A Compelling Counterweight? – The Role of the BRICS in Global Summitry

 

So the 5th BRICS Summit has come and gone in Durban South Africa.  The first BRICS Summit in Africa; the first hosted by the newest BRICS member South Africa; and the first to be attended by the new Chinese leader, Xi Jinping.  I am sure there are a number of other firsts but that will do for the moment.

For the world’s media there were these persistent questions –  what is this organization?  What does it represent?  Do we need to take any notice of it or is this a leader-made media opportunity?

For the experts the questions weren’t really all that much different.  It is not at all clear how to assess the impact and influence of this Leaders Summit?  And where are we to place this annual leaders gathering in the larger architecture of global summitry?

First, and barely mentioned by either the experts or the global media is the fact that all these BRICS countries are also members of the G20 Leaders Summit.  Indeed Russia is not just a member of this leaders gathering but is also a member of the G8 – extant since the late ’90s – and hosting the G20 this coming September in St. Petersburg.  Oh and it will shortly host the G8.

By now even the most casual observer knows the annual summit’s origin – at least with respect to the name.  Jim O’Neill of Goldman Sachs fame created the BRIC grouping – Brazil, Russia, India and China – as an investment monicker for these large emerging market countries  – only to see it appropriated by leaders from those very same countries first by ministers from these countries in 2008 and then in an annual leaders meeting beginning in 2009 at Yekaterinburg in Russia.  The original four were joined by South Africa in 2011 at the Summit in Sanya in China.

So what are we to make of this grouping?  Is it a developing country alliance – a magnet for developing country concerns; a caucus of large emerging market economies within the G20; or some kind of counterweight  – whether in the G20 or not – to the traditional and dominant states in the fashioning and future organization of the global economy.

Let’s start with their accomplishments.  At the end of the day analyzing their decisions is an important aspect of global summitry, and worthy of some attention.  Like the G7/8 and the G20, the BRICS leaders issue a declaration at the end of each gathering.  Now these communiques have been worked on by Sherpas, personal representatives of the leaders, and officials long before the conclusion of the meeting.  The current communique issued, the eThekwini Declaration – you can find it at the official BRICS website – or use the BRICS website at the University of Toronto – brought to you by my colleague, Professor John Kirton and the students at University of Toronto as well Marina Larionova of the Higher School of Economics in Moscow and her colleagues.

Well the communique is lengthy and I am afraid not terribly edifying.  I was asked by various media outlets what I thought the leaders had to accomplish to consider the Durban Summit a success.  I suggested two concluded policies were necessary:  the creation of the new BRICS Development Bank (see paragraph 9); and then the Contingent Reserve Arrangement (paragraph 10).  But neither was concluded notwithstanding that the Statement declared that both would be established.  All the critical detail for both projects still need to be worked out at this point and who knows when, and whether, the BRICS officials will be able to do so.

One other matter seemed to raise interest over the collective influence of the BRICS – this a possible the statement on Syria. Just before the Durban Summit began Bashar al-Assad appealed to the BRICS leaders to help end the two-year conflict in Syria.  The appeal raised all sorts of possibilities for involvement of these countries – especially given that Russia but also China – had resisted muscular international efforts, including at the UN, to end the Syrian civil war.  So here would be a collective effort in security cooperation among the 5 states.  It might bring influence.  Paragraph 26 speaks to the BRICS-Leaders’ concerns at the Syrian situation.  But other than a statement to permit “unimpeded access to humanitarian organizations” – possibly provision of assistance without notification to the current government, which would be a change in policy – the statement evidenced little in the way of a new initiative.

