Imagine BRICS: Four Scenarios of the Future

Today BRICS represents a club of emerging powers attempting to increase their political and economic integration in response to new global challenges. The reason this opportunity presented itself to these five countries in particular is because similar institutions are either not fit to tackle today’s global challenges or they do not have the proper resources. The four BRICS development scenarios presented below, which are based on the intensity of their overall political and economic integration, address the scope of their possible development.

BRICS: From concept to club

In the thirteen years since the term was first coined by Jim O’Neill in a Goldman Sachs analytical memo, the famous BRICS acronym has taken on a new meaning. While the group of emerging countries was initially just one of many similar acronyms without any real basis for action (such as MINT¹ or CIVETS²), today the five countries represent an active organization of the world’s leading emerging countries. The cooperation under the BRICS umbrella continues on many levels, from the closely followed annual summits of its heads of states to student exchanges and youth forums.

¹ Mexico, Indonesia, Nigeria, and Turkey.
² Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa.

Even though the BRICS countries do not have their own secretariat or a permanent supranational executive body, there are many formats that enable them to meet and discuss common issues. For example, ministerial meetings take place on
a regular basis, while a new Development Bank is in the making (the BRICS bank), and the BRICS Business Council is fully operational. In addition, the BRICS countries hold regular academic forums and even created the BRICS Think Tanks Council to formulate long-term development strategy.

Today, the BRICS represents a club for discussing common problems, with the G7 probably being its closest equivalent. However, what makes BRICS different from other clubs is its potential: Brazil, Russia, India, China, and South Africa account for around 20% of global GDP, they are home to 40% of the planet’s population, and their aggregate share of global trade totals 17%. In other words, the BRICS countries are collectively the largest market in the world, and their cumulative GDP has more than tripled in the last 10 years.

However, despite these impressive figures and the institutions they have already put in place, ‘BRICSoskeptics’ note that the volume of trade within the alliance, which in 2013 was estimated at $300 billion, accounts for a mere 6.5% of their total turnover of goods with the outside world. This can be explained by the fact that there are great distances separating the BRICS countries, and not just geographically. They enjoy different rates of economic growth; direct air service exists only between a few of their very largest cities (even though it may be technically possible); their respective languages are not commonly studied at schools and universities, meaning that even educated people from the five countries have very little understanding of their respective histories and cultures; and their societies are made up of different ethnic and religious groups.

One could say with a degree of certainty that, as
a political actor, the BRICS have already come of age. According to Fyodor Lukyanov, a prominent Russian political scientist, the BRICS member nations enjoy full sovereignty – they are capable of conducting an independent foreign policy that is not restricted by any alliance or association and they have sufficient economic potential to sustain it. On numerous occasions, they have made political statements on
a broad range of topical issues on the global agenda – from the conflict in Syria to international sanctions, and often these statements are in sharp contrast to the stance taken by the G7 countries.

However, despite their cumulative potential and the power of individual members, the sustainability of BRICS (or any other international organization for that matter) depends on how well it can rise to modern challenges. It is in this context that the BRICS countries have wiggle room, because any other international organization that exists today was created in a different era of global challenges and was designed to pursue different objectives.

BRICS could become a new platform to meet global challenges

The vast majority of international institutions that are active today were set up after World War II with one single goal in mind: to create a system of governance that would entirely rule out the possibility of a global armed conflict and that would safeguard the principles agreed upon in Yalta and Potsdam. By extension, international organizations could be broken into two categories depending on the type of their integration – political or economic – where the integration was implemented as a response to contemporary challenges.

The main objective of any political integration is primarily to strengthen the alliance’s ability to influence the context in which it operates. For instance, the highest form of political cooperation is a military and political alliance, such as the Collective Security Treaty Organization or NATO. There are also more neutral forms or larger platforms for dialogue such as the CIS, the Shanghai Cooperation Organization or the League of Arab States. While these platforms may have a specific economic infrastructure built around them, it is merely there to serve the needs of members while putting political objectives at the forefront. The main objective of these associations is to exert influence upon and broadcast consolidated opinions to international institutions regarding economic challenges.

