Tomorrow’s Agenda

Over the last decade China, India, Russia and Brazil began to view themselves as countries that share both economic interests and similar goals. Whether the expectations placed upon them are going to be met remains to be seen, but one thing remains certain today: These nations, along with the recent addition of South Africa, are proactively contemplating the price tags on the economic and political issues that could become their contribution to the global agenda.

On the one hand, this process is important because the BRICS are perceived as a non-Western force. Russia and China were the West’s antagonists during the Cold War; India and Brazil during different periods of their history were colonised by European powers; and South Africa served as a symbol of a local population’s struggle against invading outsiders.

On the other hand they remain heavily dependent on the West, and complement its economic system. China rose to economic prominence thanks to exports of cheap industrial products to the developed world; India’s growth is predicated on technological outsourcing; Russia and South Africa bill themselves as mere donors of raw materials for the benefit of Europe and the United States.

If these countries truly intend to become economic trendsetters on a global scale in the next 30 to 40 years, they will have to use this time to take the lead with respect to issues that currently dominate the global political landscape, not by emerging as winners in a fierce confrontation with leading powers, but through the creative development of existing trends.

One of the BRICS’ initiatives could be reformulating the entire agenda on global warming. The financial resources of these countries, coupled with European technological breakthroughs, could in 15 to 20 years leave the United States as the last stronghold of energy inefficiency, showing the gap between the US and the rest of the world to be the result of egotistical policy. The BRICS countries could emphasise their developing nature in this area, which makes it impossible to replicate Western consumption standards, and on the other hand capitalise on the high profile of this problem to galvanise international efforts and channel them towards areas that are most important to them

Given this backdrop, a BRICS agenda that would enable the alliance to secure the status of prominent agent in the global political and intellectual arena should combine several elements. First and foremost, it should include the areas in which these countries play a particularly significant role: energy, exports of natural resources, industrial development, and so on. Secondly, these topics should be raised in a defensive, not offensive, manner, placing greater emphasis not only on the achievements these countries boast but also on their development potential, and focusing not only on their rights but also their responsibilities. Thirdly, the key topics in global discourse should not be reduced to North-South relations, nor should they carry any non-Western connotation. From the very outset they should be billed as global in nature. Fourthly, the BRICS countries should also bring up issues that the leading powers do not expect to see on the agenda.

In other words, they need to remain in sync with the current discourse, emphasise the fact that the initiators of these discussions enjoy a special status – and not just in a positive way – and ultimately come up with a short list of top issues that potential opponents believe to be their sole and undisputed domain.

Alternatives to global warming

The environment is one issue that the West seems most keen to impose as an item on the global agenda. Without denying the value and significance of this issue, it should be noted that one of its elements – so called ‘global warming’ – has been increasingly contested by experts who believe that this process is part of a more prolonged natural wave of climate change, and that no global warming is actually taking place.

In any event, the BRICS cannot afford to ignore this issue because one of them, Russia, is the world’s largest producer of energy resources, and another, China, is the world’s greatest consumer of these resources. This could be a key issue, enabling the BRICS countries to take the lead in the discourse on sustainable development, the format of which will undergo inevitable changes in the next couple of years, with the deadline for the UN Millennium Goals coming up in 2015.

The topic of atmospheric emissions from fossil-fuel combustion is also important for the BRICS. In purely quantitative terms, neither China nor India appears capable of catching up with Western countries for per capita energy consumption. Therefore, it is the BRICS countries themselves who should make energy consumption their own pet project.

Today developing countries are not taking part in the Kyoto Protocol, citing as a reason the need to ensure their economic development. However, if this development does not require the countries to reduce their emission levels below a specific threshold, they still have to take proactive efforts to make their economies more energy efficient and create new energy technologies. In the past several decades European countries have invariably been the leaders in this area, but now other countries have a chance to play that role. China needs energy efficiency to prevent its agriculture sliding into an environmental disaster of air and water pollution; India needs it to accelerate industrialisation and maintain a competitive edge; and Russia needs it to maintain its levels of raw materials exports by way of reducing domestic consumption. Brazil in this case finds itself in a rather unique position, as a country blazing the trail in biofuels production.

So, one of the BRICS’ key initiatives could be reformulating the entire agenda on global warming and the environment in general. The enormous financial resources of these countries, coupled with European technological breakthroughs, could in 15 to 20 years leave the United States as the last stronghold of energy inefficiency, showing the gap between the US and the rest of the world to be the result of egotistical and short-sighted policy. In other words, the BRICS countries could on the one hand emphasise their developing nature in this area, which makes it impossible to replicate Western consumption standards, and on the other hand capitalise on the high profile of this perennial problem to galvanise international efforts and channel them towards areas that are most important to them.