So a reading of the Declaration reveals little in the way of effective decision making.  In reading the experts and the more enthusiastic officials – read that at least as Jacob Zuma –  the pendulum swings in the direction of some kind of counterweight – to the traditional states especially the United States.   And this view pushes in the direction of suggesting that the global economy and the traditional institutions – World Bank and IMF have failed to adjust and accommodate the rise of these large emerging market economies and that the BRICS somehow can force the pace.  Now we all can agree that the reforms promised have failed to keep pace with the promises made at the time of the global financial crisis; but how the BRICS will bring about a more rapid change – I’m afraid I don’t see it though my colleague Oliver Stuenkel at Post Western World thinks it – or at least the BRICS bank possibly will:

The answer is that while emerging powers seek a larger role within the existing framework, they do not feel established powers are willing to provide them with the adequate power and responsibility – reforms at the World Bank and the IMF have been too slow, and not far-reaching enough. The World Bank remains, despite its name, essentially a Western-dominated institution in the eyes of emerging powers.  It is difficult to read the creation of the BRICS Development as anything other than that.

Oliver then swings in a very Brazilian direction – that is “state-led economic growth sustained by strong development banks.”  This is the possible BRICS consensus.  And while there is some attention in the Declaration, see paragraph 18, to what is called State Owned Companies (SOCs) and encouragement to explore cooperation among these companies, there is little substance you can point to to suggest that the development model is the foundation for the BRICS.

So while a counterweight remains possible motivation for the BRICS how is it shaped in the context of the BRICS?  Many experts have referred to the BRICS and the character of consensus, or lack thereof.  On the latter experts from the traditional countries have alluded repeatedly to the lack of consensus.  My friend and colleague from the WTO, John Hancock writing recently  in Canada’s Globe and Mail targeted this feature of the BRICS:  “But ironically as the BRICS grow more powerful, they also grow more fractious.”  Now John acknowledges that the lack of consensus is not restricted to the BRICS, but like-mindedness has always been overrated whether at the BRICS or the G8 or the G20.  What’s important, as I argued above, is what gets decided and as we can see from this current Summit there is a long way to go.  John suggests, however, that there may be substance to the notion of a counterweight:

The only thing the BRICS clearly share is a smouldering resentment of Western dominance, and a palpable desire for their own place in the sun. Russia is still smarting from its loss of superpower status.  China has not forgotten the humiliations of the 19th and early 20th centuries.  India still carries heavy colonial baggage, and the South Africa carries even heavier baggage from its grim apartheid past.  If your enemy’s enemy is your friend, then the BRICS at least have that in common.

Is it enough?  Well rhetorically, maybe but on a developmental level, its seems far fetched. And as John concludes, “But shared covetousness doe not a common agenda make.”

There is no obvious answer at this juncture as to what the BRICS represents but I’m willing to bet that in the medium and longer term. we are far more likely to see the BRICS acting as a caucus within the G20 than anything else. And we have seen it acting that way already.  For instance in building policy consensus for committing funds to the IMF, that could be used among other things for the eurozone crisis, the willingness to commit among all the BRICS was concluded after just such a caucus gathering persuading Brazil to commit though it had expressed doubts publicly.  Indeed it would be a sad outcome if the BRICS ended up as a counterweight when much hope has been expressed over the expansion of the G8 to the G20 exactly because it brings together at the global summitry level leaders from the large emerging market countries and the traditional states.

As a parting comment there was much idle discussion at the conclusion of the Summit over the name with some suggesting the BRICS should be renamed the BRICSI as there was much discussion about extending membership to include Indonesia.   But I and others took care of that long ago – so a sign off for now from Rising BRICSAM

Image Credit: globalpost.com

The ‘China Dream’ or ‘A New Type of Great Power Relationship’

Experts are trying to puzzle through exactly what Chairman Xi Jinping has in store for US-China relations now that the power transfer has been completed in China and Xi has been named President. There appear to contending views from the US side on the future of the US-China relationship.  There is one school – attractive for the “China Threat” and grand strategy types – that focus on Xi’s reference to “The China Dream”.  For some others, myself included, less ‘exercised’ by the China Dream possibilities and intrigued – but aware of the empty content so far in Xi’s proposal – a reference to “a new type of major or great power relationship”.  It is worth exploring both to try and tease out Xi’s think, if we can.

