Summit in New Delhi

At the end of March, 2012 New Delhi hosted the fourth BRICS Summit where the leaders of the world’s five biggest emerging economies of Brazil, Russia, India, China and South Africa made another attempt to form a new center of power so feared by Western countries since this center may become the alternative to and competitive with them, a center that may lead to dramatic changes of the rules and principles of the global economic and political system. So, did they succeed?

At the end of March, 2012 New Delhi hosted the fourth BRICS Summit where the leaders of the world’s five biggest emerging economies of Brazil, Russia, India, China and South Africa made another attempt to form a new center of power so feared by Western countries since this center may become the alternative to and competitive with them, a center that may lead to dramatic changes of the rules and principles of the global economic and political system. So, did they succeed?

Aims and Goals of the BRICS member-states

Initially, the development of the BRIC (later – the BRICS) meetings reflected Russia’s approach to diversification of its foreign policy through strengthening, mainly by means of the Heiligendamm L’Aquila process, a high-level dialogue between G8 and the emerging economies of the South, which was launched as the countries started to become more and more aware of their common interests in the four main areas of the process (though the mechanism did provide for any leadership till the transformation of G20 summits into high-level meetings with the unfolding of the global financial crisis).

The interaction of the BRIC members was based mostly on coordination of their positions in the run-up to G20 summits with a view to strengthening their position at this forum. By the way, the same process of coordinating positions of Western countries was the first and foremost characteristic of G7 finance ministers meetings.

In the course of time the need of coordination within the BRICS was gradually increasing. The range of issues addressed has widened. More ambitious goals were set: to influence the global system not only through coordinating the BRICS positions in the run-up to the G20 forums but also through lobbying by "the alliance of reformers," as this mechanism was labeled by Mr V. Loukov, a Russian Sherpa, in order to review the outdated rules of monetary and financial regulation system, while maintaining the three old dominant centers of power - the USA, Japan and Europe. In the run-up to the summit in New Delhi the common goals had not been dramatically reviewed. The leitmotif of all speeches – the opinion of the BRICS member-states shall be more heeded within the framework of the global economic regulatory system.

The BRICS member-states are interested in neutralizing the negative impact of the ongoing crisis in the post-industrial countries of the West on their own economies through expanding intra-bloc trade and increasing its volume to 500 billion dollars by 2015. As for the main goals pursued by each member-state, the BRICS meetings for Russia is an opportunity to increase its political weight in the international arena through being through its simultaneous participation in the mechanisms of both developing countries (BRICS) and Western countries (G 8). Apart from that these meetings give the G5 partners an opportunity to use their total political weight to promote the idea of importance of primacy of the international law in international relations as well as the binding decision-making power of the United Nations Security Council. It is exactly in this sense the initiative of Dmitry Medvedev, the President of the RF, to transform the BRICS into a cohesive political group should be interpreted.

For China the BRICS forum is an opportunity to promote its own national currency (South Africa that joined the BRIC during the presidency of China strongly supports the use of the yuan as another world's reserve currency), to increase their political weight in accordance with its economic potential and to get an additional bargaining chip in negotiations with the United States.

China is seeking to use the BRICS mechanism, on the one hand, with the aim to strengthen its positions as the second world superpower and the leader of the developing world, and, on the other, to convince its BRICS partners in the groundlessness of their fears about the increasing power of this country.

For India and Brazil the BRICS Forum is an additional format for the promotion of the demand of the so-called "Group of Four" (together with Japan and Germany) with regards to reforming the UN Security Council membership, and jointly with the member-states the demand for flexibility mechanisms of the Agreement on trade-related aspects of Intellectual Property Rights (TRIPS), WTO and other aspects of human intellectual property rights, for sharing best practices of these countries. India which proposed to establish the BRICS Bank for Development is very much interested in forming a pool of capital that could be allocated to infrastructure projects in the country thus allowing it to avoid the inflow of a significant amount of Chinese investments.

Participation in the BRICS for South Africa is a possibility to significantly enhance the status of the country in the international arena, regardless of its actual weight, to prove that this country is a leader that can speak on behalf of the entire African continent. South Africa considers itself a kind of "window" to Africa, referring to a very much anticipated creation of a free trade zone for southern, central and eastern parts of the continent, as well as the promotion of the NEPAD mechanism (The New Partnership for Africa's Development, a mechanism initiated by Africans during the interaction with the "Group of Eight ").

This format gives all BRICS member-states (except Russia, perhaps) a valuable opportunity to attack collectively the position of Western countries in WTO on agricultural subsidies.