In contrast, economic alliances are built primarily to find answers to domestic challenges faced by their members. Thus, they place the greatest emphasis on fostering the economic development of their members by way of creating instruments to synchronize their economic activities, including their trade and customs regulatory mechanisms. Regional free trade zones – such as the Eurasian Economic Union (EEU), NAFTA, and Mercosur – are good examples of such alliances. On the other hand, alliances such as ASEAN and the East African Community not only help their member nations to address their domestic development problems but also raise regional issues at the international level.

The European Union is certainly a different sort of alliance in this sense – it fosters both political and economic integration in response to numerous domestic and foreign challenges.

Yet the innate rigidity of successful alliances, or the lack of coordination in those that are less successful, prevents them from adapting their respective agendas to account for future challenges. NATO is a particularly telling example – after the collapse of the Soviet bloc it lost its ‘raison d’être’. For two decades it has been searching for a new mission. Two other examples are the IMF and the World Bank; the distribution of voting rights in these two organizations is completely out of sync with reality and does not account for the shifting economic balance between the developing and the developed countries.

Currently, we are witnessing a radical change across the entire global landscape. Humanity faces new challenges, many of which the world has yet to come to grips with. What measures need to be taken to meet the population’s need for water and food? What needs to be done to defeat poverty? Where should one look for new sources of economic growth? How should one go about replacing non-renewable energy sources to ensure energy security? How can different continents be connected by transport infrastructure? What steps need to be taken to overcome the wide cultural gap between civilizations? Very soon these questions – as well as many others – will need to be answered. This will only be possible if all countries are united in their efforts.

These emerging challenges require an adequate response, which includes not just a common coordinated approach but also significant investments. According to the UN, the implementation of the Millennium Development Goals alone would require at least $100 billion. And this is only the social component, because infrastructural challenges would require far greater investments. According to some estimates, the infrastructure development market in emerging countries alone could reach $4 trillion in the next several years, whereas a complete transition to renewable sources of energy would cost the global economy dozens of trillions of dollars.

Technologically, economically, and even institutionally, no single country in the world is capable of overcoming these challenges alone. It is obvious that against the backdrop of the changing landscape, alliances and coalitions would have to transform as well. Among other things, their success would be predicated on the extent to which the corporate players who are directly involved in their economic life would be integrated into their decision-making and agenda-setting mechanisms.

The international community is faced with the question: which platform can offer an adequate response to these pressing global challenges? And, can BRICS occupy this niche? Their combined economic, technological, human, and cultural potential shows that the five countries are capable of implementing projects on a vastly different scale jointly and efficiently. It is perfectly within their power to find answers to global challenges of the 21st century that both developed and emerging markets are facing. What is more, the alliance may claim an even greater role and tackle something larger than just discussions of global and regional issues – it may actually offer a solution to them. Whether the BRICS countries can succeed will depend on one key factor: how adequately and intensively they are able to rise to these challenges by transforming their structures for political and economic cooperation.

The four BRICS development scenarios

Taking into account the high degree of political and economic uncertainty in the world and the fact that the BRICS development context is anything but predetermined, we used a scenario-based approach to address various degrees of political and economic integration of the BRICS countries in the face of global challenges. We chose a 15-year horizon, which is comparable to that used for investments in large infrastructure projects. It is this horizon that informs different development scenarios. While presuming that the main international actors are very likely to change over the next 15 years, we believe that the types of responses to global challenges that these actors could offer – deeper political and economic integration – are unlikely to change compared to what we see today.

If we look at a combination of proactive efforts along these lines, there are four possible BRICS development scenarios that are most likely:

Maintain the status of a ‘club of emerging nations’ that exists to discuss a global agenda formulated by other countries and supranational alliances;
Increase its ability to influence the global agenda using political integration tools such as expanding its membership and building a political alliance;
Step up economic growth and trade between the BRICS countries by way of intensifying their economic integration and building a full-fledged economic union. Thanks to its growing economic power, this union will be able to find answers to the challenges faced by these countries;
Pursue not only economic but also political and cultural integration. Economic integration, if boosted to a significant degree, will enable members to achieve sufficient global competitive edge to address global problems faced by all of humanity.

