BRICS 9th SUMMIT: ISSUES AND CHALLENGES AHEAD / Prof. Dr. BadarAlam Iqbal

BRICS 9^th SUMMIT: ISSUES AND CHALLENGES AHEAD

By Prof. Dr. BadarAlam Iqbal

Adjunct Professor

School of Economics and Finance

Monarch University

Zug (Switzerland)

dr.iqbal@monarch-university.ch

Abstract

Emergence of BRICS as a block on the world map has been recognised a force reckon with. Since its establishment, BRICS has been playing a significant role and contribution in the global economic and political horizons. The 9^th BRICS Summit at Xiamen, China is a significant step towards creating consensus for facing and attaining the global THREE most important challenges regarding Peace, Security and sustainable Development. For the first time terrorism is become the part of Summit and every Head of States has shown great concern.It is also true to say that no global issue especially sustainable development could be discussed and solved without taking into confidence, the emerging economies of BRICS.

Key Words: G-20; GDP; G-7; NTS; Multi-polar

Importance of BRICS:

BRICS is the only group along with G-20 on the world map, which could redeem the world economy from its persisting slowdown of growth and development.BRICS as a group has been recognised as a significant force in the world governance and the same is sending a positive signal to the global peace and development [Business Line 2017]. It has been established that BRICS has come up a growing economic block. This could be testified from the fact that it constituted 44 per cent of the global population; 30 per cent of the world total land; 23 per cent of the global economy; 22 per cent of world GDP i.e. more than US $ 16 trillion; 16 per cent of global exports; and 15 per cent of world total imports [Table 1]. The economic block also has per capita GDP amounted to US $ 5,401 or 9 per cent of the world GDP per capita? This all indicates the BRICS countries have been contributing significantly to global world. The group has been playing a strategic role in the global economic order.

Table 1

Facts and Figures about BRICS in 2015-16

Economic Indicator	Figures in Billion	% to global figures
Population	3.1	42
GDP	16,663	22
Exports	3,502	16
Imports	3,119	15
GDP per-Capita	5,401	9

Source: Prepared by the author from World Bank; Washington; USA; 20116.

The most significant and strategic thing and emerging trend have been that BRICS as a group is being considered as  important as G-7 group and G-20 group at global level. When we compared the economic parameters of BRICS with G-7 and G-20 groups, it appears that BRICS is getting stronger and stronger year after year due to closer cooperation among them [Table2].

Table 2

Comparative Figures of G-7; G-20; and BRICS in 2015-16

Indicators	BRICS	G-7	G-20
Total Population Billion	3.1	0.8	4.7
% to Total world Population	42	10	64
GDP in Billion	16,663	34,456	63,810
% of the Globe	22	46	86
Total Exports in Billion US $	3,502	7,208	16,150
% of Global Exports	16	34	76
Total Imports in US $ Billion	3,119	7,509	15,727
% of World Imports	15	37	76
Per Capita GDP	5,401	45,453	13,602

Source: Same as Table 1.

If an analysis is made out of table 2, it is evident that BRICS block occupies a significant place in terms of economic indicators in relation of G-7 and G-20 countries. If BRICS countries keep pace with G7 and G-20 economies, the group itself will contribute positively and constructively in the growth and development of the global economy [Times Business 2017]. If we compare BRICS with G-7 countries; the basic difference is that BRICS is a group of emerging economies while G-7 is forum of developed or industrialised countries. The G-20 is comprised of both developed and emerging economies.

During the last 10 years, trade volume has increased from 11 per cent to 16 per cent. During the same decade, FDI volume has gone up from 7 per cent to 12 per cent. The economic transformation in BRICS countries have elevated the member nations not only in economic terms, but also provided platform to influence the outcome world issues. There is no doubt that no world economic and political issue cannot be solved or discussed without the emerging economies of BRICS.

Macro statistics reveal that G-7 is the most sound and strong group when it formed just 10 per cent of the global populations but constituted 46 per cent of the world GDP and therefore, its per capita GDP is as large as US $ 45,453. Hence, this group is popularly known as “Rich men or nations Club”. On the other side of it, BRICS has 42 per cent of the world population but its GDP is just 22 per cent of the global GDP and hence, the per capita GDP is the lowest among these two groups The G-20 group is the largest group in the context of population and GDP. However, it is between G-7 and BRICS in regard to per capita GDP.