Outcomes of the BRICS Summit in New Delhi

Obvious dissatisfaction with the state of the global economy, the macroeconomic policy of the Western countries (in particular, the steps taken to create excessive liquidity, the so-called quantitative easing) and the slow implementation of the agreements on the reform of governance and quotas in the international financial institutions constitute one of the major provisions of the Delhi Declaration. Despite all the statements about the consolidated position with regard to strengthening the position of developing countries, BRICS failed to nominate (as is the case with the IMF) their candidate for a post of the head of the World Bank that will be vacated in June 2012.

The agreement achieved by trade ministers and heads of banks of the BRICS countries on the use of national currencies for mutual trade and lending, bypassing the dollar or the euro, may be pointed out as one of the main decisions made at the Summit. The Memorandum on Public Financial Institutions Cooperation and Support of Member-states Export (signed by South Africa in 2011) dates back even to the second BRIC Summit in Brazil in April 2010. In 2011 in Sanya a Framework Agreement on Financial Cooperation, focused on opening credit lines in national currencies was signed in order to develop the BRICS interbank cooperation mechanism. It is assumed that the provisions of the Agreement will be specified on a bilateral basis. Thus, the last restrictions on trade in national currencies of Russia and China were lifted upon the signature on November 23, 2010 of the Protocol to the Trade and Economic Cooperation Agreement of 1992, and in June 2011 the Central Banks of both countries signed a Bilateral Currency Settlement Agreement according to which all settlements and payments between these countries may be effected in the national currencies.

As for India’s initiative to establish the BRICS Bank for Development, the leaders still prefer to submit this issue to their finance ministers for consideration, who shall report on the results at the next meeting in South Africa. However, such a scenario was quite predictable. The problem lies in the lack of concrete proposals and understanding of the mechanisms of such a Bank functioning, options of quotas allocation and management and control tools. This initiative should be viewed through the prism of discontent of the BRICS countries with the lack of real progress in reforming the existing international financial institutions that may be treated as a threat the establishing alternative institutions might pose to the existing ones by the countries owning considerable amount of foreign exchange reserves in case BRICS persists in putting forward such requirements.

Despite the general skepticism - not only in the West, but also among the observers in the BRICS countries - about the limits of political interaction between these states, the Summit in New Delhi was abundant in political statements and decisions. The leaders discussed the Israeli-Palestinian peace settlement process, supporting the efforts of the UN, the Arab League and the "Quartet", and in fact expressed a pro-Palestinian stance. BRICS member-states expressed their concern about the settlement policy of Israel in the West Bank of the Jordan River. This can be attributed to Israel's reaction to the decision of the UN Human Rights Council to establish a special commission on the exercise of the rights of the Palestinian people and the study of the settlement policy of Israel in the West Bank that is generally in line with the Russian position in the Middle East peace process.

The BRICS countries demonstrated unanimity on the Iranian issue. They supported Tehran's right for peaceful nuclear energy in accordance with international obligations and cooperation with the IAEA, and also noted the importance of this country in ensuring "peaceful development and prosperity" in the Middle East, that contradict the opinion of the USA and Europe. It should be recognized that the interests of the BRICS member-states differ on this issue, moreover, both Russia and to a greater extent India may be concerned with China strengthening its relations with Iran.

It is in the interests of Russia to avoid the aggravation of the situation and start of a military conflict in Iran as well as to keep this country as a counterbalance to the pro-Western Arab states. China and India are interested in maintaining contacts with Iran as a supplier of energy resources. It is obvious that the increase of prices for energy in case of an armed conflict will have a negative impact on the economic growth of the two countries and South Africa.

All five countries came to a decision shared by all of them on the Syrian issue, though initially India did not welcome the vetoes of Russia and China in the UN Security Council, as well as Brazil made attempts to act as a mediator, having proposed an alternative concept of "responsibility while protecting” to the concept of "right to defense". As a result, the Summit participants called all parties to refrain from violence, to use only political and diplomatic methods of influence and they expressed support to Kofi Annan’s mission as well.

The summit also addressed the problem of Afghanistan in the run-up to the anticipated withdrawal of foreign troops from this country. Though this issue was of high priority only for three BRICS states, with relation to the drug trafficking issue too, the member-states took a common stand and expressed (though in general terms) support to the "Moscow-Paris project" - Paris Pact to curb the spread of Afghan opiates.