The China Dream 中国 之梦 -zhong guo zhi meng

Many of the China Threat types have raised concern over Xi Jinping’s reference to the ‘China Dream’.  Though it is officially described as the ‘rejuvenation of the nation’, the focus for most is President Xi’s series of talks to the military on the ‘China Dream’.

This title, as has been described by a number of sources, also reflects a book that was written some 3 years ago by Colonel Liu Mingfu of the PLA and a professor at National Defense University.  As described by Jeremy Page, a Beijing reporter for the WSJ in a recent article entitled “For Xi, a ‘China Dream’ of Military Power”,  the book by Liu Mingfu predicted a “marathon contest for global domination”.  Though suppressed soon after the publication – it was viewed apparently, as likely to cause damage to US-China relations – a new edition was approved just shortly after President Xi gave the China Dream speech.  And in the run up to the final leadership transition Xi Jinping has made it a point to speak to various groups of the military.  Chairman Xi, for instance,  told a group of sailors late last year aboard a guided-missile destroyer that had patrolled in the hotly disputed South China Sea that “To achieve the great revival of the China nation, we must ensure there is a unison between a prosperous country and strong military.”

All this has led many in US diplomatic, strategic beltway and analyst circles to believe, according to Jeremy Page that:

… Mr. Xi is casting himself as a strong military leaders at home and embracing a more hawkish worldview long outlined by the generals who think the US is in decline and China will become the dominant military power in Asia by midcentury”.

So those attracted to this view and Xi’s efforts to woo the military see:

… Mr. Xi is setting the stage for a prolonged period of tension between China and neighbors, as well as for a potentially dangerous tussle for influence with a US that is intent on reasserting its role as the dominant Pacific power.

In setting out apparently on this more military and aggressive policy, Xi appears to be setting aside the doctrine expressed by Deng Xiaoping: 韬光养晦 (taoguang yanghui) – concealing one’s capabilities; biding one’s time; to have an achievement.  Many have identified the more assertive behavior of the former leadership since about 2010 – in the South China Sea and more recently in the East China Sea, as a product of greater national aspiration and great power determination.  According to Xinhua news, President Xi expressed the following to the Politburo

… but we will absolutely not abandon our legitimate rights and interests and absolutely  cannot sacrifice core national interests.

The closeness to the military and the reflections on a more aggressive approach has led President Xi to issue orders to focus on “real combat” and “fighting and winning wars.” It certainly appears an evident contrast to the previous leadership of Hu Jintao who seemed to keep a very low military profile. But President Xi may well have adopted various territorial and nationalist perspectives that were seen to be confined before to largely military hawks to secure strong military loyalty.  Why, is still unclear.  It may be to secure the loyalty of the military as Xi prepares, perhaps. for serious economic reform.  We really don’t know, though there is much speculation.  Time will tell.

But then on reflection while the policy shift may be now, military capabilities are quite another.   What China can bring to this “party” are not anywhere near what the US currently possesses and deploys in the Asia-Pacific.  And the China Dream at least as expressed by Liu Mingfu is decades away.  And the desire to build the military resources of the Chinese military – aircraft carriers and stealth fighter jets – are costly weapons systems that may yet prove to be yesterdays war tools.  As today’s platforms become increasingly vulnerable, serious military spending on today’s costly weapons systems may prove to be a serious and not very effective weapons path.  And I always look at the official weapons expenditures and double the amount. Why?  Well at least in the recent past China – state and party – have spent about as much on internal security as they have spent on the military.   This is not a Party operating from strength, but perhaps, fatal weakness.

In the final analysis the China Dream is founded on US decline.  Today the military gap between China and the US remains demonstrably large (for 2013 China is proposing – at least officially – a budget of $119 billion while the US budget calls for $553 billion) .  The key player in this relationship is surely the United States – as much as it is China.  While there are voices that seek the US to lower its profile in the international system or that the US can shift to some notion of offshore balancing to get others to do what is necessary, reduce defense costs and maintain US influence, the reality appears to be that the US is moving in the opposite direction in the Asia-Pacific.  And while the Defense Department will be required to participate in the ‘right-sizing’ of the US budget, including weapons procurement, US decline does not appear to be evident – or on the horizon.  There is however, one policy change that could alter the strategic equation and nudge US-China relations toward a “New Type of Great Power Relationship”.

