Importance of BRIC

The importance of Brazil, Russia, India and China (BRIC) in the world economy has increased manifold since the acronym was first coined nearly seven years ago. Few could have imagined then how the American economy would collapse and bring down with it much of the rest of the world. It is worth revisiting the original formulations on the significance of these four major countries that were made by representatives of a major American investment bank — now a much-maligned tribe and justifiably so — to understand why these economies would together influence the future of the planet we live in.
In October 2003, a report by two economists then employed by Goldman Sachs, Dominic Wilson and Roopa Purushothaman, argued that over the next half-century, the four countries of Brazil, Russia, India and China would become a much larger force in the world economy than the Group of Six (G6) developed countries, namely, the United States of America, Japan, Germany, France, Italy and the United Kingdom. According to the report, in 2050, India’s economy would be the third largest in the world after China and the United States. However, in terms of per capita income measured in US dollars, India would come last among the 10 countries being compared.
Economic Stability
The four BRIC economies taken together would be bigger than the G6 by 2039, it was pointed out. By 2025, these countries could account for over half the size of the G6 whereas the combined Gross Domestic Product (GDP) of the four economies were worth less than 15 per cent at the time the report was written.
The report predicted that in terms of US dollars, China would overtake Germany by 2007, Japan by 2015 and the United States by 2039. India’s economy could be larger than all but the United States and China in 30 years and Russia would overtake Germany, France, Italy and the United Kingdom. Of the current G6 countries, only the US and Japan may be among the six largest economies in the world by 2050.
What is noteworthy is that the Goldman Sachs report pointed out that India has the potential to show the fastest rates of growth over the next 50 years compared to the other nine nations. The real rate of growth of India’s GDP could be higher than five per cent over the next 30 years and close to five per cent till as late as 2050, the report claimed. India would be the only country among the BRIC economies recording growth rates significantly above three per cent per year. These figures appear rather conservative today — the Indian economy has grown by over nine per cent four years in succession and even at a time when the world economy is in recession, the most pessimistic estimate of this country’s GDP growth rate would be four to five per cent.
Goldman Sachs Report
It is important to note the downside that was mentioned in the Goldman Sachs report. Despite much faster growth, individuals in the BRIC "are still likely to be poorer on an average than individuals in the G6 economies by 2050". The exception would be Russia, which would catch up with the poorer among the G6 countries in terms of income per capita by 2050. China’s per capita income could be similar to where the developed countries are now (about $30,000 per capita per year) for, by 2050, the per capita income in the US would be roughly $80,000. By way of contrast, India’s per capita income would be a much lower $18,000 against around $50,000 in Russia and over $26,000 in Brazil, the report prognosticated.
A second report focusing only on India was written by Ms Purushothaman in April 2004 in which she pointed out that India and China (together account for 40 per cent of the world’s population) have both witnessed strong growth, both have surplus labour and both countries have diasporas to contribute to economic development. Yet, according to her, India was 10-15 years behind China in the "reform process", suggesting that better growth was yet to come in India.
Ongoing Economic Crisis
While pointing out the differences in economic orientation, Purushothaman did not mention the important political differences between the world’s two most populous nation-states: India is a heterogeneous, noisy, anarchic democracy while Chinese society is relatively more homogeneous, regimented and wary of granting its citizens excessive political freedom. On hindsight, it is also apparent that the BRIC report by the economists engaged by Goldman Sachs erred extremely on the side of caution. After the ongoing economic crisis, it has become apparent that the gap between the BRIC countries and the G6 would narrow at a much faster pace than had been anticipated.
India currently has no choice but to engage with Brazil, Russia and China in a more proactive manner, simultaneously competing and collaborating with them. Over the past three years, China has overtaken the United States as India’s largest trading partner. Russia, the world’s largest exporter of oil and natural gas, had been badly hit by the sharp fall in world oil prices but is expected to revive with oil prices firming up and expected to rise further. The International Monetary Fund (IMF) projected in April that Russia’s economy would grow by 0.5 per cent in 2010 after shrinking by six per cent during the current calendar year.
Changing Geo-Political Realities
With more than an element of hyperbole, there is no gainsaying the potential of Brazil becoming the "granary" of the planet, China the world’s "factory" and India, its "communications centre." Many in this country, particularly the Left, have been critical of Prime Minister Manmohan Singh for his ideological "tilt" towards the imperialist and capitalist US and the West. But in today’s recession-hit world, economic ideologies have turned upside down and India certainly cannot ignore the rapidly-changing geo-political realities or the fast shift in global economic power balances.