Each scenario involves a different set of political and economic integration initiatives that would have to be implemented. The former may include, for instance, steps to introduce visa-free travel between these countries; the creation of supranational bodies that would take precedence over national ones; the development of joint solutions to security issues; the pursuit of a coordinated foreign policy; the creation of joint rapid response military forces; and the integration of adjacent regions. The economic toolbox may include such initiatives as removing barriers to trade; ensuring greater connectivity between commodities, labor, and capital markets; or creating supranational bodies and free trade zones with other countries.

Scenario 1
Club

Against the backdrop of global transformation, it turned out that further integration of the BRICS countries remained well out of their comfort zone, which is why the BRICS remained a club of emerging nations. Once a lofty and representative forum, today it is merely one of many voices in international politics. Each BRICS member nation prefers to pursue its own geopolitical and economic interests and take part in an ever-growing set of regional and international platforms, alliances, and clubs.

At the same time, the deteriorating global economic situation pushes the BRICS countries to defend their national markets and resort to protectionism. Local economies remain resource-intensive and depend on borrowed innovations and institutions.

The reluctance on the part of national governments to give up any part of their political and economic sovereignty, coupled with the entangled system of each country’s external obligations, prevented them from forming supranational bodies. The BRICS continue to exist in the form of periodic meetings between their respective leaders. At the same time, the generation of the political elite that founded the club has already left the scene and their successors did not inherit sufficient political will to formulate
a common vision.

The expansion of BRICS never took place and many countries that 15 years ago were viewed as potential candidates to join the alliance created their own clubs (MINT, CIVETS, the Turkic Council, ALBA, and many others).

Faced with the threat of long-term domestic instability caused by a number of institutional failings, each BRICS member decided to go it alone and entered into alliances with the G7 countries based on the calculation that influence within a specific region could be exchanged for a chance to influence the global agenda.

The development of other more dynamic organizations caused the BRICS nations to focus more on alternate platforms, while experts predict that the BRICS Summit in 2030 will be the club’s last.

This scenario presupposes certain inertia and therefore may prove quite realistic; however, it does not allow for tapping into the entire political and economic potential of the ‘Big Five.’

Scenario 2
ALLIANCE

After Western countries continued to ignore calls to reform the world’s political and financial institutions, the BRICS countries focused their efforts on strengthening their political clout by way of creating a full-fledged international organization. This organization was called upon to convey to the developed community the agenda of the developing nations that are still struggling with economic problems and bearing the burden of structural reform. To increase their weight and ability to respond to key global agenda issues, the five countries preferred to put aside their historical disagreements and signed a breakthrough agreement on ways to ensure mutual security.

At the same time, each country prefers to search for answers to common global economic challenges on its own or through existing international platforms. The BRICS Development Bank remains the only significant instrument of economic integration, which nevertheless, is predominantly used for financing politically motivated projects. The EU and the United States still remain the five countries’ main trading partners, which prevents them from discussing truly pressing issues.

In an attempt to achieve this objective, the BRICS countries adopt a two-tiered strategy: strengthening their representation in the system of global governance institutions and communication platforms while simultaneously expanding their membership by opening doors to other countries. Argentina is the first country to join the alliance. Later, in an effort to boost the Eurasian agenda and contain China, Russia manages to bring Turkey into the fold, a move that is widely considered a major political success.

A multi-tier membership system is formed in the alliance, with the result that Indonesia and Saudi Arabia are likely to be offered membership during the upcoming Summit of Emerging Nations in Ankara in 2030. Turkey, which had earlier withdrawn from NATO, and Vietnam have already been members of the alliance for over a decade, while individual members of MINT and CIVETS are going through various dialogue partnership stages.

It took the founding countries of the Alliance a long time to complete an arduous negotiations process to determine the degree of sovereignty they were willing to give up in favor of the newly created organization.