Evolution of G-7:

The G-7 was created due to the Oil Crisis of 173 and came into operation in 1975. This group is comprised of developed economies namely-US, UK, Germany, France, Italy and Japan. Later on Canada had joined the group and the group emerged out as G-7. The very purpose of creating this group was to discuss the major global issues and explore the ways and means to solve them [Indian Express 2017]. 

Origin of G-20:

After evolution of G-7 in 1975, the most significant group which had come up is G-20 after Asian Financial Crisis in 1997.  Its first meeting was held in 1999. The group is of Governments and Central banks Governors of developed and developing countries. The main aim of this strong group was to discuss at length the major problems of the world economy taking together the G-8 and BRICS blocks.

Creation of BRICS:

The concept of “BRIC” for the first time was evolved by the Jin O’Neill who was the chief economist of the global group known as Goldman Sachs as he had identified four major emerging economies of the world namely-Brazil, Russia, India and China in terms of investment potential and opportunities in these economies. Later on in 2003 a report was released by the firm when in it was opined that in coming times this group will be emerging out the biggest financial group on the global map and as a result, the dominance of the Western world would be reduced to a minimal level [Times Global 2017].

Evolution of BRICS Summits:

The very first BRIC summit was held as back as 2006 under auspices of 61^st UN General Assembly session where in the general issues were discussed at length.  The first independent/specific summit was held in 2009 in Russia and thereafter the summit has become an annual feature. In 2010 China hosted the summit and there in South Africa had become the fifth member of BRICS and the block has been transformed from “BRIC” to “BRICS”. This is how the transformation of BRICS becomes a reality.

The existing triangle comprising of China, Russia and India has a greater influence on the economic policies as compared to other two members of the group Brazil and South Africa. These two economies are also lagging behind China, Russia and India in terms of major economic or macroeconomic indicators [Sunday Express 2017]. Accordingly, the internal changes with the group and external economic environment have greatly changed the dynamics of the group especially for India.

In 2016, when India got presidency of BRICS, India had tried hard to initiate for increasing cooperation among members of the groups in the areas of services and also to deal with non-tariffs steps [Mohan 2017]. Two seminars was organised were organised wherein senior officials from all five member countries were invited to identify areas of NTS one hand and on the other hand to explore how the five nations would cooperate in enhancing trade in services and addressed NTSs namely- onerous standards and procedures.

In the area of services the BRICS countries have to intensifying cooperation in different mutually beneficial sectors like education, travel and tourism and health.

9^th BRICS Summit:

The 9^th BRICS summit was held in China on 4^th and 5^th of September 2017 at Xiamen to explore new ways and means for attaining two most needed pillars i.e. peace and growth and sustainable development of the members’ countries of the group. The much emphasis was on how to create win-win cooperation. The five nations group must shoulder the needed responsibilities to maintain global peace and development two faces of a coin. The Head of five nations were also of the opinion that this is not the time of conflict or confrontation among the group countries.

Russian View Point:

The Russian President had pointed out that BRICS countries are moving towards new horizons of strategic partnership since-quo-non fort peace and development and it is heartening to note here that the group of five nations has greatly and positively strengthened its global standing. The main pillars of Russian President [Putin 2017] in his speech were as under:-

1. BRICS nations operations are based on the natural principle of equality and respect for each nation among the group;
2. The group of five nations must believe in terms of multi-polar world order on the one hand and on the other must each member of the group must also create multi-faceted cooperation which is the need of the day;
3. There is also an increasing need of promoting interaction among the group countries in the vital and strategic area of world information security; What is immediately needed is signing of an inter-governmental BRICS treaty in the field of global information security which is highly exposed to risk;
4. In 2015 summit at Ufa; Russia had initiated a BRICS Strategy  for Economic Partnership and it is heartening to point out here that the initiative is successfully

working. Now what is need is to explore news areas of further cooperation in the areas of trade; investment and industrial collaboration;

1. The BRICS nations must come forward with a comprehensive plan for meeting the challenges unfairness of words financial and economic structure and systems. The existing financial and economic structure does not provide due weight age to emerging economies
2. There is an urgent need for calling reforms in the global institutions namely IMF and IBRD in-terms of quota and voting rights. There is further need for global financial regulations reforms; and
3. The BRICS nations must consolidate their global position for facing increasing challenges of protectionism and newly created barriers in world trade.

