BRICS Summit

BRICS and bouquets

Print edition : August 22, 2014

At the sixth BRICS summit in Fortaleza in Brazil on July 15, (from left) Russian President Vladimir Putin, Indian Prime Minister Narendra Modi, Brazilian President Dilma Rousseff, Chinese President Xi Jinping, and South African President Jacob Zuma. Photo: Subhav Shukla/PTI

Narendra Modi and Xi Jinping during the bilateral meeting on July 14. Photo: by Special Arrangement

The forum came of age at its summit in Brazil, but it can realise its full potential and establish its geopolitical importance only by achieving greater internal harmony and faster economic growth.

The sixth BRICS Summit, held in Brazil’s coastal city of Fortaleza on July 15, provided Prime Minister Narendra Modi an extraordinary stage for his debut in multilateral diplomacy. The opportunity was used by India’s new government to unveil the contours of its world view. A critical assessment of the summit and related events may be of wide interest.

Previous summits were held at Yekaterinburg in Russia (2009), Brasilia (2010), Sanya in China (2011), New Delhi (2012) and Durban (2013). They helped the five members—Brazil, Russia, India, China and South Africa—to view the world through a shared prism and forge cooperation in areas of mutual benefit.

The last two summits achieved some progress, but it remained unclear if BRICS would advance any further.

The grouping accounts for 46 per cent of the world’s population, 23 per cent of its gross domestic product (GDP) and 17 per cent of global trade. It has its critics and advocates. Before the summit, expectations were generally low about possible outcomes as negotiations on important issues of financial cooperation remained inconclusive. Recent developments in Ukraine and East Asia created apprehensions that BRICS, in its anxiety to craft a “non-Western” narrative on global issues, might be tempted to adopt an anti-Western and negative orientation. “It’s time to bid farewell to the BRICS,” said a reputed British daily. But, India’s view has been different. BRICS is considered “a transcontinental grouping with increasing geopolitical importance”. South Block highlighted its “symbolic significance”, arguing that the members’ ability to take collective positions carried “its own message”.

The Brazil summit had three distinct segments: ministerial meetings leading to the summit; bilateral meetings among members on its sidelines; and the outreach meeting between BRICS leaders and South American leaders.

The Summit

The sixth summit produced three important documents: Agreement on establishing the New Development Bank (NDB); Treaty for creating the Contingency Reserve Arrangement (CRA); and the Fortaleza Declaration. The first two documents are full of complex details showing why they needed considerable time for their finalisation. The third document is the key to understanding the depth of internal coherence and divergence among BRICS powers.

The NDB, the single most substantial outcome, and the CRA are the two new institutions, which are widely perceived as modest counters to the World Bank and the International Monetary Fund. The bank will have an initial “subscribed” capital of U.S. $50 billion and an initial “authorised” capital of U.S. $100 billion. It will lend money to BRICS, other emerging economies and developing countries for infrastructure and sustainable development projects. The member-states will have equal share in capital, that is, $10 billion each. Their voting weight will also be equal, in contrast to the norms in existing international financial institutions. The bank will be headquartered in Shanghai, but the first president will be from India.

The CRA, with an initial size of $100 billion, will have a different pattern of contributions. China will contribute $41 billion, South Africa $5 billion, and the other three $18 billion each. It is designed to help needy countries forestall short-term liquidity pressures and strengthen “the global financial safety net”.

The Fortaleza Declaration is a weighty document, presenting the basic philosophy, hopes and concerns, and the future blueprint of BRICS. The grouping is committed to four “overarching objectives”, namely peace, security, development and cooperation. The world needs to tackle challenges of strong economic recovery from the global financial crises, sustainable development and climate change at a time when it is experiencing “persistent political instability and conflict in various global hotspots and non-conventional emerging threats”. The prescription favoured by BRICS is “international change and reform” of current institutions of global governance.

The declaration showcases a largely shared view on economic and trade issues, a post-2015 development agenda, cybercrime, cultural diplomacy as well as political questions in countries ranging from Iraq, Syria and Afghanistan to Ukraine and those in Africa. It aims to forge intra-BRICS cooperation through ministerial meetings and dialogue on diverse subjects such as education, innovation, health, urbanisation, economy and trade.

