BRICS Think-Tanks Symposium in Beijing
The meeting has been a success in order to provide intellectual support to the BRICS at the upcoming summit in Hainan.
The first session of the BRICS Think-Tanks Symposium opened with presentations and discussions on the topic “Challenges and Opportunities - Environment and Background for the Development of BRICS Countries”. It was chaired by Mr. Mikhail Titarenko, the Director of Far East Institute, Russian Academy of Sciences. In his address, Mr. Titarenko said that the solidarity of BRICS is commendable. In the current situation, we as BRICS members face many opportunities. But we have to protect our countries and our interests and create very favourable conditions to develop ourselves
Mr. Lin Youfa, the Deputy Director of the China Institute of International Studies, welcomed all the delegates with a saying from Confucius, “it is a delight to welcome friends from afar”. He spoke on how economic globalisation created many emerging countries and how the financial crisis of 2008 brought BRICS to the centre of the world stage and enabled BRICS to become important players in the world. However, in the post crisis situation, the BRICS countries face new situations, challenges and opportunities. The opportunities include promoting mutual benefit and cooperation among the five countries. The BRICS countries have advantages and governments are grabbing opportunities to shift their developmental models and to accelerate economic growth. However, it is important to concentrate on low carbon emissions as well. BRICS have endowments that can be made use of, and this advantage arises because of the economic sizes of BRICS. The combined Gross Domestic Product (GDP) is more than 20 per cent and the combined foreign exchange reserves are about 60 per cent of the world. By utilising these resources and tapping the potentials, BRICS can maintain their rapid growth. Also the combined land territories are about 20 per cent of the world’s and the vastness can facilitate BRICS for sustainable development. In the post crisis period, BRICS can have guaranteed energy and resources for later development. In the 21st century, the market has become the scarcest factor, and the potential lies in the growing middle class group that has the capacities for consumption. In the developed countries, the capacity has been tapped already. But in the BRICS countries, the expansion of the middle class has just begun. Another advantage BRICS countries have is in terms of capital. All of the BRICS countries have finished their accumulation period and the combined capital of the five is US$ three trillion. The outbound investment taking place in the five is unprecedented, and outbound investment can be a new pole of development for BRICS, if all of these can be integrated together. In this way, the five can make greater contributions to the world and become important resources for each other.
Also, the BRICS countries have established their industrial development systems. If BRICS integrate the industries together then cooperation can be upgraded to a new level. Another opportunity BRICS have is that of talents. Unlike greying populations of the West, the BRICS countries have an advantage.
Domestically, the BRICS countries are relatively stable and politically mature, and have improving levels of infrastructure, besides sound mechanisms for science and technology development. However, sustainable development is essential to realise the potential BRICS have and to consolidate their standing in the world in order to make contributions to world peace and development.
The challenge lies in the fact that in the Bretton Woods system, external forces are very important. In such a system, developing countries like the BRICS countries cannot bring their strengths into play.
Further challenges are created by policies undertaken by the U.S. in the after math of the financial crisis. An example of such policies is the quantitative easing policy, which increases risks and passes it down, also passing down inflationary pressures, which is a challenge for developing countries including the BRICS.
Delegates from the other four BRICS countries also made their presentations on the topic. Speaking on technological innovations and economic development, Mr. Andre de Mello e Souza from Brazil pointed out how Brazil lags behind the other BRICS countries in many respects. Stating the importance of technological innovation in the 21st century, he spoke about the TRIPS agreement and IPRs. He also spoke about the innovation potential of BRICS and how these countries adapt quickly to new information and technologies unlike the gradual procedure followed by developed countries. Speaking on the expansion of research and development (R&D) he said how it has tremendously increased in each, with the most impressive case being that of China. He said that Brazil needs to overcome the linear model of innovation and create incentive structures for patenting and firming R&D among academic researchers. For this purpose cooperative linkages need to be created between universities and firms.
Vyacheslav Nikonov from Russia spoke on how the financial crisis has led to geo strategic shifts which have long term implications. However, it is important that this is considered for the proper positioning of BRICS. To prove his point, he stated how earlier the GDP of OECD countries contributed to more than 100 per cent of global GDP , which now is below 70 per cent. Also their budget deficit has expanded from two per cent to more than ten per cent. The U.S. is definitely preserving its position, but with substantial weakening of its hegemony. Its GDP has dropped more than expected and its low growth rate is expected to continue. All of these need a serious rethink in order that the BRICS position themselves correctly in the world.
