Dr Satish Misra
The four countries grouping BRIC turned formally into BRICS when South Africa joined the group on April 14 in the beautiful city of Sanya in China. Now, five countries will jointly deliberate upon regional and international issues and will try to evolve strategies to meet the challenges confronting the world at large. By bringing in South Africa into the grouping at its third summit, the BRIC leaders have not only expanded their reach to all the continents barring North America but have also added strength of a rainbow nation of 50 million people with abundant natural resources and growing economy.
Countries of BRICS are the fast growing economies and roughly constitute quarter of the world GDP. The role of BRICS is growing as the economies are expanding. These five countries have about 3 billion people who are the backbone of their economic might. Post global recession studies have shown that the economies of these five countries helped the world to come out of the economic depression faster than otherwise would have been possible.
Even in the post recession period, pace of BRICS economy will determine the speed of the economic recovery of the western world. Stressing on the significance of the BRICS, Prime Minister Manmohan Singh said the quality and durability of the global economic recovery process depends to a great measure on how economies of the five countries perform; “We have reasons to be satisfied with the management of our economies, but there is no room for complacency”.
The Sanya summit took a major step forward when a framework agreement was signed which enables financial cooperation by facilitating grant of credit in local currencies. The agreement also allows use of local currencies for cooperation in capital markets and other financial services.
The agreement is of crucial significance as it would help in laying the foundation of any future international financial architecture. This was the first concrete step to move away from the dollar dominated global financial system.
Recognising the role of G20 in playing a bigger role in global economic governance as the premier forum for international economic cooperation, the statement at the third summit expressed a hope that coming G20 summit at Cannes later this year would have positive outcomes in the fields of economy, finance, trade and international financial markets.
The summit took note of the excessive volatility in commodity prices and called for strengthening cooperation to ensure stability and strong development of physical market by reducing distortion and further regulate financial market. “The international community should work together to increase production capacity, strengthen producerconsumer dialogue to balance supply and demand, and increase support to the developing countries in terms of funding and technologies.”, the joint statement issued at the conclusion of the summit said.
“The regulation of the derivatives market for commodities should be accordingly strengthened to prevent activities capable of destablising markets”, the statement said stressing on the need to address problem of shortage of reliable and timely information on demand and supply of international, regional and national levels.
The BRICS leaders gave a call for quick achievement of the targets for the reform of the International Monetary Fund agreed at previous summits and reiterated that the governing structures of the international financial institutions should reflect the changes in the world economy, increasing the voice and representation of emerging economies and developing countries.
In the areas of energy security, the summit decided to deepen cooperation among themselves and reiterated faith in nuclear energy saying that nuclear energy will continue to be an important element in future energy mix of BRICS countries. The statement said that the grouping of five recognized the important role of renewable energy as a means to address climate change.
Health has been identified as an area for cooperation and a meeting of the Ministers of Health has been scheduled in China later this year, the statement pointed out. The grouping also promised to closely cooperate on food security to meet the exigencies and
Taking note of the challenge to accelerate sustainable growth of the developing countries, the statement said the eradication of extreme poverty and hunger was a moral, social, political and economic imperative of humankind and one of the greatest global challenges facing the world today, particularly in Least Developed Countries in Africa and elsewhere.
While the grouping highlighted the need of sustainable growth in developing countries, the BRICS have already been forging their links with low income countries. Trade, investment has been on a growth path for last couple of years.
The summit also prepared an action plan to further strengthen cooperation like holding of the meeting of Ministers of Foreign Affairs during the 66th UN General Assembly.
Similarly, it was decided that Finance Minister and Governors of Central Bank would meet under the G20 framework and during annual meetings of the World Bank and IMF.
Apart from strengthening financial cooperation among the BRICS Development Banks, it was also decided that the Joint Statistical Publication by BRICS countries would be released.
When in 2001 a study of Goldman Sachs had predicted that the BRIC consortium would emerge as a major economic force by 2050, nobody had imagined a grouping would not only get institutionalised but would also get expanded. Within a short time the BRICS have come to acquire powerful voice in the conduct of international relations particularly in the field of international economic governance.