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This week the heads of state of the five BRICS nations meet for the seventh annual summit to steer a forward course for almost 3 billion people, or 43% of the world population.
The New Development Bank or the BRICS Bank will be up and running by year’s end even as the IMF, predictably, delayed discussions on voting reforms to give emerging economies greater say.
The Shanghai-based NDB will have an initial authorized capital of $100 billion and its initial subscribed capital of $50 billion will be equally shared among the founding members.
The group has vowed the new lender will promote infrastructure construction and sustainable development of the emerging and developing economies.
The Bank and a $100 billion monetary fund are not only adding might and muscle to the bloc but increasingly challenging the Bretton Woods institutions. Both the China-led Asian Infrastructure Investment Bank and the BRICS Bank have been gaining popularity and are seen as a counterbalance to the IMF and World Bank.
The combined GDP, by purchasing power parity, of the five BRICS countries surged from $10 trillion in 2001 to $32.5 trillion in 2014.
This, surely, is a far cry from the ‘broken BRICS’ and the ‘crumbling BRICS’ metaphors that did the rounds in recent years.
Since 2010 when the BRIC group added the S with South Africa, there have been a growing list of countries that have evinced interest in joining the bloc.
Beleaguered world leaders, including Greek Premier Alexis Tsipras, have used the BRICS, perhaps not wisely, to criticise world powers like the EU for believing that it “was the center of the world”.
Economic leadership requires building unity and coalitions and preparations for the induction of India and Pakistan into the China-Russia-led bloc Shanghai Cooperation Organisation (SCO) is a step in the right direction for the violence-hit region.
Russia, the host of this year’s BRICS Summit, is also proposing a new ‘Energy Association’ that will include a fuel reserve and a BRICS credit ratings agency.
These are bold plans but the group has some serious challenges at hand.
The BRICS countries lack innovation and competitiveness, critical components in global growth. China at 22 was the highest ranked BRICS country in the 2015 IMD World Competitiveness Yearbook while US was the top performer.
The BRICS would have to rebalance their economies, align their future trajectories- a good example would be the agreement on integration of the Russia-led Eurasian Economic Union and China’s ambitious Silk Road project.
They would also have to bury some of the disputes that divide them, like the China-India border dispute that is hindering mutual trade and investment ties.
Fissures among the BRICS, like on the matter of a UNSC seat, will continue to work against their collective interests unless they are able to settle their arguments.
BRICS bilateral trade, in spite of the trade barriers and protectionist measures in place, almost doubled in the 5 years to 2013 to reach $300 billion.
But talk of BRICS supplanting the US and Europe as the engines of the global economy would be hollow and futile if these countries are unable to raise the living standards for their poor and marginalized.
Almost 50% of the world’s poor live in the BRICS countries.
An Oxfam policy brief has urged the new BRICS Bank to include commitments to: ending extreme poverty and inequality, with a special focus on gender equity and women’s rights.
The five leaders when they meet in Ufa would do well to heed to such advice even as they seek to get a bigger share in global decision-making.
Leaders in these countries must seek to be trailblazers in ending extreme poverty.
It is indeed heartening that “integration of migrants” was one of the topics discussed at the BRICS Civil forum in Moscow last week.
South Africa, India and Russia struggle with mass migrant exodus into their soil from poorer neighbours, often leading to conflict.
BRICS leaders must not sidestep the issue like some of their more celebrated peers like Myanmar’s Aung San Suu Kyi or emulate the apathy of European leaders on migrants drowning in the Mediterranean to reach their shores.
During the Ufa Summit this week, the main objective of the heads of state of Brazil, Russia, India, China and South Africa is to announce the operationalization of the twin financial instruments- the BRICS Bank and the BRICS Monetary Fund, notwithstanding the skepticism in Western capitals.
The events in Ufa, the BRICS and SCO Summits, will also present China with the opportunity to enlist further support for its “One Road One Belt” project.
Unlike the $100 billion China-led Asian Infrastructure Investment Bank (AIIB), which has roped in all the BRICS countries, Beijing’s Silk Road Project is yet to be embraced by everyone. New Delhi, for instance, is yet to be convinced.
Host Russia’s proposal to discuss a roadmap for the five countries’ investment cooperation is also on the agenda of talks.
The festering Ukraine crisis, the growing threat of the Islamic State and the instability in Middle-Eastern countries like Tunisia and Libya will find a mention in the Ufa Declaration at the end of the Summit.