Chinese Point of View:

The Chinese President has also underlined the following during 9^th BRICS Summit:-

1. There is a need for evolving and developing consensus on the very issue among the five members. Each nations must respect development model of every BRICS country and take care of concern of each other while enhancing strategic communication and mutual trust;
2. As there is heterogeneity in terms of nations conditions, history and culture, which always stood in the way of increasing cooperation; there is a need for keeping strong faith in cooperation and collaborations; There should be consistent and continued efforts among BRICS nations to increase the existing level of cooperation and collaborations;
3. Chinese President also emphasised on the two pillars of success such as peace and development and win-win cooperation must be shared by all the five countries of the group;
4. The ongoing and following the guiding principles of dialogue without conflict and collaboration without alliance must be strengthened among the group nations. Total adherence on these guiding principles will boost confidence among BRICS nations on one hand and on the other hand the five countries will come closer.
5. There is an urgent need to evolve an effective and meaningful strategy or action plan for fighting the increasing level of terrorism or “hotspots “as these are the biggest hinders in the promotion of peace and development in BRICS nations in particular and world in general.
6. The Chinese President has also opined that the persisting confrontation in different parts of the globe has direct bearing on the process of bringing peace which has direct impact on the growth and development of global economy in general and BRICS group in particular; and
7. The Chinese authorities have further emphasised on attaining success on Belt-Road-Initiative (BRI) and asked the members of the group to do concerted efforts in this direction as this initiative may go a long way in bringing speedy growth and development in the region.
8. The group of five must work together with other members of global community for the attainment of world economic stability with growth;
9. TH BRICS nations must be committed to adhere on the basic principle of UN Charter and International Law;

India’s Angle:

In the concluding part of the Summit, India has also played a significant role especially in the context of cross-border terrorism. The following were the main issues raised by Indian Prime Minister:-

1. India has emphasised on the need of creating “multi-polar” world and the role of BRICS countries in creating the multi-polar world. India further opined that BRICS is a major forum and the same must pursuit for the objective of multi-polar world rather than “uni-polar globe;
2. India wanted a “multi-polar Asia” and this should be based on guiding principles of equality and natural justice. This does require India’s engagement with other BRICS countries;
3. India also want to stand up to China where essential and collaborating with it where ever possible;
4. Indian Prime Minister has also showed concern on security of the region and globe. He also supported the agenda of stronger BRICS partnership;
5. India attached greater significance to the role and contribution of BRICS as a forum, as this forum may play an increasing role in facing the global challenges and up holding world peace;
6. India also want to engage with leaders of nine other nations including BRICS partners in an Emerging Markets and developing economies

Brazilian Point of View:

During the 9^th BRICS summit, at Xiamen city; China; the Brazilian President has stated and emphasised on the following issues:

1. To enhance strategic partnership with other member countries of the group;
2. Identified the areas of strategic partnership namely- industrial capacity; E-commerce; electricity; tourism and health care;
3. Making efforts for increasing cooperation with developing countries in general and emerging economies in particular;
4. Exploring the possibility of creating Second Golden Decade for BRICS cooperation
5. Emphasised on holding dialogue  between emerging countries and developing; economies under central theme of “Promoting Mutually Beneficial Cooperation for Common Development which is the need of the hour;
6. Strengthening the south and cooperation for sustainable development, which is the sine-quo-non for the survival of the global economy in general and BRICS nations in particular;

South Africa’s View Point:

The fifth member country of BRICS group i.e. South Africa, its president has given the following observations during the 9^th Summit at Xiamen city, China:

1. Since joining the BRIC in 2011 to become five countries group, South Africa has witnessed an appreciable progress on economic and social horizons;
2. There has been an institutional framework and cooperative mechanism for promoting growth and development in the different parts of the South Africa;
3. Through cooperative efforts of BRICS countries, African Regional Centre has become the reality and see the light of the day;
4. The BRICS Submitted has deepened BRICS cooperation and collaboration in terms of common development, global governance; people-t-people exchanges and building broader partnership;
5. Pursuing likeminded countries for exploring new approaches of innovation and meaningful and effective solution for the most burning and identified problems of poverty eradication; employment generation and increasing inequalities of income and consumption as well as global south development;
6. Formulation of an effective and efficient action plan or strategy for meeting the most burning challenges in regard to global governance mechanism or system; reforms in UN and Britten Woods institutions in respect of quota; voting rights and governance;
7. Increasing efforts for an effective institutional building mechanism and agenda for better collaboration among member countries of the group;
8. Strengthening economic relations between and among BRICS countries i.e. enhancing inter-BRICS economic ties and intra-BRICS nations through effective implantation of BRICS Economic Partnership created in 2015 Summit at Ufa, Russia;
9. Focussing at investment and industrialization issue sin-quo-non for speedy growth and development to solve the most significant issues confronted with the BRICS countries namely-poverty, unemployment and inequalities of income, consumption and standard of living;

