BRICS' increased assertiveness

The group of the world's five emerging economic powerhouses, popularly known as BRICS comprising Brazil, Russia, India, China and South Africa has evolved into a formidable player on the international economic scene and begun to assert its clout on matters related to the world economy more authoritatively. In its latest summit held in New Delhi, the group advised other nations on various issues and also taken a number of steps itself to carve its role in accordance with the new realities.
It was highlighted that while the BRICS recovered relatively quickly from the global crisis, growth prospects world-wide had again been dampened by market instability, especially in the eurozone. Stressing that the BRICS countries were very much concerned over the current global economic situation, they expressed the belief that "it was critical for advanced economies to adopt responsible macroeconomic and financial policies, avoid creating excessive global liquidity and undertake structural reforms to lift growth that creates jobs."
The BRICS alliance was particularly critical about the excessive liquidity in the global financial system caused by the policies of the rich world to reflate their economies. The declaration issued after the summit also emphasised that excessive liquidity from the aggressive policy actions taken by the central banks of the rich countries to stabilise their domestic economies has been spilling over into emerging market economies, creating risks of asset bubbles in recipient countries and resulting in volatile exchange rates.
The BRICS leaders also stressed the need for reforms in the international global governance institutions including the UN Security Council to reflect contemporary realities. Regarding the IMF, they demanded more voting rights, saying that a "dynamic process of reforms was necessary to ensure the legitimacy and effectiveness of the Fund." The Indian Prime Minister commented that international institutions were failing to support the development of emerging and developing economies and the BRICS' heads of states had directed their finance ministers to examine the proposal for setting up their own development bank.
Two pacts were also signed for enhancing intra-BRICS trade in the national currencies of BRICS countries. The accords would enable credit facilities in local currencies for businesses and allow development banks to extend lines of credit to each other. It was hoped that besides reducing transaction costs within the bloc, the agreement would also insulate trade from the US dollar fluctuations. The leaders at the summit recognised the right of Iran to pursue a nuclear programme for peaceful purposes and urged upon the other nations to resolve the problem diplomatically.
The Delhi Declaration issued after the summit certainly reflects the growing confidence of the BRICS leaders in playing a greater role in the management and future direction of the world economy. The BRICS group, which had held its first summit in 2009, consisted initially of Brazil, Russia, India and China but was enlarged last year to include South Africa, is now more vehement in its assertions and has enlarged its focus to include non-economic issues as well. This is not surprising, given their ascendancy in the world economy recently.
The BRICS nations not only account for 22 percent of global output and almost half of world's population, but also will be responsible for more than half the global growth predicted for 2012. As for the future, BRICS was believed to be the most important engine of growth in the coming years and this was bound to be accompanied by rising diplomatic influence in world affairs. With their rising clout, the effectiveness of forums like G7 and G24 is definitely going to diminish over time. So far as the main points of their declaration at Delhi were concerned, there can be hardly any argument about the rationale of the advice to the advance economies for adopting responsible macroeconomic policies and undertaking the necessary structural reforms.
Unfortunately, the developed countries, instead of implementing the required reforms, are taking easy routes of expansionary fiscal and monetary policies to lift growth and create jobs. Such easy measures could prove to be somewhat beneficial in the short-term but cannot solve the fundamental problems of the rich economies in the long run.
The call for reforms in the international institutions, particularly the demand for more decision-making power as determined by the voting rights of the member countries, is also justified. The world, of course, cannot remain hostage to the realities of the past century forever. If the US and European countries continue to insist on the status quo, nature has its own ways to change the relative positions of various countries in the global order in accordance with the new power equation.
However, while the BRICS nations have the potential of becoming the axis of international politics and driver of global growth, their geographical distances, political disparities and territorial disputes as in the case of China and India may eventually hamper their unity and search for common policies. Also, there is still some ambiguity on whether the economies of BRICS are complimentary or competitive among themselves - a question that will ultimately determine the level of integration and intra-BRICS trade. Besides, the BRICS declaration is completely silent on the inadequacies of their own economic policies which, in certain cases, continue to worsen the recessionary tendencies in the world economies.
For instance, China is not at all prepared to readjust the value of its currency in the international market and continues amassing foreign exchange reserves at an alarming rate despite contrary advice from all over the world. The less powerful, non-aligned and small developing states are also almost clueless and wondering whether the rise of BRICS is a good omen for them or marks the beginning of another global elite with vested interests, which would also pay no heed to their problems.