THE FOURTH BRICS SUMMIT — comprising five countries, viz., Brazil, Russia, India, China and South Africa, which between them account for 43 percent of world’s population and 18 percent of global trade, and attract 53 percent of global financial flows — that concluded on March 29 has got much media coverage than its previous three meetings. Obviously, this was not due to any imminent challenge that the BRICS might pose against the post-war neo-colonial order under American hegemony, but because of the widely held genuine concerns raised by it in the background of the American corporate financial meltdown and European sovereign debt crisis, US led imperialist machinations in West Asia, emerging people’s struggles in different parts of the world and growing inter-imperialist contradictions.
These concerns that spread across the 50 paragraph BRICS declaration relate among other things to the present global financial mismanagement and irredeemable national debts leading to world recession, the “political mismanagement” of the West Asian question including that of Iran and Syria and the need of a new environment of peace through political and diplomatic means in the region, and above all the proposal for the development of an alternative South-South Bank (BRICS Bank) with a view to shielding “developing countries” from global currency instabilities. And in general, compared with its three previous summits, the tone of the Delhi declaration also seems to cross the line from economics into politics. On the whole, the Delhi declaration should be welcomed for its apparently positive intentions.
But when coming to concrete reality, at the outset itself, it must be stated that the BRICS summit, for obvious reasons, is not going to have any impact on the international economic and political relations in the imminent future. Even after its fourth meeting, the very coherence itself of the BRICS grouping is doubtful. For instance, there are number of differences on certain issues between BRICS countries. Of crucial significance is China’s evident superiority over others as an emerging imperialist power in terms of its comprehensive national and economic power, the military manifestation of which is also evident in the apparent growing tensions in South China Sea between itself and USA during these days. On the other hand, India which is having a number of bilateral problems with China including a long standing border dispute is particularly eager not to surrender leadership to the latter.
At the same time, as a strategic junior partner of US imperialism and with its own “sub-imperialist” ambitions in South Asia as the big brother in SAARC, etc. under American hegemony, the BRICS is not at all barrier for India to toe the American line as is evident from the position it has taken regarding almost all issues concerning West Asia in recent times. On all important international questions, the BRICS countries with divergent views are not in a position to adopt a unanimous approach as, for instance, is manifested in their inability to reach a consensus on the selection of a common candidate challenging the US nominee, Jim Yong Kim as the successor to Robert Zoellick the current president of the World Bank.
Above all, being spread across four continents and with their primary economic links still with US and EU, at this juncture, it is difficult even to find out a trade-related or economic bourgeois justification for the formation of BRICS. It is often reported that even the acronym BRICS was coined not by its members but by an executive of Goldman Sachs whose aim was to drum up new business for the company in advising MNCs on how to expand business in countries where rapid economic growth is taking place.
However, from a political and strategic perspective, the BRICS, composed of both “senior” and “junior” partners of imperialism is a manifestation of the sharpening inter-imperialist contradictions especially between the US and China. While an enfeebled Russia finds it difficult to assert itself, the Chinese finance capitalist interest which, unlike the comprador India regime, wants a say in the global affairs is more clear cut and explicit.
For instance, while the Indian response to the proposal for a BRICS Bank was ambiguous, the genuine need for it comes from China. According to Chinese commerce minister, Chen Deming, the US recession and EU debt problems have pulled down even Chinese exports to the region. Growing Chinese concerns about fluctuations in the US dollar, the continuation of which will put the prospect of more than $2trillion Chinese investments in US securities in peril, has prompted Chinese capitalists to initiate a fresh drive to make its currency the Renminbi (Yuan) as an alternative among selected group of countries and promote cross-border settlements through it.
Accusing at the US controlled international financial and monetary system where the depreciating dollar still acts as the de-facto medium of global transactions, Li Youfa, a scholar at the official Institute for International Studies, Beijing said: “BRICS countries have been left with few other options. One avenue is utilization of foreign exchange reserves, which all BRICS countries have in ample quantity, for infrastructure development in BRICS and other developing countries. But routing foreign exchange reserve through multilateral financial institutions will not give these countries enough say over utilization because their voting power still remains small.”
Reminding the urgent need for reforming the Bretton Woods system and indirectly hinting the need for the emergence of Chinese currency as an alternative, he added: “… this would also serve as a platform to find ways to help reform existing international institutions, like the IMF and the World Bank, which are not working very effectively at the moment …the creation of such a bank can also serve as a testing ground as BRICS countries search for a way to find a currency that can be used alongside the dollar.”
But according to China, India which is closer to America has other objectives of a BRICS bank. Li further said: “The Indians are proposing a BRICS bank because their country doesn’t have adequate funds for development… India needs foreign investments, but is reluctant to be more open to countries like China. If a BRICS bank can be established, India will be able to use the funds to develop its infrastructure and new industries.” As a matter of fact, the post-Summit utterances from the Indian side are more inclined towards utilizing the BRICS including the concept of a South- South Bank as a bogey to strengthen its bargaining power with the US.
Certainly, by establishing the BRICS bank, China’s intention is to have another set of institutional arrangement within the imperialist system that is free from the control and influence of Washington and that primarily serves the interest of Chinese finance capital. The dollar that fuelled US power under neo-colonialism has been a source of enormous economic, political and military power. Chinese illusion of utilizing its immense trade surplus accumulated through cheap exports over the years along with an appreciating Yuan as the base of this new financial arrangement led by BRICS which accounts for 18 per cent of global trade, 25 per cent of global GDP and 53 per cent of global financial capital comes up in this context. And trade among BRICS rose from $27 billion in 2002 to $212 billion in 2010 and is expected to reach $ 250 billion in 2011.