新型大国 关系 – (Xin xing daguo guanxi) – new type of great power relationship

So alert to the potential turn in relations, yet not entranced by the China Dream perspectives, what then of a new type of great power relationship.  As I mentioned earlier there is nothing at the moment that fills this particular diplomatic and strategic vessel.  But in reflecting back on the conversations that a number of colleagues and I had in January in Beijing at the Harvard-Beida conference I came away with one overwhelming conclusion – China experts – possibly not officials  but maybe – believe that the Obama pivot is a policy targeting China and indeed a strategy all about China and US determination to contain China and remain the hegemon in the region and beyond.  Moreover the China experts suggest that the US pivot will give comfort to Vietnam, the Philippines and most especially Japan to advance more aggressive stances with China in the continuing “Island Disputes.”   Especially with the latter, US diplomacy can be effective in alerting allies quietly, especially Japan that the US has little appetite for crisis and no appetite for conflict, intended or not.  The same needs to be conveyed quietly to China.  Publicly the US needs to avoid some of the more pointed language that former Secretary of State Hillary Clinton publicly prone to express, though she claimed to be advancing a neutral stance.  This even-handedness is obviously most difficult with the Japanese, where security guarantees tilt US statements.  Overall the US needs to frame the Pivot in a wider frame of diplomatic and economic engagement – and away from a military focus.

So a tuning of US policy toward greater diplomatic and economic policy in the Asia-Pacific is the bedrock for a new type of great power relationship.  In addition while greater competitiveness is evident in the US-China relationship, there are possibilities of collaboration.  In a recent assessment of the US-China relationship at the China US Focus David Shambaugh, from George Washington University,  and long time observer of China and the US-China relationship acknowledges  the deep interdependence of the two in what he sees as a ” … predominantly competitive relationship with a major power with which it is simultaneously deeply interdependent.”  He characterizes the need for a new relationship as:

For all these reasons, President Xi Jinping and the new Chinese leadership is wise to put forward the desire for a “new type of major power relationship.”  It is definitely needed – because the “old type” of competitive and suspicious relations is now predominant in the bilateral relationship.  … While establishing such a “new type of major power relations” is a desirable aspiration, this observer believes that “managing competition” is the more feasible reality. To establish a relationship of “competitive coexistence”  is more realistic.

It would appear that David has bowed – at least a little – to a more contemporary framing of the US-China relationship – it is primarily competitive.  It leans in the direction of the characterizations expressed by the IR China scholar Yuan Xuetong, the Director of the Institute if International Studies at Tsinghua University, accepting the current enmity and rejecting superficial friendship, extending the meaning of the traditional Chinese perspective –  (非敌 非友)  (fei di fei you) – “neither friend nor foe”.

亦敌 亦友- (yi di, yi you) –  both friend and foe

The traditional expression it seems to me to leans too far in the direction of a competitive relationship.  The slight turn of the traditional phrase, above, which I have commented on in earlier blog posts appears to me to better situate the two – highly interdependent powers in a periodically competitive relationship.  So unlike earlier competitive power transitions, this relationship is defined as much by high economic interdependence and various potential global or near global collaborative leadership settings, e.g. APEC, EAS and the G20. This doesn’t suggest that the road map to a new type of great power relationship is self evident or inevitable but  it does set off this competitive relationship from the host of earlier power transitions – whether US-Soviet or Germany and Great Britain before World War I.

