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Tuesday, 12 August 2014 17:02

THE BRICS REACH MATURITY

MOSCOW, August 12, 2014 (Ria Novosti) -- Executive Director of Russia’s National Committee for BRICS Studies and Director for Regional Programs at the Russkiy Mir Foundation Georgy Toloraya shares his thoughts on the results of the BRICS summit in Brazil, where the leaders of Russia, China, India, Brazil and South Africa reached a number of important agreements in security, economic and financial issues.

 

— What’s your general assessment of the Brazilian BRICS Summit results?

 

— Unexpectedly enough, this summit proved to be outstanding. This meeting symbolically ushers in the second series of summits: the first one is over and the second one has commenced, showcasing the maturity of the BRICS.

 

This summit is different from other meetings in that it took place during an unexpectedly acute phase of confrontation between some members of the BRICS and the USA: in particular, this concerns Russia, though the relationship between China and the US is far from being cloudless as well. And in this geopolitical landscape the BRICS nations expressed solidarity on all major issues. In fact the association postured itself as a new center of power that includes the nations challenging the Western model in their development, firmly and unambiguously expressing their readiness to stand for their interests and opposing Washington’s dictate.

 

In addition, some important practical steps were made towards the implementation of the BRICS concept as a new center of power in the world: agreements were reached on establishing a new development bank and a pool of conventional currency reserves.

 

In spite of the fact that the process of creating the bank was only recently launched, this should not only become a financial institute but also the center coordinating the economic policy of the founding nations, which is an unprecedented move. The bank is also very important for providing the opportunity of independent investing in the projects that are of interest to the BRICS nations, but rouse no interest of the World Bank or other investment banks, where the positions of western financiers and governments are very strong.

 

— How will these institutes agreed upon by the BRICS nations influence the existing global financial architecture?

 

— The global significance of these institutes should not be exaggerated, since they are at the very beginning of their inception. But their establishment is already a very important symbolic step.

 

Potentially the bank of development could be an influential coordination center, a likely think tank for agreeing the economic policy and project selection, to enable the financing of those projects which other banks do not feel like backing. In fact the BRICS Bank is an alternative and in many respects a rival of the existing banks. The question is whether their relationship will be one of collaboration, division of labor or confrontation.

 

Division of labor can be illustrated on the following example. Why should the World Bank where Americans take the leading positions finance the GLONASS system, a direct competitor of the US navigation system GPS? On the other hand, the BRICS Bank might be interested in financing this project. And there are many similar projects which are important for the BRICS nations, but not for the West.

 

In this way a gradual readjustment of the financial architecture will be taking place. It will take the BRICS Bank only 7 years to accumulate the capital of $10 billion, but nobody knows what the decision making mechanism will be adopted there, how the bank will position itself on the world capital markets and how it will build its relationship with the existing financial structures. Stiff competition from the Western structures and their meddling with spokes in the wheels seems to be inevitable.

 

As regards the pool of currency reserves, this is a serious claim, psychologically, that the BRICS nations are capable of creating a source of financing needed to avert financial instability in these countries. This will allow dispensing with the IMF which often sets very stiff fund disbursement terms that are unacceptable for the governments. Creating a pool of currency reserves is a very important psychological step not only for the BRICS, but also for other developing nations which will have access to alternative sources and ways of solving their economic problems, not necessarily under the dictate of the IMF.

 

— Besides developing their own institutional system, the BRICS nations stated in their Fortaleza Declaration their intention to joint efforts in securing a reform of the IMF and the World Bank. Do these statements mean that one of the main areas of activity for BRICS in the future will be struggling for a more equitable world order?

 

— This is not so much an area of activity but rather the very reason for the BRICS existence: reforming the international architecture geopolitically, financially and economically.

 

As regards the IMF reform, certain agreements about a change of quotas and other structural shifts have been reached, but not realized because the US Congress refuses to ratify them. And the BRICS nations declare that they will push for the agreed positions to be put into life and uphold the policy aimed at IMF reforms. This does not mean, however, that their efforts will be a success, since the other party ignores their demands and is not ready to meet them half-way.

 

As for UN reform, this is above all the desire of India and Brazil to become permanent members of the UN Security Council. It seems to me that this is a justified aspiration. But this nut will be hard to crack individually, solely in relation of these two countries, without reforming the entire UN and Security Council, and this is a rather long process. And I am not sure that the cart can be put in front of the horse, with the status of permanent members granted to these countries first, and the UN being reformed afterwards, though some tradeoff can be groped for. For example, they could become permanent members for a certain period of time without the right of veto.

 

— Russia, China, India, Brazil and South Africa are unanimous on many key issues of the international agenda. Will the US and their allies try to make a dent in this unity by concluding bilateral agreements and putting some pressure?

 

— I feel the efforts to undermine the BRICS from within will be gaining momentum. Attempts will be made to sow strife between these nations, to play on their disagreements, to try luring them into some alternative alliances and groups. Work will be carried out with the national governments to till the soil from inside. Certain solidarity against the BRICS exists on a global scale among the interested G20 nations. But this should be taken in pace: the world order has never changed easily without upheavals. The main aim is for this to be done in a civilized manner, not in the form of bitter confrontation degrading to violence, but rather as a clash of ideas and concepts and a quest of the compromises that would match the interests of the entire mankind.

 

— At the summit Russia proposed creating of the BRICS energy association, including a fuel reserves bank and an energy institute. What’s the crux of this initiative?

 

— This is a rather new idea injected literally on the eve of the summit. It appears sensible, since the BRICS nations are both the biggest energy producers (Russia and Brazil) and consumers (China and India). Pooling their efforts to regulate the fuel market would certainly enhance its stability, predictability and energy security, which reverberates with the interests of both producing and consuming nations. Perhaps in this direction will the given initiative be further developing.

 

— Can Russia’s visible role in the BRICS be regarded as equivalent substitution for its participation in G8?

 

— It seems that our country continued to participate in the ‘G7 + 1’ format. This is certainly useful, but I think far more serious objectives could be reached within the BRICS. Yet one does not exclude another. If Russia’s involvement in G8 is revived I think this would be useful both for us and our Western partners.

 

(Source: RIA Novosti)

 

 
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