Will the Fifth BRICS Summit be a Game-Changer?
Image Credit: Fifth BRICS Summit - Offical Website

Will the Fifth BRICS Summit be a Game-Changer?

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With the BRICS Fifth Summit drawing to a close, observers are already analyzing the summit’s impact on the future of these important nations. Here’s a recap of what has been going on in Durban, South Africa in a number of key areas.

BRICS-African Relations

This year’s summit was the first head-of-state summit to be held in South Africa. Fittingly, the theme of the conference was “BRICS and Africa-Partnership for integration and industrialization.” To that end, several African organizations as well as non-BRICS leaders like Egyptian President Mohamed Morsi participated in the summit alongside BRICS heads of state South African President Jacob Zuma, Brazilian President Dilma Rousseff, Russian President Vladimir Putin, Indian Prime Minister Manmohan Singh, and Chinese President Xi Jinping.

Africa presents both enormous opportunities and challenges for BRICS nations. On the one hand, BRICS members like China and India have been steadily deepening relations on the continent in order to tap into Africa's enormous natural resources as well as to open up markets for consumer goods. That latter goal is likely to prove particularly important as certain parts of Africa emerge as international success stories.

On the other hand, many parts of Africa are steadily deteriorating due to a breakdown of governance; indeed, immediately prior to the summit the Central African Republic's capital city of Bangui was overrun by militants forcing its president to flee the country and resulting in the deaths of some 13 South African peacekeeping troops. Meanwhile, Egyptian leader Morsi is presiding over an increasingly perilous situation at home as political disputes continue to hamper necessary economic reforms. Ominously, with an estimated three months to go before its foreign reserves run out, the global political risk consulting firm, Eurasia Group, said in a research note this week, “the chances of state collapse [in Egypt] will be better than even in the coming three months.” 

As President Xi Jinping has learned in his travels this week, one challenge BRICS countries face in deepening their presence in Africa is the possibility of opening themselves up to charges of imperialism and neocolonialism. One way to hedge against this risk is by acting through multilateral institutions and initiatives. In this regard, it wasn’t surprising to see BRICS come together at the summit in creating a number of new institutions and initiatives.

BRICS-led development bank?

No such initiative was as important and anticipated as the creation of a BRICS development bank, and as well as the related reserve currency fund.

Unfortunately, earlier today BRICS leaders announced they had failed to reach an agreement on funding the development bank. Earlier South African Minister of Finance, Pravin Gordhan had said, “We have made very good progress” on working out the terms of the bank. With some areas of contention still needing to be worked out, BRICS will likely continue discussing how to bring this idea to fruition in the coming months.

BRICS was more successful in agreeing to pool some of their reserves together to create a currency stabilization fund to hedge against future volatility in international financial markets.  Together, BRICS holds $4.4 trillion in foreign currency reserves and the new stabilization fund will initially consist of $100 billion, $41bn of which will come from China.

Independent of this, China and Brazil signed a $30bn currency swap agreement this week to insulate their own bilateral trade from international financial markets, providing enough capital for Sino-Brazilian trade to continue for eight months during a global financial crisis. 

The potential biggest intra-BRICS challenge in implementing its vision for a more equitable international financial order—particularly as it relates to the foreign reserve fund— will be to ensure that China’s dominance in its liquid reserves holdings does not result in Beijing dominating the multilateral initiative.

Formation of  BRICS business council:

On the eve of the summit, a business forum was launched featuring over 900 business professionals which resulted in the creation of a permanent business council. The business council consists of 5 members, each of which is a BRICS country representative. Yuri Ushakov, Russian presidential aide said, “Its main task will be [the] implementation of multilateral investment projects,” including the formation of the BRICS-led development bank.

Creation of BRICS think-tank:

South Africa’s Human Sciences Research Council (HSRC) was given the responsibility of nurturing and growing the South African BRICS Think Tank launched prior to the summit. The think tank is supposed to be a South African equivalent of BRICS think tanks already established in other member states. Its purpose is to “provide a forum for discussion among academics, policy makers and non-governmental organizations on the BRICS developmental strategy” that will allow member states to collaborate on policy research and analysis.