They could even take it a step further and expand their focus from energy efficiency to resource efficiency in general. The BRICS, including the positive examples of China and Brazil as much as the negative example of Russia, prove that it is large-scale industrialisation, and not niche development, that serves as the key to overcoming poverty and transitioning to a stable middle-class society.

Linking the environment to efficiency and replacing global warming with a worldwide programme to improve resource efficiency could turn the BRICS into intellectual, if not de facto, leaders on the question of sustainable development.

Rethinking financial imbalances

It is equally important for the BRICS countries to advocate initiatives to tackle the root causes of the financial situation that has plagued the world over recent years. One of the key aspects of this situation is the gigantic imbalances that have emerged in economic relations between the developed world and the BRICS. Back in the mid-1990s the West still acted as the global creditor, and countries on the periphery were busy overcoming either the 1980s crisis or the break-up of the Soviet bloc. Today, America and Europe increasingly appear as dubious debtors, and China (including Hong Kong), Russia, India, Brazil and South Africa boast foreign currency reserves totalling $5.2 trillion (as of late November 2013). However, this gives the BRICS countries the kind of self-confidence that could backfire.

On the one hand, one should not forget that China’s quick rise to prominence was in many ways predicated on the fact that, on the heels of the 1997 crisis in Asia, the United States and Western Europe never introduced any protectionist measures against the countries which chose to drastically lower their foreign exchange rates, putting the West in an a priori unfavourable position. The same can be said about oil prices. Their growth could have been arrested back in the mid-2000s but the United States and Europe never made any effort to that effect, therefore contributing to the rise of Russia and Saudi Arabia. In many ways the phenomenal growth achieved by the BRICS countries over the last decade has been made possible by the West’s ‘sloppy attitude.’ These global imbalances were not caused by the desire of developed countries to borrow money as much as the desire of developing countries to create reserves they could fall back on in case of another crisis.

On the other hand, one should remain cognisant of the fact that developed countries can afford to depreciate their currencies, accelerate inflation, and one way or another devalue the reserves accumulated by the BRICS countries. Just like in 1971, they would run no risk whatsoever. That is why the newly rich countries do not in the least seem self-sufficient, and global imbalances threaten them to a far greater extent than they do Europe or the United States. A drop in the dollar and the euro exchange rate could prove more than beneficial for the issuers of these currencies, but it would spell disaster for the global periphery.

In this situation it would behove the BRICS countries to beat other nations to the punch in raising the issue of overcoming global financial imbalances – taking care not to present it as an ultimatum to the West, but rather as a proposed gradual and rational solution to a problem.

The first step in this direction could be the recognition that the imbalances in question have resulted from the economic policies of both the West and the periphery; that in the late 1990s and throughout the first decade of the 21st century the West did a lot to contribute to the growth of the BRICS by maintaining demand; and that, ultimately, the BRICS countries have today come to realise they need to support a West that finds itself in a very difficult position. This could herald a radical change in the attitude of the developed nations and the rest of the world towards the BRICS countries both economically and politically.

As a second step an agreement could be reached that the debts of Western countries (for instance, to the extent held by other nations for a period of more than five years) could be used to purchase tangible assets located in these countries (possibly even discounting the debt). As a result the existing restrictions on investments from the BRICS countries to Europe and the United States could be lifted, while the debt burden on the leading powers could be drastically reduced (along with the reserves held by the developing nations), which would ensure accelerated economic growth across the globe.

Finally, if the BRICS managed to secure equal opportunities to invest in the leading economies of the world, they would be viewed as natural leaders by other countries on the periphery that are striving to achieve the same goal.

In other words, both politically and economically, it is exceedingly important for the BRICS countries to offer the West a respectable and efficient way of resolving the current debt crisis. The existing financial imbalances should not be treated as a proof that the BRICS have triumphed over the United States and the EU; that would be reminiscent of the arms race era, and a triumph of ‘mutually assured destruction,’ occurring regardless of who first strays from responsible financial policy.

A BRICS initiative in this area would be extremely unexpected given the current situation, and is unlikely to be rejected. If realised, such an initiative could spell a dominant trend in international finance for the decades to come.

The problem of corruption and transparency

Developed nations tend to reproach the BRICS for insufficient economic transparency, a widespread dominance of state-owned enterprises, and a dovetailing of the interests of the business community and government officials which ultimately results in large-scale corruption.

In the Corruption Perceptions Index published annually by Transparency International, Brazil and South Africa are both ranked 72nd in the list of countries least tolerant of corruption. China is currently in 80th place, with India ranked 94th and Russia 127th. It seems as though the BRICS countries are constantly on the defensive in this respect, whereas the West enjoys the status of a society that has reached the highest level of governance and responsibility.

