They account for 40% of the world population and 1/5 of the global GDP. They are the BRICS: Brazil, Russia, India, China and South Africa. The most famous of the emerging countries and now a topic in Italian graduation exams. But ten years down the road, the bloc is in trouble: the ‘new G5’ have inherited the problems of the old G7, and risk a similar decline.
Since 2003, trade between the BRICS economies and the West has grown by 300%, and internal trade among the five member countries, by 1000%. However, rather than limiting themselves to trade, the BRICS have also started creating institutional structures and seeking political alliances to bolster their clout on the world stage. For a while the group was united by a shared antagonism towards the United States, but what political agenda are Brazilian socialists, Russian Putinists, Indian Gandhians, Chinese turbo-communists and South African Zuma-ites likely to share in the future? For the time being the BRICS economies are
busy racking up easy earnings without looking to the long term, following the same recipe used so often by their western counterparts: major sporting events. While the number of countries vying to host these occasions is dropping worldwide, in light of the economic disasters that befall cities many years after hosting such events, the ‘new’ G5 are securing every possible slot. China hosted the Olympic Games in 2008, India was home to the 2010 Commonwealth Games and hopes to be the third BRICS country to bag football’s World Cup (after Brazil in 2014 and Russia in 2018). Moscow and Rio will be passing the Olympic torch between them, with the 2014 Winter Games to be held in Sochi, followed by the Summer Olympics hosted by Brazil in 2016. Money is therefore needed for this period of major expenditure, and the world’s largest lenders are naturally taking advantage of this. The Americans are strengthening the dollar and the BRICS’ currencies are suffering as a result.
The value of imported goods in the G5 economies is rising and the risk of inflation is starting to loom. Big debts in American currency are becoming hard to pay off and dollar reserves make all the difference. In the last two years, all BRICS’ efforts have been concentrated on creating a joint development bank – by 2015 – in order to make them independent from the dollar.
Progress has been slow, but the Russians are insistent. These things take time, they say, because every country must first choose a national delegation to hammer out the details with the others. Then the bank must be capitalised, though it will be difficult to divert funds from elsewhere in these hard economic times. There has been talk of $10 billion in capital, with each country contributing $2 billion.
The first results of the preparatory meetings should be unveiled at the G20 summit in St. Petersburg on September 5-6. In fact, the BRICS bloc began reducing its dependence on foreign currencies in 2012, selling off €45 billion of its €3.4 trillion in foreign currency reserves. The European single currency now accounts for only 24% of their reserves. And the dollar? The leaders of the five economies are convening this summer, during which time they must find a response to the US’s policy of strengthening its
currency. Meanwhile, the only path identified to stem the decline is another move typical of western powers: bilateral agreements. China is signing one with Brazil, and Russia with India. Rio and Beijing have agreed to exchange $30 billion worth of goods in their respective currencies, whereas Moscow and New Delhi have an agreement on steel. Russia’s famed battle tank factory, Uralvagonzavod, will help India modernise its entire domestic railway network, from tracks to carriages to small components. Since the Indian rail network is one of the largest in the world, this is an excellent deal for Putin. Russia and India in the meantime have signed a privileged strategic partnership. According to Russia’s former First Deputy Foreign Minister, Vyacheslav Trubnikov, “New Delhi is the capital with which Moscow has the best relations”. General Trubnikov, who also served as the Russian Ambassador to India, went on to explain: “We are developing new weapon systems and fighting terrorism together.
We share many cultural interests, and India has even been holding a Soviet Culture Week since as far back as the 1980s”.
The weapons he is referring to are predominantly fifth-generation T-50 fighter jets: Russia will be producing the first 70 planes by the end of 2013 and the Indian version will be ready in 2018.
Anti-terrorism goes hand in hand with another sector where cooperation is key: crisis management. Russia is trying to boost its presence in India, claiming it can help New Delhi with technology and know-how, since its National Crisis Management Centre
holds a record in real-time interventions, with relief teams that save a life every 12 minutes. These figures most likely refer to natural disasters seeing as in anti-terrorist operations the number of deaths usually exceeds the number of lives saved.
They account for 40% of the world population and 1/5 of the global GDP. They are the BRICS: Brazil, Russia, India, China and South Africa. The most famous of the emerging countries and now a topic in Italian graduation exams. But ten years down the road, the bloc is in trouble: the ‘new G5’ have inherited the problems of the old G7, and risk a similar decline.