The agreement between the BRICS countries on ways to ensure mutual security has become a cornerstone document for building an Alliance of Developing Nations with its Secretariat in Mumbai, headquarters in Vladivostok, and Parliamentary Assembly in Istanbul. Large-scale joint military exercises are held on a regular basis, while the Alliance’s Collective Rapid Response Forces outperform regular armies of several developed nations, both in terms of personnel strength and military sophistication.

The key challenge in this scenario is the need to overcome internal tensions, including competition in a number of regions, legacy border disputes (primarily between India and China), and reluctance to share even a part of these countries’ sovereignty in favor of an alliance fully integrating all members. On the other hand, the fact that selected countries share certain problems does not mean that they perceive them as common. From this perspective, a positive case in point would be NATO, where countries with historical tensions dating back centuries manage to successfully co-exist in a single supranational military structure and jointly search for answers to political and economic challenges.

Scenario 3
UNION

The deteriorating economic situation in the emerging markets, coupled with the launch of a third industrial revolution in the developed countries, prevented the BRICS from sustaining their previous economic growth. Against this backdrop, the leaders of the five countries opted for a strategy of national economic development by way of fostering integration. The BRICS’ political agenda has become a mere function of its economic development, while the member nations follow a paradigm whereby a strong and sustainable economy may overcome political challenges of any magnitude.

Over the last 15 years, the BRICS economic agenda has changed considerably. Having created numerous institutions to support business cooperation today, the ‘Big Five’ have become a powerful economic union. The BRICS countries are among each other’s top 10 trading partners and have embarked upon the development of a common currency. However, this union is more than just another ‘global free trade zone’ – it is built on the concept of sustainable development and a new approach to innovation including technological development. What makes this approach unique is that the five countries are taking targeted and streamlined joint efforts to develop their innovation potential, factoring in the distinctive traits of their respective technological ecosystems and placing a greater emphasis on innovations for citizens at the ‘bottom of the pyramid.’

Pursuing their institutional development, the BRICS countries are not setting their sights on a technological race on the developed markets; rather, they are trying to find solutions to their most vital domestic problems: natural resources, the environment, and social issues. These solutions include ‘precision land farming,’ ‘precision production,’ and social business tools. The technologies they produce are highly sought after in the emerging markets, including the poorest countries, and stimulate sustainable social and economic development in the world.

These technologies are already starting to penetrate the ‘tip’ of the pyramid, finding their way to the developed markets, which brings about the creation of a global technological ecosystem as an alternative to the existing one that is based on the concentration of research capabilities in Western countries and Japan. In this environment, the BRICS Economic Union narrows down its foreign policy agenda and focuses more on cooperation with other trade blocs and isolated countries (creating Free Trade Zones, stepping up work in various regions of the world, and diversifying its projects portfolio). However, the union’s primary objective remains the pursuit of deeper economic integration.

The main supranational body of the BRICS nations is the Economic Commission based in Shanghai to which both the Development Bank and the Monetary Fund report. A single BRICS Merchant Fleet Directorate was also set up to deal with transportation issues inside the Union. The BRICS countries conduct a common foreign trade policy with thousands of common trading houses all over the world. Moreover, against the backdrop of persisting economic instability in foreign markets and disintegration of the eurozone, the BRICS Economic Union set up its own Ministry of Planning and Forecasts with the task of analyzing the competencies and production capacities of the BRICS countries in long-term complex strategies.

The BRICS economic integration initiative, if it is to become a reality, will have to overcome the following key challenges: low level of mutual trade, weak economic ties, and mutual competition in third markets.

Scenario 4
CORPORATION

The limited potential offered by initiatives to grow trade inside the ‘Big Five’ underscored the need to consolidate their economic and political tools to address broader global challenges. Given the primacy placed on economic integration, the global competitiveness of the BRICS became the key factor driving their further development.

At the same time, it is also the BRICS that have become the main agent to solve the problems of the developing world. Representing key continents that act both as drivers of global growth and a source of key global problems, the BRICS countries have become the main agent to address universal challenges and are not forced to pursue objectives falling outside their political and economic interests.