Beginning his presentation with the fact that China is the chairman of the United Nations Security Council (UNSC) for the month of March, 2011, Ambassador T C A Rangachari from India went on to elucidate the centrality of China in the BRICS. Even putting together ‘B’ ‘R’ ‘I’ and ‘S’, would not be equal to the ‘C’ in the grouping, he said. The first question that arises is how to ensure that the other four countries of the grouping grow equally to China, without any conflict. Even in the question of the shift taking place from the West to the East, the centrality of China stands out. The next question that arises is the extent to which ‘B’ ‘R’ ‘I’ and ‘S’ want to follow the model China has followed. Also questions arise on what model BRICS as a grouping should follow so that it has an impact on the global community.
The need of the hour is to develop an internal consensus till BRICS have a global voice. There is a need to guarantee ourselves and the future generations a world which is peaceful and stable. Concluding with a line from Confucius, Ambassador Rangachari said that if there are three people, there has to be one teacher. The teacher in the case of BRICS is China.
Building on the point of internal consensus made by Ambassador Rangachari, Stephen Gelb, South African delegate said that BRICS have developed different values, different political systems and different regional interests in their own parts of the world, and this is a dilemma BRICS faces. The question also is where South Africa- the newest member fits into this dilemma. He briefly outlined five imperatives for South Africa in addressing this dilemma, which are:
- The transition from apartheid; which is less than 20 years old.
- Inequality and unemployment and their negative impacts on the economy
- Low economic growth
- Low population than the other BRICS countries, along with low export orientations, small domestic market and weak exports
- Being part of Africa which faces the biggest developmental challenges in the world.
Thus there is a need to reorient the economy away from reliance on OECD countries to bilateral relations with other developing countries like India and China, as there is a lot of room for more growth.
The second session was on the topic of “Changes and Responsibilities: Agenda and Items for BRICS Countries in Advancing Global Economic Governance”. It was chaired by Mr. Joao Pontes Nogueira, the Dean of International Relations School and Director of BRICS Research Center, PUC Brazil.
Mr. Zhang Yansheng, the Director of the Institute of Foreign Economic Relations, National Development and Reform Commission, said that globalisation and technology revolution bring in high efficiency and transparency. However, systematic risks are also brought in the process. The world is not ready for integration. So the question arises -- if we -- the BRICS countries are ready. The crisis in the core countries, i.e. the U.S., Japan and in the EU, has influenced the periphery which consists of developing countries. Quantitative easing has created new bubble economies, as a result of which political fluctuations are being witnessed. Economic globalisation even now has not paid attention to the pressures created. Only efficiency and freedoms have been looked at, and there is a lack of attention to wealth gaps and lowering consumption capabilities which leads to damages to developing countries.
There is a need to realise inclusive growth and development on the basis of equal opportunity. The protection system for global green system is still lacking. There is a requirement of environmental protection for developing countries. As such, there are two opposite inclinations in today’s international trade. On the one hand, some advance free trade, reform and opening up. On the other hand, trade protectionism has been rising, especially during the global financial crisis. The Doha Round is regarded as the “Development Round” to benefit developing countries. But since 2001, it has faced many difficulties.
Globalisation is disintegrating due to regionalism and due to protectionism. Crisis adjustment responsibility and moral rebuke are all directed to emerging countries. Thus the construction of a global financial supervision system is needed to reduce the impacts on developing countries. On the question of what BRICS can do to facilitate development, he made a few suggestions which include forging new modes of cooperation such as South-South cooperation to further open markets and mutual trade and investment. Also, the BRICS need to strengthen macro policy and its study. There is also a need to strengthen technological cooperation and to strengthen social responsibility. BRICS should also stress on cooperation for balanced, green and intelligent strategic development, and think about working more effectively on low regional cooperation and to put in place a mechanism of joint interests. Reform of the International Monetary Fund (IMF) and Special Drawing Rights (SDRs) is also needed, as well as putting a bench mark on a system looking at inflation. For this purpose, more in depth study is required. Linkages between Small and Medium Enterprises (SMEs) of BRICS countries need to be built along with constituting a joint task force on development.
The third session, on “Unity and Cooperation -- Practical Cooperation and Institutional Building of BRICS Countries”, was chaired by Mr. Fadl Nacerodien, the Director General of the Directorate of Policy Research, Department of International Relations and Cooperation, South Africa.
Speaking on the issue of strengthening trade among BRICS countries, Mr. Fernando Pimental Puga from Brazil said how there is a lot to learn from China. Building infrastructure, reducing unemployment levels and improving wealth distribution systems pose challenges not just for Brazil but for the other BRICS countries as well. The challenge in terms of population exacerbates due to the rapid movement of the lowest income class to the highest income class – as in the case of Brazil, China and South Africa. Also the problem of exclusion from the consumption market is a serious one. The BRICS have taken the leading role in trade and in emerging out of the recession. However, intra BRICS trade is still very modest. Trade flow among BRI (excluding China and South Africa) was only US$ 22 billion in 2009. BRICS are more important for Brazil, nevertheless in its total trade.
