Thursday, May 09, 2013

To compete globally, BRICS nations need reputation, not imitation



by Ahmed E. Souaiaia* 

BRICS nations
The economic, political, and social rise of the Western block of nations was founded on the single most enduring currency: reputation. Reputation, the source of credibility and trust, is the real asset that allows the U.S. to project its stature around the world. BRICS nations cannot rise to prominence by mimicking developed countries. They must build their reputation first. Wealth is only a byproduct of this more precious commodity, and countries who have it can squander it just as emerging economies can acquire it. For either of those results to happen in any country, circumstantial conditions and principled actions must converge.


Despite scientific advances, including ease of communication and physical mobility, many countries around the world remained untouched.. Many nations around the world mimicked the Western block of nations’ institutional structures in order to improve social and economic conditions. Consequently, regional cooperatives that grouped some countries together to increase capital and expand markets sprung up all over the world. One such cooperative is the consortium of nations dubbed BRICS. It is a curious association that warrants close examination in order to understand the forces that bind them together and the forces that push them apart.

Observers of international affairs have been intrigued by the outcome of the BRICS summit in Durban. Notably, the leaders of the five countries that constitute this group have agreed to build institutions that will foster cooperation and coordination. Specifically, they agreed to found a New Development Bank (NDB) that would invest in member states’ infrastructure as well as in that of Emerging Markets and Developing Countries (EMDCs).

The leaders agreed that each country would contribute an investment of $10 billion, bringing the initial capital of the NDB to $50 billion. The leaders also agreed to supplement this capital with an additional $100 billion in emergency reserves, establishing a Contingent Reserve Arrangement (CRA), to help member states during unforeseen crises. China will provide $41 billion of the supplemental fund and each of the other four countries will contribute $18 billion, except South Africa, which will allocate only $5 billion. The bank will start by investing in one major project: a high speed Intranet that will connect all five countries. The project is estimated to cost about $1 billion. 

The potential and challenges facing this emerging economic group are enormous, given the human, geographic, economic, and political realities that unite and separate them. What is evident, however, is that challenging the West in the name of multilateralism is not enough to create a solid block that will survive the various challenges.

First, let’s look at the potential for success. More than 45% of the world’s population lives in the countries making up the block: 1.347 billion people in China, more than 1 billion in India, nearly 194 million in Brazil, about 140 million in Russia, and almost 50 million in South Africa. Together, the five countries control 30% of the land on earth. Each of the five countries is an economic powerhouse in its own right: China’s economic input (according to data from two years ago) equaled $5.5 trillion, Brazil’s was $1 trillion, India’s and Russia’s were both $1.6 trillion, and South Africa’s equaled $285 billion. Together, the five nations are the source of about 15% of global trade. More recent data show that the economy of BRICS grew by an average of 4%, compared to 0.7% for the top seven industrial nations. Economic projections suggest that BRICS countries will contribute nearly 50% of global economic growth by the year 2020.

But unlike other economic blocks around the world, BRICS consists of five countries from four different continents with five different cultural and ethnic backgrounds. The geographic, cultural, and ethnic differences among BRICS nations are significant, but the political differences are even more pronounced. For instance, Brazil’s political culture is rooted in leadership that is derived from the authority of the Church and the power of the institution of the military. In contrast, China’s political system combines Confucius’ values with communism and the veneration of elders. India’s democracy, shaped by religious and class casts, is nothing like Russia’s authoritarianism or South Africa’s emerging representative governance. These differences are significant because political stability is also crucial in building reputation domestically and globally. Nations become stable and reputable when citizens (and businesses) know that life, property, and dignity are safeguarded under all circumstances. If these nations cannot provide political stability and smooth transfers of power at home, they certainly cannot be called upon to adjudicate political disputes abroad. For that to happen, all five nations need to do more to build robust civil society institutions.

In addition to the challenges that are dictated by difference, BRICS nations face serious conflicts of interests. China is perceived to be interested in flooding the markets of the other countries with its own goods. India is worried about China’s plans to build more dams on rivers on which India depends. Brazil, South Africa, and India have campaigned hard to have their status upgraded in the UNSC, but Russia and China did not support their efforts—which exacerbated the lack of trust amongst the veto-wielding countries and the non-permanent members.

One could argue that differences—especially cultural, political, and linguistic ones—ought to be seen as an asset, not a liability, since leaders of all five nations have emphasized the virtues of diversity and multiculturalism. That would be a sound argument if the composition of BRICS was actually built on diversity instead of economic potential. In the end, this cooperative is an intergovernmental organization. Governments are not in the business of promoting philosophical and ethical norms; they are in the business of increasing value to the power holders. 

Ultimately, the fact that BRICS are focusing on creating an investment bank instead of dealing with all the outstanding and potential issues suggests that they are relying on their shared interest in challenging Western dominance. Their first political statement on Syria and Afghanistan shows that BRICS nations need more than potential and resources to be effective on the global stage. Importantly, given the number of crises within the Islamic world, and given the potential and status of the Islamic world, BRICS could benefit from adding at least one emerging Muslim country to their exclusive club of nations.

The lingering financial crisis with which the U.S. and the EU are struggling provided other strong economies with an opportunity to break free from a unipolar world dominated by the United States and its allies. China and Russia are seen as the most likely candidates for re-establishing parity on the global stage. While Russia might be interested in reinventing itself as one of two superpowers in the post-Soviet Union era, China seems more interested in improving and preserving its economic rise. The association of BRICS was built on an idea—not on a principle—an idea that is rooted in the hope that countries with many resources and much potential can compete against the West. Competing against the Western block is unifying, purpose-wise. But competing against the Western block requires a principled approach and disciplined drive to build a reputation that these countries singularly or collectively can project around the world with confidence.

Reputation is not built in a day, by promises, or by wealth. Reputation is the outcome of a historical trend that builds trust. It cannot be bought, coerced, or manufactured. Reputation takes time to build and arrogance to destroy. BRICS nations’ leaders will be fatally mistaken if they think that the crisis of credibility of the West resulting from their recent illegal wars and violations of human rights will create an opening for them to as an alternative. BRICS countries must be consistently better in all those areas for which they fault the West for a long time for them to have a chance to compete for reputation, the most valued prize in human civilizations.
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* Prof. SOUAIAIA teaches at the University of Iowa. Opinions are the author’s, speaking on matters of public interest; not speaking for the university or any other organization with which he is affiliated.

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