Russia accepted the positions of other BRICS member-states on social and economic issues particularly on sustainable development and climate change. Unlike all other countries-signatories of the Kyoto protocol Russia is an Annex I country, while the rest of the countries, speaking in favor of a new agreement, focus on “common but differentiated responsibilities" and do not want to make concrete commitments. The concept of green growth is the key idea when addressing sustainable development issues. Russia is less concerned than all other BRICS member-states about the possible use of this concept by post-industrial countries for the sake of the so-called "green protectionism". Nevertheless, the Delhi Declaration states that the "green economy" is defined in the context of sustainable development and poverty eradication.

Though the interests of the BRICS countries in energy security differ, still a range of positive aspects for Russia may be singled out. Amidst reviewing approaches to nuclear power in some countries the statement on strengthening efforts to increase public confidence in nuclear energy as a clean, affordable and safe energy source is of great importance. This is not only consistent with the official position of Russia on the role of nuclear energy, but it may also enhance cooperation and promotion of Russian peaceful nuclear technologies in the BRICS markets.

Russia is less interested in proposals to encourage and enhance best practices sharing in healthcare and pharmaceutics, agriculture and urbanization, renewable-sources-of-energy development, etc. as the main vector of Russia's efforts in these areas is seen as an innovative partnership with the countries of Europe and the USA.

So, it’s obvious that the BRICS countries do not always have common goals for objective reasons. Thus, pharmaceutical companies of India and Brazil are more interested than other members in promotion of generics and flexibility of the TRIPS mechanisms while Russia, Brazil and the remaining three countries have different approaches to the issue of energy security as well as to climate change and trade issues, etc. Nevertheless, the fact that finally the BRICS member-states managed to find common position on a range of issues proves that these countries are ready to negotiate and reach compromises. Moreover the Summit showed that despite different approaches to challenges the ultimate goal of all the countries is very often the same.

BRICS Prospects and Role

Today neo-liberal economic model is going through hard times, as evidenced by the ongoing since 2008 crisis. Back in 1999, having established the "Group of Twenty" at ministerial level (G20 members are Ministers of Finance) the West recognized its inability to cope alone with the emerging challenges and ensure sustainable development of the global economic system. Ten years later such understanding was backed up by the seriously increased role of emerging economies and their aspiration to take part in global governance. Clash of interests of old and new world economic giants led to the necessity to consolidate these “newcomers” and the BRICS meetings became a demonstration of that.

The continuation of negotiations, willingness to overcome or at least put aside the existing bilateral contradictions in order to reach a consensus on the strategic aspects of development and the world order reform (for example, by strengthening the role of the IMF) are the main outcomes of the Summit in New Delhi for each member-state. The release of the first ever BRICS Report on the “Synergies and Complementarities” among the economies of the five states and BRICS Joint

Statistical Publication 2012 released on a regular basis may be treated as an expression of willingness to deepen the dialogue.

The agreements achieved on political issues, particularly the support of the position of Russia on Syria, Iran and Afghanistan expressed by the member-states may be deemed perhaps as the most important outcome of the summit for Russia. Though D. Medvedev’s statement on the necessity to transform the BRICS from an economic group into a cohesive political group did not gain a strong support, that is exactly what happened de facto in New Delhi.

The initiation of certain processes for use of national currencies in trade and lending to the BRICS countries may be considered as the main outcome for China. South Africa managed to get the member-states’ consent of the importance of the NEPAD process and the readiness of the BRICS countries to interact with it. The provision on support by Russia and China of the process of enhancing their status in the United Nations Security Council may be viewed as a very important one for the three countries though, as is known, China as well as Russia is not really interested in the expansion of the number of permanent seats in the Security Council.

The Delhi Declaration provisions on social and economic aspects of interaction represent special importance for the four developing countries. Though we have to recognize that when we speak about the so-called “club mechanisms”, and the BRICS is such a mechanism too, the effectiveness of the meeting may be assessed only upon implementation of the decisions taken. In particular, G20 summit in Mexico and RIO+20 Summit may become an important milestone as they will show whether the BRICS member-states exercise common approaches to the whole range of the issues addressed.

Annual BRICS Summit of 2012 held in India showed that despite the remaining differences in approaches and priorities, lack of complete credibility and skepticism of the Western observers on the limits of BRICS cooperation, this mechanism continues to operate successfully and remains up and running. In Delhi interests of each member-state were taken into consideration, consensus decisions on giving more weight to the BRICS in the international arena are made, and the general positions on the political issues were voiced and all this is in line with the interests of Russia and helps to address the issues of promotion of sustainable development and poverty eradication. But still the effectiveness of the Summit despite its overall success can be assessed only upon the implementation of the decisions and commitments made at the Summit.