It leaves me to suggest that there are a number policy steps that the US – and for sure China can take – that  can help build a new type of great power relationship:

  1. As noted above the US needs to widen its “Pivot” and underscore that it is as much diplomatic and economic as it is political and security.  And I would think that the advice from Harvard’s Stephen Walt at the Harvard-Beida Conference, and then on  his return to the blogosphere, warrants policy exploration. He urged policy efforts of both positive and negative cooperation.  On the positive side the evident possibility is the DPRK and there has been some sanction cooperation between the two.  There needs to be more and that requires – I suspect President Xi – to press the PLA to bring greater reality to the DPRK military;
  2. President Xi also needs to take note of Harvard’s Joe Nye’s realistic strategic framing – only China can contain China – and that its “assertive behavior” has accomplished exactly that in the region;
  3. President Xi can take a giant leap – and I suspect this is more in the realm of wishful thinking – and put to the test the US position that the TPP (Trans Pacific Partnership) is not designed as an anti-China economic initiative, by signalling its interest in joining the talks  now that Japan appears to have signaled the same; and
  4. Then in the realm of perception and policy followup both the Chinese and US leadership and the cognoscenti circling the leadership need to avoid framing the relationship in “Cold War” terms.  It is all too comfortable for policy makers and the military to see the relationship in growing competitive even growing rivalrous terms.  Perceiving it may in fact hasten it.  Now that is really a bad idea!

Image Credit: topnews.in

 

 

 

 

 

 

Cold Reality – Economic Growth Among the BRICS

I was caught by the recent FT article chronicling a report from Goldman Sachs that concluded “that the global economy will expand at a faster rate this decade than in any of the previous three.”  What powers this enhanced growth, according to Goldman Sachs and its celebrity economist, Jim O’Neill, are the original BRICs – excluding therefore South Africa.

With the economic growth of the BRICS in mind I decided to look a bit more closely at the economic growth.  My inquiry produced the table below on economic growth.

Economic Growth for the BRICS

Country Current Estimate 2013 Recent – 2012 Previous -2011
China 7.5% (Premier Wen) 7.8% 8.0 -9.2%
India 6.1% to 6.7% (Finance) 5% 6.5%
Brazil 3.26% (Finance) .98% 2.7%
Russia 3.3% (World Bank) 3.4% (Federal Statistics) 4.3%
South Africa 2.6% (Reserve Bank) 2.5% 3.5%

A couple things are apparent.  First of course O’Neill would strongly object to an examination of what I call the “Political BRICS”.  The Political BRICS is the global summit leadership that has met annually now from 2009 – though ministers met before that.  For O’Neill, and publicly stated, he argued that South Africa should not be included in his conception of the BRICS.  All of his original members rank  within the top ten of GDP growth.  South Africa in contrast is ranked only 26th (all this according to the CIA’s World Facts Handbook).

It is also apparent from this cursory examination that China still stands out from the rest for rapid growth – well beyond any of the other BRICS.

And finally it would appear that current estimates of economic growth are decidedly moderated from recent years.  Moreover, if you follow the estimations of economic growth mixed signals appear to be the ‘order of the day’.  India is struggling with inflation; Brazil has generally healthy growth, but not any way the “China growth rates” at least in recent years.  And of course South African growth has been sputtering along and there are estimates that South Africa will lose its place as the largest African economy to Nigeria.

Now I suppose it is all relative.  The article I alluded to was written in part to raise concerns over European growth and in particular Eurozone growth. In that light the projected growth from the BRICS looks solid in comparison to the Eurozone.  But still it does seem to me that the economic growth – with the exception of China – seems rather modest.  And there is a constant mixed bag of reporting that raises the capacity of China to continue to grow at an above 7 percent rate.

Am I wrong?

 

Democracy and Economic Development in India

 

Well once again I must apologize for a prolonged silence. These past two weeks I have been travelling through parts of India most particularly Delhi and Agra and then through Rajasthan – Jaipur, Udaipur, Jodhpur and Jesilmar – etc.  This trip was deliberately far from the more rarified halls of global governance discourse.  It is always good to step away from the conference schedules and think tank encounters. Such action is an effort to get some tangible feel for the country.  But I always find it is well worth it – no more so than India.  India from the palaces and forts and bazaars is, as I found, an endlessly fascinating place.  The colors, smells and busy human activities are enticing and suggest possibilities for the future for this ancient/new land.