There is one glaring omission in the BRIC combine that needs urgent rectification. The acronym needs to be made BRICS with the addition of the letter "S" to include South Africa, the most powerful economy in the continent of Africa. That would make the grouping truly representative of the world and, perhaps, even a formidable combination for the future.

Stabilizing South Asia

With the beginning of 2011, the overall geopolitical and security scenario across the globe will appear to be distinctly dismal with 2010 not having witnessed any significant political breakthroughs toward peace and stability. Severe recession plagued the world’s economy as never before and the scourge of terrorism unrelentingly expanded its global footprint in more dangerously innovative forms.
Environment and Climate
Unbridgeable chasms in managing the world’s environment and climate continued to bedevil the developed and the still developing fraternity among nations where billions still remain deprived of the most basic sustenance.
Nearer home, South Asia presents a bleak picture with most of our neighbors suffering, apart from economic deprivation, political instability underscored by the ever-expanding specter of terrorism.
Mercifully, as alluded to by our no-nonsense home minister, India did not witness any major terror strikes in 2009 with over a dozen of these strikes perhaps averted, thanks to some improvements in our overall security architecture, besides the always welcome “luck” factor.
Terrorism Menace
Terrorists and all those agencies, predominantly foreign and now some home grown, which mastermind terror will undoubtedly be waiting in the wings to fructify their evil agendas soon for 365 days without a major terror act in the Indian hinterland would be unpalatable to them.
As such, 2010 could prove to be very challenging to India’s security apparatus, besides, once again, testing the resolve of the Indian state to combat terror. India thus has to look inwards to ensure its own well-being by itself, and as an extension of its ethos and values and as the premier power in this region, do all it can to stabilize South Asia.
To our immediate west lies the most dangerous expanse of the world, namely, the Af-Pak region. Pakistan, globally acknowledged as a fountainhead of terror, is at the cross-roads with its own existence as a nation-state under grave threat attributable to those very elements of the Taliban and Al Qaida it nourished for years to foment terror in India and Afghanistan as an extension of its myopic state policy.
Almost daily major acts of violence all across Pakistan have virtually brought it to a halt, but is Pakistan still sincere in combating terror or will its death wish take it to further ruin? An unstable albeit nuclear-armed Pakistan in the danger of imploding has severe security implications for India and we thus have to monitor the overall situation with great caution.
Though adopting a posture of benign neglect towards them may have some takers in this country, yet indifference towards Pakistan may not prove prudent in the long run. As we remain firm in not restarting the composite dialogue till the 26/11 perpetrators are brought to book by Pakistanis and as unambiguously stated by our Prime Minister that no redrawing of boundaries could be ever considered, India could mull over two steps in the larger interests of peace and stability for this region.
We must impress upon Pakistan that, in Afghanistan, India’s sole interest is to bring peace and development to that hapless nation and thus Pakistan must refrain from carrying out any anti-India activities there.
Accordingly, the first step India could contemplate is that if Pakistan officially commits to genuinely stop abetting terror, India may once again offer a no-war pact on the lines of one that was suggested by the Prime Minister in Amritsar four years ago.
Consequently, Pakistan could safely withdraw as many troops they wish from their eastern border to pursue their internal war against the Taliban and al-Qaida terrorists more vigorously.
The second step could be to invite the main centre of power in Pakistan, namely their Army Chief General Ashfaq Pervez Kayani, for a frank ‘one-to-one’ discussion with the Indian government on some security collaborative measures which need to be taken.
Our democratic dispensation in India will naturally be hesitant to have parleys with the Pakistan Army Chief in India instead of their political leadership and thus such meetings could be managed even outside the country in a confidential manner.
Nevertheless, as we must upgrade our badly lagging and ageing military preparedness, India must not remain indifferent to the happenings inside Pakistan and the small yet civilized constituency for democracy and sanity inside Pakistan needs our encouragement.
Importantly, India must also impress upon the United States that for stabilizing Afghanistan, more than a unilateral approach, getting together all the principal players of the region like Russia, even China, Iran, India, Pakistan and itself to collaborate, under the UN banner, may prove beneficial to that fragile and impoverished country.
Towards our East, after years of an uneasy relationship with Bangladesh, the scenario is positively encouraging with the friendly regime of Prime Minister Sheikh Hasina handing over the bulk of the Bangladesh-located rebel ULFA leadership to India.
This major goodwill measure needs to be reciprocated in a substantial manner by our government and we need to address the problems of the Farraka Barrage, the Tin Bigha corridor, the trade deficit problems with equanimity and in a spirit of cooperation.
India must make maximum use of this window of opportunity to cement a multi-faceted relationship with Bangladesh, especially during the forthcoming visit of its Prime Minister to India.