The BRIC (except South Africa) export basket is relatively similar to the rest of the world’s standards. Countries’ specialisation includes food and beverages for Brazil, fuel and lubricants for Russia, industrial supplies and consumption goods for India, and capital and consumption goods for China.
Industrial supplies and capital goods are relevant for all countries. However, imports are much smaller across countries. As such BRIC (excluding South Africa) trade can be understood by the theory of comparative advantages. China dominates intra BRIC imports. In conclusion, he held that trade among BRIC has not explored all potentials. Traditional trade theories based on comparative advantages are able to explain most of the commerce among BRIC. But commerce is vulnerable to price volatility. As such, there is room for increasing trade between countries. Intra industry commerce and trade may lead to even higher levels of integration among these countries.
Speaking on the situation of agriculture in South Africa, Hannah Edinger, pointed out that Africa is host to 60 per cent of the world’s arable land. The barriers in the agriculture sector range from poor policies to donor funding issues and aid. Also, high transaction costs are attached. There is an urgent need to shift from subsistence based agriculture to market based agriculture. Also, there is a lack of extension services and technical support. Diseases in rural areas exacerbate the problem. All these can be overcome through advancements in information and communication technologies (ICTs), technological research, market systems and technological gains.
Increasing yields in China are attributable because of technological innovations in grains and infrastructure. This is absent in Africa. The issue of food security is extremely important. The lack of coordination in donor programmes is another serious issue.
Nevertheless, a renewed focus on the agricultural sector has emerged, and there is governmental support to irrigation and agricultural transfers. During his visit to India, President Jacob Zuma stressed on agricultural cooperation between South Africa and India.
Innovation and efforts to improve it can help in dealing with poverty.
Various lessons can be learnt from China, India and Brazil. Africa urgently needs to operationalise technologies, along with a sharing of agricultural technologies and joint research. China can offer solutions to small scale farmers and to undertake research on the mechanisation of technologies for example.
In the interests of a global harmonious society, cooperation among BRICS is essential. A higher level of cooperation with Africa is also essential to improve people’s livelihoods and to provide sustainability to the African continent.
On the issue of land ownership in Africa, the delegate said that promoting cooperation and engaging private sector actors in the agricultural sector is essential. Lessons can be learnt from China’s technology transfers. The promotion of partnerships is also necessary. Technological revolutions are the need of the hour to lock Africa’s capabilities and to gear Africa better towards the Millennium Development Goals (MDGs)
Speaking on the issue of cooperation between the five BRICS countries, Professor Ravni Thakur from India said that there are two main levels to assess cooperation. The first one is the extent of clarity in which goals are articulated and to the extent to which they merge along with the capabilities they have to merge. The second level is one of the way in which outside parties perceive the grouping.
Since 2009, after the first BRIC summit, the developments among the BRIC countries are being closely watched by the world. Russian President Medvedev’s comments on multipolarity and the need to strengthen global security are important. Indian Prime Minister Manmohan Singh’s comment on how the BRIC countries have a high stake in reviving the global economy is also important.
The one area in common in the deliberations of 2009, 2010 and those of today’s is the focus on the economy. The second common theme is that of a multipolar world. Brazilian President Lula was correct when he said that the world is not multipolar or multilateral but polycentric. The main common goal is the existence of a fairer world. The BRICS grouping is not in competition with the developed world.
Another subject that is high on the agenda is a commitment to multilateral diplomacy, along with a reform of the UN. This is an interesting aspect as two members of the BRICS grouping are already permanent members of the UNSC. What needs to be seen is how the reform of the UN can be brought on the agenda of the BRICS. What is laudable about this grouping is that despite huge differences, the BRICS countries have been able to outline a basic structure for cooperation. The BRICS grouping is the largest growth producer outside the OECD. Therefore, the world has to take the grouping seriously. Also, BRICS can provide an alternative model of cooperation, away from the traditional balance of power conceptualisations.
The fourth session was based on “Exchanges and Mutual Trust -- Cooperation among Think Tanks of BRICS Countries”. It was chaired by Ambassador Harihara Subramaniam Viswanathan, Distinguished Fellow, Observer Research Foundation, New Delhi, India.
Speaking on the issue, Ms. Narnia Bohler-Muller from the Africa Institute of South Africa began by pointing out how BRICS have not gone far on institutionalisation. The South African constitution is value based and its international relations laws have always been normative, based on human dignity and non racialism; which are entrenched in the constitution. This binds South Africa to customary international law. Also, South Africa is a member of the International Labour Organization (ILO).
