Is BRICS a Real Bloc?

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Is BRICS a Real Bloc?

Tensions and diverging interests between China and Russia loomed large over the group’s latest meeting. Will BRICS ever find a unified voice?

When the leaders of Brazil, Russia, India, China and South Africa met for a day-long summit in the south China resort city of Sanya last week, they may all have privately marvelled at quite how quickly their small group has risen to become one of the world’s most influential international concepts.

Indeed, the summit—only the third in the group’s history and the first in which South Africa has participated—overshadowed the concurrent meeting of the G-20, which is now seen as the world’s official collective manager of the global economy. Yet despite the media hoopla that now surrounds BRICS, there are some serious issues facing the collective if it wants to build on its success.

On paper, BRICS certainly has considerable potential. Brazil, Russia, India, China and South Africa are influential actors at the regional level, with their combined populations amounting to nearly three billion people; they account for one-quarter of global gross national output and possess much of the world’s stockpiles of key national resources.

BRICS governments also share a commitment to state sovereignty, a multi-polar world in which no single country dominates, and respect for the authority of the United Nations. At the closing news conferences at Sanya, Russian President Dmitry Medvedev declared that, ‘We must act to boost the potential of the United Nations, and to ensure that all the decisions adopted by the UN General Assembly and UN Security Council are effective and respected.’

But by going on to note the position of Russia and China as veto-wielding permanent members of the Security Council, Medvedev also drew attention to one of the biggest challenges facing BRICS—the frequently diverging interests of its two most powerful members.

Of course, you wouldn’t know this judging by the rhetoric of Chinese and Russian writers, who have been keen to laud the BRICS’ rise. ‘The current global economic order, established over decades after World War II, had long been dominated by developed countries,’ one Chinese commentator wrote explaining BRICS’ importance. ‘The arrangement had worked for decades, but appeared increasingly incompetent in the past decade as the rise of major emerging economies dramatically changed the world economic landscape.’

Russian analyst Leonid Ivashov, meanwhile, argued that ‘the agreements sealed in Sanya represent a serious bid to reconfigure today's world.’ He added: the ‘process…helps Russia both maintain its status in international politics and preserve its statehood and territorial integrity.’

But despite such effusive praise on both sides, the reality is that the Sino-Russian relationship can hardly be described as harmonious. Despite years of negotiations, Russian and Chinese energy companies have proved unable to reach agreement on the appropriate price the Chinese should pay for natural gas imports from Russia. And, although their oil ties have seen greater progress, the Russians now believe the Chinese are underpaying them for these deliveries.  In addition, Chinese and Russian officials have repeatedly announced grandiose oil and natural gas deals that, until recently, have failed to materialize.

Limited reciprocal investment is another source of mutual disappointment. The Russian government is particularly eager to secure Chinese investment to help achieve its goal of modernizing the Russian economy. Shortly before arriving in Sanya, Medvedev said that: ‘In my opinion, $2.6 billion of China’s direct investment into the Russian Federation and nearly $1 billion of Russia's direct investment into China isn’t much. We know that both China and Russia invest a lot in other economies. I believe we should consider enhancing the investment cooperation.’  By the end of 2009, China's accumulative non-financial direct investment in Russia was a mere $2.02 billion.

In addition, the regional policies of the two countries are rarely in sync. In East Asia, China and Russia share concerns over the evolving political, military, and economic situation on the Korean Peninsula, which borders both countries. But Beijing and Moscow have pursued largely independent policies toward both North and South Korea. The two country’s policies towards Japan and Taiwan also aren’t particularly well integrated, while in South Asia, the two have actually adopted divergent positions on critical issues.

Most recently, though, China and Russia have declined to coordinate their policies regarding Libya or other Arab world uprisings, despite common fears of contagion, dislike of Western military intervention on humanitarian grounds, and concerns about losing valuable commercial opportunities. Indeed, Sino-Russian cooperation in the Libyan War has so far predominately consisted of their government officials’ citing each other’s opposition to Western interference.