Notwithstanding the fact that Dhaka’s military establishment and intelligence agencies (predominantly its Directorate General Forces Intelligence) have had very close linkages with both the Chinese military and Pakistan’s ISI, a fresh approach to foster security relationships with them be tried. The cooperation of Bangladesh is vital for peace in our restive North-East region.
Maoists Issue in Nepal
With Nepal, over the years, our relationships have been peculiar of love and hate. Nepal, since the end of monarchy, has itself been witnessing a fratricidal struggle owing to the power and ideological struggles between the pro-democracy elements and the Maoists.
Notwithstanding the Maoists’ unfavorable perceptions of India, the visit of Nepalese leader Madhav Kumar to India in August 2009 was indeed a promising beginning for Indo-Nepalese relations. India must strive for the speedy implementation of the various trade and river waters treaties in existence and those signed recently.
We also need to give a fillip to the Bilateral Consultative Group on Security to address all security issues, including cross-border crimes. However, Nepal has to be firmly told that anti-India activities being masterminded by the ISI from Nepal, especially of sending in trained terrorists and the use of Nepalese territory as a conduit for smuggling in fake Indian currency to India has to be dealt with effectively.
China and Sri Lanka Factors
The Indian establishment needs to work out long-term strategic-cum-intelligence arrangements with the Nepalese establishment, notwithstanding the current opposition to it by pro-China elements inside Nepal. In addition, fencing of the currently open Indo-Nepal border could be thought of, besides revisiting the 1950 India-Nepal Treaty of Peace and Friendship.
Though we have warm relations with Sri Lanka, India does not appear to be proactive in furthering its multi-faceted relationship with the island territory. With the Chinese ever active in the implementation of their “string-of-pearls” strategy, it is embarking on the construction of the strategic port of Hambontota in Sri Lanka, which has security implications for us.
And now with Tamil Tiger Prabhakaran out of the way and the end of the civil war in Sri Lanka, India could consider supplying most of the military equipment for the Sri Lankan armed forces as possible and carve out newer areas of cooperation with its tiny neighbor. India has to prevent the Chinese doing a Myanmar in Sri Lanka.
The world acknowledges our “seat on the high table” and the potential of India as a significant global player in the coming years. A strong, secure and self-reliant India must play its major role to bring peace and stability to South Asia and the world at large.

Annual UN Climate Change: India Feels Heat

Two-week international climate conference with participants from more than 190 nations plus the European Union (EU) has already begun in Durban, South Africa on November 28. The conference is seeking ways to curb ever-rising emissions of climate-changing pollution, which scientists said last week have reached record levels of concentration in the atmosphere.
Addressing the conference, South African President Jacob Zuma said that global warming already is causing suffering and conflict in Africa, from drought in Sudan and Somalia to flooding in South African, urging delegates at an international climate conference to look beyond national interests for solutions. He added that for most people in the developing countries and Africa, climate change is a matter of life and death.
Talks Failed
Talks at the climate change conference have predictably bogged down over funding and over the insistence of the first world countries that emerging economies like India and China also commit to legally binding and higher reduction of carbon emission.
Nations like Japan, Canada, Russia and New Zealand have decided to back out of the Kyoto Protocol, the only legally binding treaty that requires 37 developed countries to reduce amount of CO2 they released. The European Union has made it clear that it would agree to more carbon reduction only if emerging economies like China and India also undertake some form of binding cuts to bring down their gases that trap heat and make the climate warm.
Government delegates from 194 countries have gathered in Durban to agree to the next steps to combat climate change. The talks have been bogged down by disagreements on the kind of actions that need to be taken by developed and developing nations.
Another area of disagreement is on the design of a Green Climate Fund, which will provide $100 billion a year from 2020 to developing countries to combat climate change. The report of the UN committee on how to set into motion such a fund is now being debated at the talks. The South American nations of Colombia, Venezuela, Nicaragua (representing the ALBA nations) as well as Saudi Arabia and the U.S have objected to its contents.
There is, however, an overall urgency for the Fund to be adopted at Durban so that money begins to flow. Tomasz Chruszczow, the Polish envoy whose country is currently presiding over the EU, told reporters that the report was a “good compromise.” “In its current form it would attract significant funding,” he said. “We believe it would be counterproductive to undertake technical decisions on the instrument.”
The Africa Group also supported India, which “is doing its fair share in the context of its own challenges,” said Nafo, the spokesperson of the Africa Group to The Tribune. The diplomat from Mali further noted that China was taking the lead in investing in renewable energies that do not pollute the environment.
As large developing economies release more CO2 in the atmosphere because of rapid economic growth in the past decades, it has also led to divisions within the bloc of G77 + China. Both have argued that their overriding priority remains poverty eradication.
