BRIC Meeting

The 2009 meeting of the heads-of-state of Brazil, Russia, India and China (BRIC) in the Russia’s third largest city, located in the picturesque Ural mountains, that was held recently after the Shanghai Cooperation Organisation (SCO) Summit. The meeting was attended by the Russian President Dmitry Medvedev, Chinese President Hu Jintao, Brazilian President Luiz Inacio Lula de Silva and Indian Prime Minister Dr. Manmohan Singh. The meeting focused mainly on the meeting between Dr. Singh and the Pakistani President Asif Ali Zardari.

Formation of BRIC
The formation of BRIC is post-Cold War developments, dictated by circumstances brought about by that signal event. The BRIC countries have 25.9 percent of land in the world. Their population is about 40 percent of that of the world. Their contribution to the world's Gross National Product (GNP) is about 40 percent. The focus of the BRIC meeting was mainly on global economic recession and on environment. It will be difficult for the world to ignore their joint demand. Before his departure, the prime minister had said India was prepared to play its role in overcoming recession. As a matter of fact, there can never be a way out of this problem without the participation of countries accountable for 40 percent of the world's population and its GNP.

However, the ongoing international recession has adversely impacted Russia and Brazil far more than China and India, particularly on account of the fall in commodity prices, especially the prices of oil, gas and metals. China’s Gross Domestic Product (GDP) is greater than the combined GDPs of the three other BRIC countries while its exports as well as its foreign currency reserves are more than twice those of Brazil, Russia and India put together.

The BRIC states are also members of G-20, which met not long ago to discuss the issue of coping with the global economic slowdown. In that setting, the focus was on strategies to get the economic and financial wheels moving in the major economies with the aid of countries like China and Saudi Arabia that have surplus investible resources. The BRIC format would allow the leading developing countries — which are a subset of G-20 — to better concentrate on strategies of trade, development and energy transfers among themselves in a way that would maximise gains for each of them. This is an important objective which does not diverge from the wider G-20 objectives.

At the G-20 Summit in London in April 2009, these countries had in fact referred to their own separate obligations. But they also want their presence to be felt in international organizations. India and Brazil, in particular, have been demanding permanent membership of the United Nations Security Council (UNSC). Since China's role in India's context is not clear, unanimity is practically impossible on this issue. Nevertheless, they can agree on economic issues.

Joint Statement
The joint statement issued at the end of the meeting, the leaders committed to advance the reform of international financial institutions, so as to reflect changes in the global economy. The leaders believed that the emerging and developing economies must have greater voice and representation in international financial institutions, whose heads and executives should be appointed through an open, transparent, and merit-based selection process. They also believe that there is a strong need for a stable, predictable and more diversified international monetary system".

Much of the rest of the joint statement contained platitudes about support for a "just multi-polar world order" and the imperatives of energy-efficient development strategies. It pointed out that the "poorest countries have been hit hardest by the financial crisis" and called on the "international community… to step up efforts to provide liquid financial resources for these countries". Developed countries were urged to remember their commitment to provide 0.7 per cent of their national incomes as aid.

Russia and China have for long been expressing their dissatisfaction at the pre-eminence of the US dollar as a "reserve" currency. The BRIC statement did not specifically mention the dollar but the message was clear. The BRIC countries are among many others who, faced with terrible recessionary conditions, are frustrated at their powerlessness in influencing the exchange rate of the dollar while remaining vulnerable to the fluctuations in the value of the American greenback.

Before the summit, Medvedev remarked: "There can be no successful global currency system if the financial instruments that are used are denominated in only one currency…" BRIC member states do have a common understanding of the causes and consequences of the current world economic crisis— something they do not necessarily share with the US, Japan, and Europe — and a joint interest in the reshaping of the global financial architecture.

Need of the Hour
It is believed that for making the BRIC successful, the organisation needs to proceed on three separate fronts. The most important of these is global. The Yekaterinburg statement speaks about making the institutions of global economic governance more open, transparent, and representative.

The four-nation organization, BRIC also speaks of moving towards a more stable and diversified international monetary system, and pushing for a balanced conclusion to the Doha Development Round at the World Trade Organisation (WTO) through, among other things, ending the multi-billion dollar western agricultural subsidies that distort global food markets.

The second issue is internal: BRIC will be stronger and more unified if there are greater internal linkages between its economies, especially on the business front.

The last but not least front is that the BRIC has a political agenda: using its collective strength as a lever for creating what President Medvedev called a “fairer world.”