According to IMF experts, the BRICS group of countries will be responsible for 56 per cent of world GDP growth in 2012. Since China alone has a trade surplus with all other countries in the BRICS grouping, if the BRICS becomes a reality, the Yuan will naturally play the role of the medium of exchange with in it and also in the exchange relation between BRICS and the rest of the world. China is reportedly going to set up a “Yuan payment-settlement platform” over the next two years.
But this is only a hypothetical scenario. At the existing global context, the US shall never allow such a development including BRICS to materialize and it is easy for it to manipulate especially India in view of the very configuration and inherent contradiction of the grouping. In fact, the US has already started this move which came out in the open in an article in the editorial page of the New York Times on March 29, the same day when BRICS summit was kicked off in New Delhi. Among other things, the article authored by an American diplomat said: “It is the fundamental incompatibility of the BRICS nations, not their lack of organizations, which prevents this collection of emerging economies from acting as a meaningful force on the world stage.”
More strikingly, even days before the summit, at the behest of Obama administration, Robert Zoellick, the World Bank president was camping in New Delhi meeting central ministers, senior bureaucrats and corporate CEOs. One day before the summit, when his attention was drawn to the proposed BRICS bank, Zoellick said thus: “It’s a complicated venture which will have a hard time getting off the ground and match the expertise of the World Bank.” Immediately after the summit, on March 30 he told the Manmohan government that World Bank can help India to meet the challenges ahead. It was clear that Zoellick’s presence in India and his comments were part of a broader strategy to convince the Indian government, the current chairperson of BRICS not to go for a BRICS bank allying with China.
To appease India, exactly at the same time, the US Congress announced a $ 10 million bounty on Hafiz Saeed accused in 26/11 attacks. This announcement of bounty on Hafiz Saeed was overwhelmingly welcomed in India and caught front pages of all Indian national dailies. Almost at the same time, the ADB, the Asian economic arm of US imperialism inked three loan agreements worth $826 million to India. On the other hand, as a mark of its continued allegiance to US imperialism, in continuation of the Iran-India Gas Pipeline Project, the Manmohan government has decided to fully comply with US sanctions on Iran and is drastically reducing its oil imports from Iran.
For instance, while India reportedly imported 21 million tons of Iranian oil in 2009-10, that dropped to around 18 million tons in 2010-11 and is continuously dipping further. And instead of paying in hard currencies, India is also trying to entail the use of wheat exports to Iran in return for oil so that Manmohan government can avoid American branding of India as a contributor of hard currency to Iranian coffers.
But when he proceeded to China from India, Zoellick made a somersault and said that the World Bank will support the BRICS bank by providing its expertise. He came out with a detailed statement expressing its willingness to support the proposal of BRICS nations to set up a development bank to insulate their economies from the ongoing economic problems, rising oil prices and currency volatility. “India was one of the sponsors of this idea (BRICS bank). And partly because they wanted more funds for infrastructure development… if they do develop an institution, the Bank will want to be partner with it.”
Regarding the possibility of such a bank he said: “… just as we are with NGOs, civil society groups and National Development Banks… we will be able to complement each other… We have the benefit of being global, we have 187 shareholders and operate in 120 countries. So we might be able to share the knowledge and experience.” It was in this context that Manmohan Singh himself has given his own interpretation of the BRICS bank. Identifying the “supply-side constraints” of development, he put the problem of scarcity of capital as the one that should be tackled urgently. Among other things, he said: “BRICS must address the expansion of the capital base of the World Bank and other multinational development banks to enable them perform their appropriate role in financing infrastructure development.” In other words, it is as part of an effort to supplement the resources of the neo-colonial financial institutions that Manmohan Singh sees the proposal for a South-South development bank that would be funded and managed by the developing countries.
For instance, The Hindu, one of the leading Indian dailies quoting authoritative sources within the BRICS reported on March 30 thus: “Sources said the leaders agreed that the bank should in no way emerge as a competitor to the World Bank and the IMF but provide funds for projects that do not find favour with these institutions.” Of course, this perception on the BRICS bank shared by both American imperialists and Indian compradors is at variance with that of the Chinese capitalists, an aspect already noted. But at the same time, the comprador Indian ruling classes, especially the comprador bureaucratic bourgeoisie, have an intention to manipulate the BRICS as a catalyst, and at the same time as a bargaining tool with American imperialism, for achieving their long standing goal of a seat for India in the UN Security Council. For, Manmohan Singh himself reveals: “While some progress has made in international financial institutions, there is a lack of movement on the political side. BRICS should speak with one voice on important issues such as the reform of the UN Security Council.”
The upshot of the argument is that BRICS is likely to continue as a non-starter in view of its own configuration and the differing political perceptions and objectives of its constituent members. Even the Indian comprador analysts themselves prefer to put it at the “concept stage.” A glance at the post-war history of neo-colonialism clearly reveals that on account of the inherent unevenness and differences in the levels of neo-colonisation to which Afro-Asian-Latin American countries are subjected, all the various groupings among them have remained only on paper. As a result, all attempts such as G-77, G-15, G-24, and above all the much trumpeted New International Economic Order (NIEO), etc. have not at all been able to achieve anything significant.
Instead of proposing certain trading arrangements and economic adjustments such as the UNCTAD, South-South Cooperation these initiatives have utterly failed to put forward a political alternative to the neo-colonial order led by American imperialism.
BRICS is also not an exception to this general rule. The BRICS’s resolutions on Afghanistan and stalemated Doha Round of WTO negotiations and its impotency to take positions on the most crucial question of Palestine denouncing Zionism, etc. are clear manifestations of the fact that, even if materializes, the BRICS will be another apologetic adjustment within the imperialist system rather than a challenge to it.