Emission Reduction Obligations
Even before the annual UN climate change negotiations are formally kicked off in Durban, India was warding off pressure to commit to legally binding CO2 emission cuts. Developed countries are threatening to abandon the 1997 Kyoto Protocol, which imposes emission reduction obligations on 37 industrialized countries, if all major emitters don’t do more to curb their greenhouse gases.
The Indian delegation here has reiterated its stand that it was indeed absurd to expect India and other developing nations to undertake reductions on the lines of developed nations. The developing countries, says the Indian delegation, have the overriding priority of eradicating poverty and sustain development. Indian negotiators added that they have already taken on voluntary commitments to reduce emission by 20 per cent by 2020.
The Indian delegation cited the Stockholm Environment Institute’s Report, released in 2011, which said that pledges to reduce carbon emissions from developing countries are more than the targets set by the developed countries. The study, commissioned by Oxfam, estimates that over 60 per cent of emission cuts by 2020 are likely to be made by the developing countries. The emission reductions of China, India, South Africa and Brazil - the BASIC countries - could actually be more than the combined efforts of the seven most developed countries or zones, namely the US, the European Union, Japan, Canada, Australia, New Zealand and Russia.
Already there are concerns that talks over the next two weeks will fail. The 2010 talks in Cancun skirted around the issue with Japan and Canada asserting their opposition to the 1997 Kyoto treaty. The US had also backed out of the agreement in 2001, claiming that it was unfair. Developing countries, including India, want these talks to result in developed countries renewing their pledges, since the first phase of the treaty expires at the end of 2012.
But the European Union, Japan, Canada and Russia are not willing to be part of a treaty that neither includes the US nor emerging economies like China and India. But with mounting Republican opposition, the Obama administration cannot act decisively until the 2012 presidential elections.
Some countries have also hinted that another treaty could take as much as 10 years to work out. In Durban, the US has already made it clear that it would not agree to any legal instrument that did not put obligations on all major emitters.
The efforts to continue the North-South differentiation under the Kyoto Protocol is led by India, China, Brazil and South Africa (BASIC) countries. “The Kyoto Protocol is the cornerstone of the climate regime,” a Chinese spokesperson told delegates. “We call upon the developed countries to rise up to their historical responsibility and take the lead up by undertaking ambitious and robust commitments consistent with science.”
China is now the largest producer of carbon emissions followed by the US. Indian delegates maintained that the BASIC statement by China at the start of the conference testified to the group’s solidarity. The bloc of developing countries, however, is more fragmented due to the immediate danger faced by small island nations, which are most vulnerable to rising sea levels. The International Energy Agency report, released this month, said the world had five years before the consequences of climate change will become irreversible. The goal is to stop the Earth’s temperature from increasing more than 2 degree Celsius from pre-industrial levels. Despite the deadlock over the Kyoto Protocol, delegates from 194 countries will attempt to find solutions on issues like adaptation, finance and technology sharing.
On a positive note, however, the Indian delegation was pleased that it garnered some support for its three-point agenda - equitable access to sustainable development, unilateral trade measures (in response to the European Union aviation tax), and intellectual property rights - two of which were left out of previous Cancun agreements. India’s lead negotiator Jayant Mauskar said: “We are not talking about the Himalayas, Mumbai or the Ganges. These three issues are important for all developing countries.”
Saving Financial Costs
The UN's top climate scientist says global warming will lead to human dangers and soaring financial costs and that containing carbon emissions will have a host of benefits.
Addressing the conference, Rajendra Pachauri, head of the Intergovernmental Panel on Climate Change (IPCC), said that heat waves experienced once every few decades will happen every other year by mid-century.
Coastal areas and islands are threatened with inundation by global warming, rain-reliant agriculture in Africa will shrink by half and many species will disappear.
Pachauri said: "Many impacts can be avoided, reduced or delayed by reducing emissions. The costs of action would be offset by improved health, greater energy security and more secure food supplies.”
Weather Data Released
On the sidelines of the UN-sponsored climate change talks, the World Meteorological Organization (WMO) stated that the global average temperature in 2011 was down from the record high in 2010 because of it being a La Nina year, but it was still higher than previous La Nina years.
The latest weather data highlight the conundrum of the negotiations as governments spar on whether developed or emerging countries should bear the brunt of emission reductions. Few attendees expect a breakthrough on the talks, which come amid growing warnings about the likelihood and severity of global warming.The UN weather group stated 2011, still with one month left, was the 10th warmest year on record. While the temperature was down from 2010, the WMO said it was higher than previous La Nina years. La Nina typically has a cooling influence on temperatures.