Emerging markets are extremely dynamic and BRICS belong to this group. But the challenges that come along with this include forced labour, child labour, migration and human trafficking. These have increased as markets have increased. Protocols to prevent these exist, examples of which include the Convention on the rights of the child, the prohibition of child labour and the prohibition of child prostitution.
Yet, we need to research these areas and see the initiatives are being taken. Each of the five BRICS countries faces these problems, and the five are at a risk.
Speaking on the issues of macroeconomic policy and the question of the reform of the international financial system, Dr. Jyotirmoy Bhattacharya from the Indian Council of International Economic Research, New Delhi, India, said that there is no road map to progress on. Think tanks have an important role to play to think of corporate solutions. There has been a lot of buildup for BRICS but the fact remains that the five are at stake and the interests of BRICS are different from those of advanced countries. He also spoke about the need for more capital controls and moving away from a system that is dollar fixed.
Nevertheless, a basket of currencies is not a viable solution as such an arrangement will merely lead to further instability. The best solution would be a Yuan standard. BRICS should collaborate on making policies that are more accepted internationally. Looking at just one country is not enough, Dr. Bhattacharya said.
The Russian delegate, Mr. Georgy Toloraya from the Institute of Economy of the Russian Academy of Science, spoke on how BRICS is an alliance for reform, and reform will be more of an evolution, rather than a revolution. He also said that BRICS agenda should encompass security issues.
Speaking on how there are no convergent points in trade among the BRICS countries, Mr. Ivan Tiago Machado Oliveira from the Institute of Applied Economic Research from Brazil, said that a lot remains to be done, and what has to be found out include interests and common agendas for institutions. He also spoke of joint research projects on the issues of common interests, and how BRICS would then be playing a proactive role for cooperation between countries.
Mr. Hu Hao, the Deputy Director of the CCCWS, spoke of his strong belief on how BRICS can convene international seminars on bilateral areas to discuss areas of common interests. He said that China is willing for more. He also spoke of the need to deepen cooperation between think tanks. For this purpose, sharing documents, materials, publications, DVDs, books, along with regular exchange of electronic mails, become pertinent in order to discuss better important issues of the world. He also spoke of publications and publicising journal articles for the same purpose. He concluded by saying that it is essential to deal with domestic problems urgently in order to serve people better.
The closing session of the symposium was chaired by Mr. Vyacheslav Nikonov, the President of Unity for Russian Federation and the Executive Director of the Ruskii Mir Foundation.
One delegate from each of the five countries made closing remarks. Andre de Mello e Souza from Brazil said that prior to the summit, the researchers from the BRICS countries knew very little about each other, and whatever was known was primarily through Western lenses. So it is necessary to learn from each other and the symposium was the key to it, as it paved the way to have a more positive role in shaping global policies and institutions. It also renders participation efforts to deal with issues of international relations more useful.
Mr. Mikhail Titarenko from Russia said that BRICS is a new platform of planning and is of historical significance. He also said that the words ‘to share’ were less commonly used in the past than they are now. The tasks laid out through the symposium should be carried forward.
Ambassador Viswanathan from India expressed satisfaction, on behalf of the Indian delegation, on the deliberations that took place. He also appreciated the informal interactions among the delegates from the various countries.
Mr. Huang Renwei, the Vice President of the Shanghai Academy of Social Sciences, said that the symposium was a great opportunity to learn from all the participants of the BRICS countries. Productive suggestions here are beneficial for the future of cooperation. He also said that the change of the international system has to be gradual and not radical. Hence, the agenda of the BRICS countries should be long term and not short term, and the five should together avoid threats to secure the interests of developing countries. In order to forecast the future, common research is necessary. Also, cooperation and compromise are necessary, and there is a need to learn from developed countries that have good coordination mechanisms, he said.
Mr. David Monyae from South Africa said that it is essential to find practical ways to deal with domestic, regional, national and international situations and the symposium was a good platform in this regard.
The closing remarks was made by Mr. Hu Yongjun, the Chairman of the CCCWS Council and the Director General of the CCCWS. Appreciating the deliberations during the symposium, he said that 60 delegates from the five BRICS countries have discussed issues relevant to the theme of the symposium, along with finding common ground. Thus, the meeting has been a success in order to provide intellectual support to the BRICS at the upcoming summit in Hainan. He concluded with the hope of meeting all the delegates at the next year’s meeting in New Delhi, India.
(This report was prepared by Ms. Sriparna Pathak, Junior Fellow, Observer Research Foundation)