One of the continuing discussions I had with one of our Indian hosts was the state of progress for economic development in India.  This discussion emerged in a generally jocular discussion over the state of India’s roads.  But there was also a serious discussion as well.  It was an experience travelling on the roads through Rajasthan and Utter Pradesh.  They were, however, from a North American perspective – but for one road/expressway – quite dreadful.  The expressway was terrible for another reason that I shall relate in a moment.

These roads were filled with an enormous variety of vehicles from camel-pulled or buffalo-pulled carts, to the famous tuk tuks, to large trucks and small, bicycles and the ever-present motorbikes, all crowded on to generally badly paved and far too small carriageways.  But enough of the description.  The roads in fact are emblematic of a much larger societal issue – the tension between democracy in India – which as best as I could tell is alive and well – and the demands of development, market growth and prosperity more generally.  The ongoing discourse went something like this: the roads are inadequate for the demands of commerce, the market and people.  Their inefficiency burdens the movement of people and goods throughout the nation.  On the other side a strong Indian push back.  You, meaning me, see the roads from a “western perspective”.  These roads are satisfactory for Indian needs; Indians don’t crave what the system in North America provides.

Now it is not to say there are aren’t some expressways – I travelled on one – the Yamuna Expressway from Agra to Noida – about 10 km outside Delhi.  It is an amazing – amazing especially in the context of highways in India – but it was largely empty.  Most notably absent were the trucks – the big colorful loaded trucks.   There were some evident features that explained this rather haunting emptiness.  First there were almost no exits from Agra to Noida.  Truckers I was told prefer to connect from one community to another – offloading and taking on goods. That is impossible on this super expressway and in addition the stops really don’t accommodate trucker lifestyle, which includes stops conversation and sleep.  The end result is a magnificent highway for the tourists and individual vehicle occupants – that’s it.  Thus the critical goods and services transport is assigned to secondary hugely overcrowded roads.  Indeed in our travel from Delhi to Jaipur we ended up in a several hour delay surrounded by trucks in a very narrow stretch of this so-called main road.

So why are the roads the way they are?  And do the state of the roads threaten economic development?  Let’s look at the first issue – the terrible state of the highway network.  Here the tension with democratic wishes is evident.  Voters in the rural areas – a powerful influence in India – don’t set a high priority in enlarging and improving the road system.  This is especially the case where enlargement and improvement requires the confiscation and compensation of rural folk principally farmers.  Most farmers – with little enough land as it is – want nothing to do with shaving off portions of precious land.  Opposition abounds.  Politicians in India are not blind to the opposition and the voter impact.  So roads aren’t built, or they are built without reference to need.  Now obviously there are alternatives especially rail.  But don’t get me started on that.  My experience tells me that the rail system suffers from serious infrastructure underfunding, but I’ll need to explore further on that.

Now I don’t have the numbers on cost and time delivery but I have to assume that what I saw really suggests an inefficient costly system.  It is why many experts have come to believe that in the contest for economic growth and prosperity China and no India will achieve the better results in raising the poor from poverty.  Steven Rattner, a long time Wall Street financier and some time public policy participant has recently drawn that conclusion in a January piece in the New York Times entitled “India is Losing the Race”:

Many Westerners fervently hoped that a democratic country would triumph economically over an autocratic regime.  Now the contest is emphatically over. China has lunged into the 21st century, while India is still lurching toward it.  That’s evident not just in columns of dry statistics but in the rhythm and sensibility of each country. While China often seems to eradicate its past as it single-mindedly constructs its future, India nibbles more judiciously at its complex history. … Democratic it may be, but India’s ability to govern is compromised by suffocating bureaucracy, regular arm-wrestling with states over prerogatives like taxation and deeply embedded property rights that make implementing China-scale development projects impossible.

Maybe we “westerners” do not have the right frame of reference, as suggested by my Indian colleague, but I am willing to commit to a standard of economic growth, opportunity and increasing prosperity for India’s poor.  And right now India’s politics are failing India’s economic development needs.

What do you think?

Image Credit:  ithappensinIndia.com