Economic, digital, cultural, and educational contacts between the BRICS countries are on the rise. Their societies are learning to plan the future of the entire world. Companies from Brazil, Russia, India, China, and South Africa are running development projects on a global scale, while the alliance’s political subsystem supports its economic power.

A particularly illustrative example is a large-scale infrastructure project called ‘The African Crossroads’ to build transport communications between the largest countries of Central, East, South, and West Africa. More than 300 companies from the ‘Big Five’ countries joined their efforts to implement this project, while the BRICS Rapid Response Forces acting under a UN mandate provided security during the construction of the continental transport artery. These examples are constantly growing in number: Latin America has become a global hub for biotechnologies, China’s Northeast manufacturers more high tech products than the remaining countries in the Asia-Pacific region put together, while Russia has become the global hub of fundamental sciences.

Deeper integration as a priority did not lead to its expansion; instead of being integrated, each member country became a political, technological, and economic leader in its own region assuming the responsibility for the development of its neighboring countries. The BRICS nations now serve as role models in a broad range of key areas. Models of behavior and public wealth distribution, education and public governance, business practices, healthcare, and sustainable development practices are implicitly integrated in any BRICS project.

The BRICS system of governance is based on a corporate model where the Parliamentary Assembly acts as a ‘supervisory board,’ while the ‘corporation’s CEO’ and the ‘Board of Directors,’ consisting of these countries’ heads of government, exercise day-to-day management. They manage specific problem resolution functions – committees and commissions dealing with innovation, culture, defense, social issues, and business development.

We realize that, apart from the domestic challenges characteristic of BRICS alone, such as the need to create a new model governing relations between states and an effective system of checks and balances on such a scale, this scenario does not factor in the challenges and opportunities offered by the previous scenarios. The contemplated evolution of events in and of itself does not provide any preconditions for the BRICS countries to emerge in that role, and whether this scenario could be successfully implemented depends on the ability of the BRICS countries to project a common future.

According to the UN, the implementation of the Millennium Development Goals alone would require at least $100 billion. And this is only the social component, because infrastructural challenges would require far greater investments. According to some estimates, the infrastructure development market in emerging countries alone could reach $4 trillion in the next several years, whereas a complete transition to renewable sources of energy would cost the global economy dozens of trillions of dollars

Conclusion

Undoubtedly, the above scenarios are extremely aggressive. Taking into account the scale of global challenges, various obstacles inside the BRICS, complex country dynamics, and a difficult environment for reaching consensus, we realize that any development trajectory for the BRICS would include different elements taken from all four scenarios. We admit that there is little chance that the ‘Big Five’ will be able to realize its full potential.

Moreover, we only looked at successful models of international associations such as the G7 (a club), NATO (an alliance), EEC (a union), and the EU (a corporation). The world has seen many more unsuccessful attempts to build alliances than successful ones. One of the reasons behind these failures is the ineptitude of those attempting the transformation and the resulting inability to rise to new challenges and select a political or economic response to them. Another reason is that, in certain cases, this transformation could not be completed even if the selected vector of development was right.

The success of the BRICS countries depends on how well they will face today’s global challenges and on their ability to develop a consistent integrative strategy and use their available resources efficiently.

At the same time, we believe that the future of BRICS will involve not only the five countries in question but also the rest of the world, which today more than ever needs new international institutions capable of addressing global challenges. However, what the world really needs is not another EU or NATO. The power of the existing alliances, their cultural and regional identities, their well-oiled governance models, and a common stance on global and regional issues has also proved to be their weakness in this day and age. They are too entrenched in the challenges and experiences of the past and are proving inefficient in responding to today’s world.

If the BRICS didn’t exist, a similar concept would have to be invented because the challenges faced by humanity require that we act outside of our customary parameters. Looking at the history of the European Union one could say with certainty that, if there is one lesson to be learned from the Western European experience, it is that the hope for a utopia starts with an attempt to institutionalize a common dream for the future.