The Economy of Forums

Today the BRICS countries account for more than 40% of the planet’s population, one fourth of its landmass, and one quarter of the global gross domestic product measured by the purchasing power of their national currencies. What is even more important than these figures is that during the global financial and economic crisis it was the BRICS countries that made the greatest contribution to the world economy, enabling it to maintain growth. But in international institutions such as the World Bank and the International Monetary Fund (IMF), the BRICS countries play a rather modest role compared with their clout in the real world. Among these five countries, only Russia was admitted to the G8 club, while Russia and China are the only BRICS to be permanent members of the UN Security Council. So far, none of the BRICS countries have joined the Organisation for Economic Cooperation and Development (OECD), a body that commands a great deal of authority. Something is out of balance in this picture.

Having said that, all of the BRICS countries are members of the World Trade Organisation (WTO) and the G20, whose role in resolving global economic issues has increased considerably today. Most importantly however, these countries share a common vision of global challenges, their positions are close, and sometimes they share the same stance on the core challenges faced by the global economy and the ways to resolve them. The G20 has made significant strides in advancing and agreeing common macroeconomic policies, and in my view much of the credit for this success should be attributed to the BRICS countries, because during the G20 meetings their positions remained very similar.

Most importantly, BRICS countries share a common vision of global challenges, their positions are close, and sometimes they share the same stance on the core challenges faced by the global economy and the ways to resolve them

It must be added, however, that economic ties between the BRICS countries are at different levels. Russia’s main trade partner is China, which in recent years has moved into first place not only among the five BRICS nations. Our economic relations with India, which rightfully holds the second place in this group, remain on growth track as well. In terms of trade turnover and levels of economic cooperation, South Africa remains Russia’s leading partner in sub-Saharan Africa, while Brazil plays the same role in Latin America.

Today all of Russia’s BRICS partners have become the leading economies in their respective regions. Each of them has a role in various regional and economic associations, much like Russia’s customs unions and common economic space with her geographic neighbours.

Other welcome news is that Russia’s cooperation with the BRICS involves not only the traditional supply of commodities but also the high-tech sector, which enables them to develop relations in a multilateral format. For instance, as a result of Russian Prime Minister Dmitry Medvedev’s recent visit to Brazil, the Russian GLONASS satellite navigation system will also become available on the South American continent.

There is no doubt that business forums play a vital role in the development of economic cooperation between the BRICS. It all started with the meeting of the BRICS leaders in Hainan, China, in 2011, and now these forums are held exclusively in the format of summits between heads of states. Meetings between business leaders identified the need to ensure greater five-way coordination not only at the macroeconomic level but also in terms of interaction between the respective business communities.

Business meetings based on the BRICS platform have become a forum for fostering business contacts. Usually, trade relations tend to develop on a bilateral basis and many of our entrepreneurs take part in various forums held on the margins of BRICS summits to meet their partners from specific countries. Yet their businesses can benefit greatly if these entrepreneurs have an opportunity to listen to their colleagues, exchange business cards and expand business networks, which could later translate into real contracts. Therefore, on the Russian side, the Russian Chamber of Commerce and Industry organises such meetings on a regular basis.

Russian entrepreneurs are greatly interested in organising a business forum on the margins of the upcoming BRICS summit in South Africa. More than 70 leading Russian companies that operate in various economic areas have already indicated their willingness to attend. Among them there are quite a few companies representing the high-tech sector, which in our view holds the greatest promise today.

Among key ideas identified during the previous BRICS forum, in Delhi in 2012, our interest was particularly aroused by the proposal to set up the BRICS Development Bank. Such an institution will presumably become the main centre lending financial support to development projects, which entrepreneurs from the BRICS countries could carry out jointly.

In a report prepared by the heads of development banks from the five BRICS countries, the authors stated that setting up such a bank would be both “desirable and possible”. The bank’s chief objective would be to lend money to infrastructure development projects in the BRICS countries and beyond. The question of the initial chartered capital has already been brought up, and a figure of at least $50 billion was mentioned. More often than not development banks tend to be state-owned credit institutions; that is why such projects are frequently financed based on sovereign guarantees. At any rate, this project is still under discussion, and the issue is very likely to be analysed in greater detail by the BRICS leaders in Durban.