March 27th, 2013, marked the conclusion of the 5th BRICS Summit in Durban, South Africa; which saw the leaders of Brazil, Russia, India, China, and South Africa agree upon the establishment of a new international investment bank to be run jointly by the five countries.
The acronym BRIC was first coined in 2001 by Jim O’Neill, an economist and chairman of Goldman Sachs, who believed that the emerging industries of Brazil, Russia, India, and China would come to dominate the global economy in upcoming decades. All four of these developing countries had experienced robust growth in the past quarter-century, and O’Neill posited that their consolidation into a singular, collaborative economic entity would create an authoritative international bloc powerful enough to rival the influence of the established North American and European states.
Leaders of the four countries gradually warmed to the idea, and began to engage in increasingly high-level multilateral dialogue. This process culminated with the first BRIC Summit in 2009, and the issuing of a first ever BRIC joint statement calling for reforms to be made to the international economic system to better reflect the growing role of developing countries. Successive annual summits saw the expansion of the group’s agenda to topics such as energy security, United Nations Security Council reform, and the safe development of nuclear energy; as well as South Africa’s induction as a fifth member in 2011. Today, the BRICS nations together represent nearly 40 percent of the total world population, and generate a combined annual nominal GDP of $14.8 trillion USD. Slightly a decade after his initial prediction, O’Neill’s vision is already coming close to becoming a reality.
The recently concluded 5th Summit represented another major step towards the actualization of the group’s international influence, as the decision was made to begin the process of creating a “BRICS Bank” that would serve as a counterweight to Western-dominated, Bretton-Woods institutions such as the International Monetary Fund (IMF) and the World Bank. With the help of a $10 billion start-up capital contribution from each country, the new bank would initially facilitate the funding of developmental projects within the BRICS nations and eventually expand to offer financial assistance to other regions of the world. It is also expected to closely mimic the Chinese government’s policy of providing “no strings-attached” financing, which will serve to position it as an attractive alternative to the IMF’s caveat-laden aid options.
China, as the economic heavyweight of the group, is poised to assume a hegemonic role in the operations of the proposed institution. It has both the capacity and the ambition to leverage its undisputedly superior hard power into effective control over the future direction of BRICS policies, in a manner similar to the United States’ historical relationship with the IMF. The headquarters of the bank will likely be located in a Chinese metropolis, and the Yuan will likely be its official transactional currency. This has raised concerns from the wider international community that the institution will function primarily as an instrument for the amplification of China’s global influence. Other BRICs countries, particularly South Africa, have also voiced objections over the proposed even distribution of funding for the project; citing the fact that China could easily foot the entire $50 billion bill by itself and spare its fellow members from a relatively taxing commitment.
These points of contention are emblematic of larger issues that have dogged the BRICS alliance since day one. Critics of the coalition have long argued that the five countries’ political systems, economic structures, and foreign policy aims differ too radically to feasibly coordinate group consensus. Consequently, previous summits have been long on empty proclamations and short on concrete, practical resolutions. Even with the formal declaration of intent made at the most recent summit, the BRICS bank remains a largely ambiguous proposal whose specifics will not be fleshed out until 2014 at the earliest. Unless significant progress is made in the next few years, it appears unlikely that the BRICS will ever develop into a practical, functioning international institution.
Even if the BRICS bank project ultimately concludes in abject failure, however, the global influence of these developing nations will only continue to grow in the near future. Changes are being felt within the established institutions as well. This was most recently exemplified by the appointment of Brazilian diplomat Roberto Azevedo as the next director-general of the WTO, the first time that an individual from one of the BRICS countries has held this position. The ascendancy of the Global South is poised to become the most significant economic trend of the 21st Century, and the repercussions of this seismic shift will be felt in all arenas of international affairs.