Clearly, the Fifth BRICS Summit has proven ambitious in its aims. Despite its critics, many diplomats are optimistic about the outcomes and long-term implications for these new projects. South Africa is in a unique position to advance fellow-African interests through the BRICS forum to assist in developing the continent, and has recognized its role as such.

If the summit’s projects are successful, they can add legitimacy and credibility to BRICS as an alternative institution to other more Western-dominated ones. As Memory Dube,  Senior Researcher at the South African Institute for International Affairs, noted: "If [BRICS] can establish common norms then they will succeed in entrenching their position on the international arena.”  

Whether they will succeed in this, as well as how exactly it will impact international relations, remains to be seen. It’s more certain, however, particularly after this summit, that it remains one of the most important trends to monitor in the coming years.

Elleka Watts is an editorial assistant for The Diplomat.

Comments
6
Earth Wars
March 31, 2013 at 15:40

What does America fear?  That the BRICS countries might form an alternative trade and development model discarding the WTO, IMF and the World Bank?  Soon, it will be the US, Britain and France who will be isolated and contained?  Yes, like a growing "cancer" cell BRICS might just expand and grow and be the harbinger of death to the body of the once mighty American-British-French Coalition Empire?  Expect the Diplomat to start attacking BRICS at every turn from now on.  Americans cannot compete fairly.  They cheat, lie and slander.  Exceptional people?  Yes led by the nose by their exceptionally unscrupulous politicians. It is good there is BRICS which hopefully can expand like a defensive dome against the US Empire's attacks against the rest of the world.

Bankotsu
March 28, 2013 at 22:04

"The USA will be most unhappy if Mexico tries to join the BRICS countries.  Indonesia will join for sure."

The U.S will be unhappy regardless of who joins BRICS. BRICS is the eyesore of the west.

http://blogs.rediff.com/mkbhadrakumar/2013/03/27/pms-pointless-african-safari-no-lions-in-view/

Bankotsu
March 28, 2013 at 13:54

It's high time that the U.S unipolar hegemonic system ends.

vic
March 28, 2013 at 11:49

The USA will be most unhappy if Mexico tries to join the BRICS countries.  Indonesia will join for sure.

 

elmerfudzie
March 28, 2013 at 04:17

At bottom, the real issue is a gnawing anxiety we all have about new weapons. Bombs have become too big; Atomic and they've become too small, bio-warfare (CBW). At first, I believed that the one world government concept along with a single currency would control the use of these bombs. At the time, it seemed that a well organized group of bankers within the ranks of the Bilderberg Group and Council on Foreign Relations could apply the Cecil John Rhodes model. Through the coercive power of financialized capitalism they could dominate most of the traditional industrial and agricultural economies of the second and third world. Unfortunately, this is a pipe dream. The "Rhodesian" if you will, long range plan has degenerated into a game of musical chairs, in particular when grabbing resources like raw materials. The first world remains divided against itself, Sino-Rusian alliances are gathering both military and financial strength to oppose the Western Occident and United States' financialization strategies. The gradual dissolution of the New World Order has begun to form evil and twisted alliances with nightmarish scenarios that even George Orwell could not foresee. I include in this alliance, microchip implants in lieu of paper currency, Total Infromation Awareness (TIA) by spy agencies and worst of all, propaganda that continuously spews the notion of a monolithic moral authority, higher than any other. It denounces and persecutes religious leaders, whistleblowers, prisoners of conscience only to dismiss their knowledge as faulty, untrue and or lends aid to a dubious enemy. The almost feudal powers within the old Supreme Soviet mistakenly thought that by changing their name to Duma and Russian Federation, their opposites wouldn't see and Leninists or KGBer's. By the same token, the Republics and so-called Democracies must admit to much the same thing within their government circles. For example, bought and paid for representatives, senators and the unelected such as UK's House of Lords et-cetera. This is all becoming a tiresome business and looks as though history is indeed repeating itself,  as world returns to fifedoms and fascism. And what of the next world war? why it's just around the corner, again!

Bankotsu
March 28, 2013 at 01:19

Mexico and Indonesia are suitable countries that can join BRICS in the future.

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