BRICS Business Forum at 9^th Summit:

Since its establishment in 2010, BRICS forum has been paying a significant role in enhancing the required level of confidence among the business community in BRICS countries. It is side-event which every country holding BRICS summit has to organise, to provide an effective platform for business leaders to discuss major issues of concern, also building up consensus and provide policy suggestions for the next BRICS summit which is to be held every year.

During the 9^th BRICS Summit at Xiamen, China more than 1200 business leader gathered from BRICS economies; 80 from Fortune list and 500 multinationals firms.  There were nearly 600 enterprises belonging to both traditional industries namely-engineering and infrastructure and newly emerging industries like biological and internet companies. The very purpose of the business forum was to focus on trade, investment, financial cooperation, connectivity and the blue economy. The business forum has bolstered the needed business circle confidence for expanding collaborations and further strengthens their communication to extend required valuable advice for policy makers in BRICS economies [Times Nation 2017].

The most noteworthy feature of 9^th BRICS summit was to invite other emerging economies and developing countries to engage in dialogue with BRICS nations. These countries were Egypt, Guinea, Mexico, Thailand, and Tajikistan

Outcome of 9^th BRICS Summit:

After the hectic deliberations during the summit, the BRICS countries have developed consensus on different issues for the ultimate mutual beneficial for the group. The major issues agreed upon are as under:-

1. There is an urgent need for working together for the purpose of peace, security, development and cooperation;
2. Concerted efforts are required for enhancing multidimensional and multi-layered cooperation among BRICS nations as well world economy;
3. The group must work for effective mechanism of multilateralism to avoid the fear or threat of new concept “new regionalism:;
4. Efforts and collaborations must be made out for the attainment of “an open world economy” based upon openness and inclusiveness.
5. Enhancing the resources for New Development Bank and Contingent Reserve Arrangement for better and improved working of these two initiatives;
6. Need for full commitment and confidence in the future of BRICS as a group;
7. Giving much required support  for multilateralism and effective role of UN in international matters;
8. Productive and meaningful steps must be taken in regard to implementation of 20130 agenda for sustainable development;
9. 9. To commit for promoting a needed long-term and balance demographic growth and development by emphasising on increasing cooperation in respect of population related matters in the light of the Agenda for BRICS Cooperation on Population Matters for 2015-20.

Conclusion:

The growth and development in emerging economies (BRICS) and developing economies is not intended to have cheese from any nation, instead to make these nations the pie of the world economy. There is an urgent need to have ‘internal optimism and external confidence among BRICS nations. It is imperative that BRICS nations must have a collective policy and strategy against protectionism and new barriers in world trade that must allow the emerging economies for having more consistently say for an open, equal and mutually beneficial multilateral trading system and to make WTO more strongwhich is main regulator of world trade.

References;

 Business Line (2016); India to Push for BRICS Cooperation in Services; New Delhi; February 11; P.4.

Indian Express (2017; Xi Sets Stage: Need Peace and Cooperation, not Confrontation; New Delhi; September 4; P. 1 and 2.

Mohan,CR (2017); Rearranging the BRICS; Indian Express; New Delhi; September 5, P.9.

Putin,V (2017); BRICS: Towards New Horizons of Strategic Partnership; September 1; P.12.

Sunday Express (2017);BRICS Business Forum Meet; New Delhi; September 3; P. 14.

Times Business (2017); Developing Nations Engine of Growth; New Delhi; September 6, P 17.

Times Global (2017); BRICS Represent 42 % World’s Population; New Delhi; September 4; P. 16.

Times Nations (2017); BRICS: PM Hopes for Positive Outcome; New Delhi; September 3, P.5.