While addressing the plenary session, Modi described BRICS as a “forward-looking” institution which brought together “a group of nations on the parameter of ‘future potential’ rather than existing prosperity or shared identities”. He was clear about its fundamental role: “BRICS must provide a united and clear voice in shaping a peaceful and stable world.” He suggested decentralisation of the forum, its moving away from being “summit-centric”, and its vertical expansion. Participation in the summit, he said, was “a truly enriching experience” for him.

Bilaterals

A byproduct of today’s summit diplomacy is the phenomenon of meetings on the sidelines, which often attract more attention than even discussions within the summit room. This happened at Fortaleza too. Prime Minister Modi’s meetings with the other four leaders—China’s Xi Jinping, Russia’s Vladimir Putin, Brazil’s Dilma Rousseff and South Africa’s Jacob Zuma not only contributed to removing last-minute hurdles to positive outcomes of the summit, but they were also occasions for fruitful dialogues on bilateral relations.

The meeting with the Chinese President was the most consequential, lasting 80 minutes. Both leaders, meeting each other for the first time, strove to create a good personal chemistry. Diverse issues—global, regional and bilateral—were taken up. Matters such as the boundary question, trade deficit, Chinese investments in India, river waters, and a new route for the Kailash-Mansarovar yatra were reviewed. Modi was invited to attend the Asia Pacific Economic Cooperation (APEC) summit in China, a gesture that took the Indian delegation by surprise as India is only an observer. The Indian spokesman called it “a good conversation, a good meeting”. Much hope has now been placed on Xi Jinping’s September visit to India. India-China relations are traversing a positive phase at present. The question is whether the Modi government will be astute enough to balance them by developing new proximity to the other power centres—the United States, Japan and the European Union.

The Modi-Putin meeting was an occasion to reaffirm faith in the privileged and strategic partnership between the two countries. Putin’s next meeting with Modi will take place in New Delhi in December. The two governments have their work cut out to raise the quantum of bilateral trade and investment and achieve closer cooperation in the fields of defence and nuclear energy. But major hurdles remain.

The Brazilian President had a good meeting with Modi, who called Brazil “a key global partner”. They agreed to take steps to expand and diversify trade and investment flows and deepen cooperation in agriculture and dairy science. Three agreements were signed on remote sensing, environment and consular issues.

The Modi-Zuma meeting saw the two sides characterising the relationship as unique and special. Zuma was invited to visit Gujarat in 2015 to participate in the centenary celebrations of Mahatma Gandhi’s return from South Africa.

India announced that the next India-Africa Forum Summit would be held in New Delhi in December. Modi also indicated that India would host the next India-Brazil-South Africa (IBSA) Summit in 2015.

Wooing South America

BRICS leaders met heads of state/government of 11 member-states of UNASUR, the association of South American nations. They conveyed the grouping’s commitment to work closely with the region and contribute to its socio-economic development. The BRICS bank and the currency reserve arrangement will benefit South America too. This meeting demonstrated the rising geopolitical significance of BRICS.

Modi’s statement was an unambiguous signal of India’s interest in South America. “In a globalised and interconnected world,” he said, “our destinies are inter-linked.” Referring to the famous poets and authors Octavio Paz, Gabriel Garcia Marquez, Pablo Neruda and Rabindranath Tagore, he spoke of India and South America sharing “a deep bond”. He assured his interlocutors that India would work more closely with South America than ever before. They invited him to pay a bilateral visit to South America. Modi also had detailed discussions with the Presidents of Guyana, Peru and Suriname.

Modi remarked that “the possibilities of cooperation are limited not by distance but only by our imagination”. If New Delhi is serious about reinvigorating relations with the region, it should host the first India-South America Forum Summit in the next 12-18 months.

High praise

From India’s viewpoint, Modi’s visit to Brazil was a substantive success, complete with a positive outcome of the BRICS summit, satisfactory bilateral dialogues, and beneficial interaction with the largest number of South American heads of state or government. Most observers have portrayed Modi’s personal performance in glowing terms. A few, however, have raised doubts about the long-term efficacy of BRICS, referred to fears about its likely domination by China, or argued that deterioration in U.S.-Russia relations would complicate India’s task to balance its relations with other powers.

Recently, Minister of External Affairs Sushma Swaraj informed Parliament that the aim in India’s international engagement was “to advance our national development and security and to fulfil our international responsibilities to build a peaceful and prosperous world”. BRICS came of age in Brazil. It has much potential. Greater internal harmony and faster economic growth will help in increasing its geopolitical importance.

Rajiv Bhatia is Director General of the Indian Council of World Affairs and a former High Commissioner to South Africa.

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