There is no doubt that corruption is a problem in developing countries. What is more, on a global level its acute nature is in many ways predicated on the sheer scale of corruption in periphery countries. However, today it should be recognised that the fight against corruption in individual countries is impossible against the backdrop of pervasive globalisation. Such efforts may prove successful in eradicating corruption at the grass-roots level, involving small fry, but when it comes to embezzling funds from government budgets, awarding contracts to large international companies, or corruption within the entourage of heads of state and governments and so forth, it appears that such forms of abuse can only exist where there is close interaction between domestic and international financial systems. Making it impossible to legalise one’s wealth abroad and put it beyond the reach of national law enforcement agencies or new governments would serve as the greatest deterrent to corruption one can imagine in today’s world.

As an aside, the sheer scale of interaction between the corrupt elites of developing countries and Western financial institutions is mind boggling. According to some sources the average annual volume of financial transfers from countries of the South to banks in the North is well over a trillion US dollars, while corruption reduces the GDP of developing nations by about 4-8% annually. If Western financial institutions had not strived to benefit from this situation, if large international companies had not lined their pockets by way of taking part in deals involving such corrupt practices as ‘kickbacks’ abroad, and if real estate owners in the most prestigious cities of the world had not been interested in maintaining a high level of demand for elite properties, corruption on a state-wide scale would have been impossible in the developing countries.

Faced with such an environment, the BRICS could come up with a practical initiative to unite the efforts of periphery and developed nations in fighting corruption. Such an initiative could radically step up efforts to fight corruption inside the BRICS, through civil society mechanisms and monitoring. Meanwhile, the West could do away with offshore jurisdictions and introduce a total ban on transfers of significant amounts from developing nations to banks in the United States and Europe.

The average annual volume of financial transfers from countries of the South to banks in the North is well over a trillion US dollars, while corruption reduces the GDP of developing nations by about 4-8% annually. If Western financial institutions had not strived to benefit from this situation, if large international companies had not lined their pockets by way of taking part in deals involving such corrupt practices as ‘kickbacks’ abroad, and if real estate owners in the most prestigious cities of the world had not been interested in maintaining a high level of demand, corruption on a state-wide scale would have been impossible in the developing countries

Today such an initiative looks realistic for two reasons. Firstly, the elites of the BRICS have secured significant control over the economy of their countries for many years to come and are now more interested in preserving their wealth, and ensuring that the state apparatus functions well, than in maintaining their money-grubbing behaviour on a permanent basis. Secondly, it is corruption that poses one of the greatest threats to economic growth today in the developing countries. In these places growth is badly needed to maintain the social contract between elites and the broader public which is still in effect in the majority of countries that are not entirely democratic.

In this case, as in the instances addressed above, if the BRICS act swiftly and decisively they stand a chance of overtaking the West and resolving one of the most vital and topical problems of our time.

General considerations

Today the BRICS are on the verge of a crisis affecting the development of relations between them. None of the countries in the bloc can be called a leading trading or investment partner of any other one; their trade share in one another’s economies barely reaches 6.5% of the total turnover. Politically and socially these countries could not be more different, and their attitude to the Western world cannot be described as homogenous either. Some of them are both large exporters and importers of resources; some have undergone the process of industrialisation; others are still striving to reach that stage. Geopolitically some countries of the bloc are in direct competition with one another.

In this situation, in order to preserve the BRICS as an alliance and strengthen the sense of solidarity and common identity between the countries of the bloc, it is critical that they should come up with a number of initiatives in the next couple of years capable of revolutionising the global political landscape. All such initiatives, however, should share a number of attributes.

First and foremost, they should deal with topics that are the centre of attention for Western politicians: the environment, human rights, corruption, international security, and sustainable development, including economic disproportions and imbalances.

Secondly, these initiatives should recognise that developing nations should assume an equal share of responsibility for what is going on; that they must go a certain way to meet specific standards; that they want to join ranks with developed nations to improve the state of the world.

Thirdly, their implementation must have significant benefits either for the BRICS themselves, or for nations allied or sharing common economic interests with them, or for countries that the BRICS are most interested in developing relations with.

Lastly, and perhaps most importantly, all such initiatives formally put forward as a part of the ‘Western’ agenda must contain proposals that the West would find extremely hard to accept. In that case the BRICS countries win no matter how events unfold.

Obviously all this does not necessarily mean that in the long run the BRICS will manage to form a single powerful bloc – in my view they remain too different, and are pursuing divergent interests. But at least such a paradigm could bring them closer together for some years, and mitigate potential tensions inside the countries themselves – if not the global contradictions between them. This in itself would be a major achievement; anything beyond that would be but a dream.