. It is possible that these two leaders may introduce a new dynamic into the grouping. We should know soon enough.
Global trade arrangements are experiencing far-reaching developments that could significantly impact the economic prospects of the BRICS countries. These changes could provide the trigger for their closer co-operation. A transatlantic free trade zone with the US and the European Union is already under negotiation; if successful, this would create an economic zone encompassing virtually half the world's GDP and trade flows. On the other side of the world, the trans-Pacific partnership is steadily making headway (Japan is virtually certain to join), creating another parallel and powerful trading bloc. None of the BRICS nations finds place in these emerging giant trade conglomerations. The US has championed both projects with China's relentless economic ascendance in mind, but other BRICS members will suffer heavy collateral damage as a result of their exclusion. The new groupings will set norms and standards for economic exchange with little or no input from emerging countries. They will inevitably evolve into non-tariff barriers. The serious implications of these developments should drive the BRICS nations to consider effective coping strategies. Reviving the multilateral WTO process could be one such collective response.
It should have been expected that a summit being held in Durban should have development co-operation with Africa as its theme. This is to be welcomed. The emerging countries are now a significant source of development finance for sister developing countries, even as the traditional aid donors in the Organisation for Economic Co-operation and Development (OECD) have drastically scaled back aid flows both bilaterally and through multilateral financial institutions. The emerging countries follow different norms in providing funds for development, the most important being the treatment of the recipient as a partner. There is a a conscious rejection of the prescriptive donor-recipient approach of the OECD, including the imposition of political conditionalities. India's own development co-operation with Africa has focused on capacity building and community development projects, and it is generally aligned with the African partner's priorities.
The BRICS summit could be a good platform for establishing a new set of recipient-friendly norms in the domain of international development co-operation. Since India and China are already major economic partners of Africa, and the other members of the group, too, have substantial presence in different parts of the continent, a co-ordinated approach to promoting Africa's development and the setting of certain shared norms and benchmarks would be of considerable significance in the ongoing development discourse, particularly in the context of the post-2015 Millenium Development Goals (MDGs) and the proposed Sustainable Development Goals (SDGs) arising out of the Rio+20 conference of 2012. The establishment of the BRICS development bank would fit in neatly with such an initiative.
India could take the lead by proposing a BRICS Africa development compact, which would be a substantive contribution to Africa's development and a political statement that would erase the premature obituaries that keep appearing whenever the BRICS leaders meet.
The writer, a former foreign secretary, is chairman, NSAB and RIS, and senior fellow at CPR, New Delhi
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
