On the face of it, the five biggest emerging nations — Brazil, Russia, India, China and South Africa — that make the world’s newest aspiring power bloc Brics, have everything going for them. Together they account for two-thirds of global humanity, a quarter of the world’s geographic area, a quarter of global GDP in purchasing power parity, two-fifth of international trade and one-10th of worldwide foreign investment absorption.
This is the reason why, in the first place, they have come together in a strategic transcontinental alli-ance to leverage their clout in a changing geostrategic and economic global order, following the 2008 financial meltdown.
Yet, as the heads of state and government of the five nations come together for a pow-wow for the fifth time in as many years, here in Durban on Tuesday, hardly much seems common apart from their disguised desire to outdo one another in their great leap to break rank from the emerging world. In that sense, Brics should be more against each other than about each other.
For one, three of the five group members — Brazil, India and South Africa — are inextricably aligned to the West to sustain their economic aspirations and have little to feed each other’s growth engine apart from abundant goodwill and shared Third World bonhomie. Two, China is decidedly a global superpower, flexing its substantial economic clout, and more recently, military muscle. Three, Russia, a yesteryears’ superpower, is busy nursing renewed superpower ambitions with plenty of petrodollars earned from selling oil and gas to Europe, and emerging opportunities in China’s lucrative energy market. It has little to sell India, Brazil and South Africa other than outdated military hardware that finds few takers in the global market.
For India, that has been enthusiastically pushing the Brics dialogue, the partnership has essentially to do with the India-China story that could allow New Delhi to play catch-up with Beijing at peddling influence in world capitals. It also sees Brics as a manageable post-Cold War alternative to a near-defunct nonaligned movement that can help it reclaim its Third World leadership profile.
Which is why policy wonks and strategic masterminds in the Delhi establishment are content at overlooking China’s incursions in the neighborhood, while championing cooperation as the cornerstone of the Brics framework.
Officials in Prime Minister Manmohan Singh’s delegation say they look forward to his dialogue with China’s new President Xi Linping. “Everything we have seen of the new leadership, while the transition has been going on (in China), has been positive,” they say, adding “the content of all exchanges from China in China-India relationship so far, has been very significant.”
Officials claim India has demonstrated its capability to manage the bilateral relationship despite many differences with China over arming nuclear-capable Pakistan, damming the Brahmaputra and ring-fencing India’s maritime interests. This, they say, is evident in China’s significant achievements in project exports to India and in emerging as the country’s biggest trade partner.
Yet, the fact remains that the Indian government resents China’s overwhelming presence in India that has relegated Indian manufacturing to the periphery, and added to our current account deficit. State-owned power producer NTPC rejects Chinese turbines as substandard, despite substantial orders from private power producers, while state-owned turbine maker Bhel frowns upon Chinese equipment for rendering it uncompetitive. Even in the telecom sector, imported Chinese gear is suspected for embedded malware and snooping devices that threaten our communications network.
On its part, India has hardly anything to offer China other than iron ore lumps to feed its giant steel mills. The trade balance weighs heavily against India. Official delegations to Beijing in the past 12 months pleading to restore the trade balance have been ignored with contempt for Indian merchandise.
For the record, the Prime Minister is also scheduled to meet Russian President Vladimir Putin later on Monday in a one-on-one for what increasingly looks like old times’ sake. In the post-Cold War era, India has singularly aligned its economic and strategic interests with the West, led by the United States, for dollar inflows, both in terms of FDI and FII investments. It has little use for Russia other than to replace and refurbish old armaments; that country’s oil and gas reserves are located too far to satiate India’s hunger for energy.
With South Africa, India seeks to build an emotional engagement that looks to shared nostalgia of Gandhi’s experiments with truth in this country a century ago and Nelson Mandela’s subsequent experiment with non-violence. We also sell a few Tata trucks here. Brazil triggers euphoria around soccer. Period.
For China alone, all these countries mean business, as all of them are within reach of its giant state-funded manufacturing enterprises.
It is against this backdrop that the Brics nations have made little headway on trading and loans in local currencies despite an agreement among five development banks from these countries. Even loud thinking among the respective commerce ministers to double trade to $500 billion by 2015 from $230 billion in 2011-12 has not been endorsed in any official communique so far. Plans to set up a Brics Bank await clarity after four rounds of talks among the respective finance ministers in the past year, even as they head for yet another round of brainstorming later Monday, on the bank’s viability.
Yet, for five emerging economic giants gathered here this week, Durban brings hope for a new tomorrow. South Africa, which chairs the summit this year, has rustled up heads of fellow African countries for a bigger pow-wow in the summit’s shadow.
And for the five fast-growing emerging economies, what could be a bigger opportunity than a bid to grab slices of a giant continent, touted as the world’s newest growth engine today? Even there, China has a head-on advantage over others, as it pervades the global economy with its hunger for natural resources and huge export push of cheap manufactured goods.