But it’s not just differences between China and Russia that could hamper progress of a BRICS vision of the world—the bloc also lacks an independent organizational structure, common projects for many areas, and, most seriously, member nations harbour conflicting interests on key issues.

Even in the economic realm, the core area of their concerns, BRICS members have allocated limited resources to collective multilateral initiatives. Member governments have offered financial and development assistance primarily on a unilateral or bilateral basis, which gives them greater individual influence, while the absence of a free trade zone or common membership in the World Trade Organization impedes commerce among the five nations—the most important economic partner of most of the five countries is usually a non-BRICS country.

In addition, the organization’s current roster of members includes some of the world’s leading national energy suppliers (Russia and Brazil) and consumers (China and India). These cross-cutting interests have impeded rapid progress in this area, and their energy cooperation has largely been occurring outside the BRIC framework. Any energy collaboration that did occur within the group’s framework would probably consist of a mechanism for dialogue and information exchange rather than a body for setting quotas or fixing prices.

The currencies of the BRICS countries, meanwhile, are used extensively only inside their respective nations. BRICS leaders have periodically expressed support for conducting bilateral trade between themselves in their own national currencies to reduce dependence on the US dollar—which still accounts for more than 60 percent of global foreign exchange reserves —and pave the way for their own currencies to play a bigger international role. But since they all have massive dollar dominated holdings—including billions worth of US Treasury bills held by the Chinese alone—they would hardly want to take steps to reduce the currency’s value.

The cross-cutting interests of BRICS members often impede their cooperating on non-economic issues as well. China resists elevating India, which is a potential security rival, to permanent UNSC membership. The wording of the text they adopted on the topic last week—which makes no promises regarding UNSC membership—makes clear their divisions: ‘China and Russia reiterate the importance they attach to the status of India, Brazil and South Africa in international affairs, and understand and support their aspiration to play a greater role in the UN.’

To be fair to members, there has been some effort at co-ordination to enhance the group’s impact on global security affairs, including by issuing joint declarations. For example, in their Sanya Declaration, BRICS leaders called for ‘establishing a more equitable and fair world’ with ‘peace, harmony, cooperation and scientific development.’

But despite this rosy goal, their foreign policy initiatives have largely been about negatives—agreeing on what they don’t agree on. In Sanya, for example, BRICS leaders issued a declaration criticizing the NATO-led coalition fighting the regime of Col. Muammar Gaddafi for using excessive force. According to media reports, the governments of China, Russia, and India have blocked British and French efforts to enact stronger UNSC resolutions authorizing a wider range of sanctions and military strikes against the Libyan government.

Still, whatever the signs of agreement over Libya, the potential for deterioration in China-Russian ties in the near future looms large.

Until recently, Russian analysts were confident about maintaining military superiority over China for at least the next decade, but recent displays of growing Chinese defence capabilities, combined with a more confrontational style of Chinese diplomacy, appear to be causing the same unease in Russia as in other countries. The Russian military for its part has begun to cite China’s growing military potential as a reason why Russia needs to acquire more warships and retain tactical nuclear weapons despite US pressure to negotiate their elimination in the next round of the strategic arms talks. The Commander in Chief of the Russian Navy, Adm. Vladimir Vysotsky, has also cited Beijing’s interest in the Arctic as a reason to field a larger fleet.

When asked in a pre-summit interview whether the so-called China threat theory had gained popularity in Russia, Sergei Razov, the Russian ambassador to China, couldn’t deny that many Russians shared such concerns.

‘Russia is an open and democratic country. Many express different opinions on different issues including Russia’s bilateral ties with China or other countries,’ he said, adding that the China threat theory was ‘only one of the views and can’t represent the majority of our country.’

He added that the Russian government is devoting itself to a ‘strategic partnership of coordination with China.’ But the choice of language implied that a failure of this approach could lead at the very least to Moscow revising its assessment of the relationship.

For now at least, the prospects for BRICS as a coherent bloc remain up in the air.