In what is essentially an unequal world, preponderance on development, especially amongst the lower per capita income economies, is natural. The Eurocentric discourse on human rights is simply not applicable to large proportions of the world’s population. The notion of a basic minimum entitlement to goods and services is utopian given the technology and productivity levels that exist today. This entitlement by its very definition, involves a necessary redistribution of consumption patterns across the world. Given that the Earth has a finite amount of resources, only a finite amount of real wealth can be created. This in turn implies that unless the democratic frameworks in existence throughout the world are overturned, and the fundamental right to accumulate wealth through legal enterprise is denied, any meaningful discourse on redistribution of wealth and in turn basic human rights stands on shaky foundations.
Wednesday, May 2, 2012
Tuesday, May 1, 2012
The BRICS View on Iran: India's Motivations, Vivan Sharan * As Published in Dalal Street Investment Journal, April Issue
The recently concluded BRICS Leaders Summit in Delhi yielded comprehensive and progressive outcomes on a number of important issues. Besides being able to achieve consensus on significantly deepening the intra-BRICS cooperation agenda with emphasis on market based integration, BRICS Leaders for the first time, were also able to coherently express views on sensitive foreign policy issues including on the Arab-Israeli conflict, the Syrian imbroglio and the contentious Iranian nuclear programme. Through the Declaration, BRICS members have recognized Iran's right to "peaceful uses on nuclear energy consistent with its international obligations". The Declaration has also unambiguously stated that BRICS members do not support "plurilateral initiatives that go against the fundamental principles of transparency, inclusiveness and multilateralism". The BRICS position on Iran's sovereign rights and the respect of international law is an unequivocal rejection of interventionist policies outside of the UN framework. It is interesting to briefly examine India's motivations for adopting such a firm policy stance given its simultaneous proximity to powers such as the U.S and the EU.
For decades, Iran has faced multiple sanction regimes, for allegedly sponsoring terrorism and for developing a nuclear programme with the intent to make nuclear weapons. The U.S has led such efforts, following a fairly predictable model of incrementally imposing unilateral sanctions each time Iran's governance apparatus has been less than deft in handling its foreign policy priorities and messaging. This default model of response has been used by the U.S administration since the Islamic Revolution, which led to the overthrowing of the Shah of Iran, a close ally of the West. Sanctions have been used by the U.S to achieve highly ambitious foreign policy goals, which history proves, are hard to achieve without simultaneously establishing economic and political synergies (South Korea) or the blatant use of force (Iraq). Repeatedly, studies have shown that sanction regimes cannot work in isolation of comprehensive strategies for engagement. Yet, there has been little or no will to explore alternatives and with the Jewish lobby at Capitol Hill, the policy hostility towards Iran will be hard to reverse.
The problem with imposing sanctions on a country which has the world's third largest proven reserves of oil and second largest conventional natural gas reserves is that the implications are felt globally. An important characteristic of the global oil market is that it is an integrated market. The price of oil is highly correlated throughout the world due to market arbitrage. This means that plurilateral initiatives by the U.S or the EU to curb Iran's economic viability by imposing barriers on the free flow of trade and finance are in effect paid for by all net consumers of oil, including developing countries such as India. Iran's production capacity has also been more or less stagnant for many years at around four million barrels per day. Sanctions have prevented Iran from accessing technology to upgrade oil infrastructure and increase supply, which would theoretically ease oil prices. This is a perverse and fundamentally flawed dynamic. Why should the developing world pay for the foreign policy interventions of the West? Why should India, a country with over 800 million poor and stark levels of energy poverty, subsidise American and European foreign policy and in turn face insurmountable fiscal deficits year after year?
India and Iran share historical ties, and there is definite cultural affinity between the two nations. However, these are not the reasons why Indian policymakers have supported the seemingly ideological stance taken by BRICS members. India imports around 12 percent of its oil from Iran, its second largest supplier after Saudi Arabia. While in a globally integrated oil market, import substitution should theoretically be fairly simple, Iran sells oil to India based on long term supply contracts that offer a competitive rate. Moreover, many of the PSU refineries in India are geared towards the processing of sweet crude oil which is imported from Iran. Mangalore Refineries and Petrochemical Limited (MRPL) and Hindustan Petroleum Corporation Limited (HPCL) in particular are two large PSUs whose profit margins depend to a significant extent on the sweet crude mix imported from Iran. While the private sector, including Reliance, has been fairly quick to respond to the political risk and diversify imports, the public sector understandably cannot adapt as fast (Essar Oil is the private sector exception which was the largest importer of Iranian Crude in the first quarter of 2012). India is certain to continue importing oil from Iran and only the relative quantities in the composite import basket are likely to fall over the long run as gradual refining technology improvements are carried out by the aforementioned PSUs.
In the first quarter of 2012, India overtook another BRICS member, China as the largest importer of Iranian Crude, with direct imports of over 430,000 barrels per day. This is in spite of the difficulties of carrying out financial transactions with Iran due to the existing sanctions regime which specifically also targets financial institutions such as the Central Bank of Iran. In 2010, the Reserve Bank of India mandated that oil import payments to Iran would have to be settled outside the Asian Clearing Union (ACU) mechanism, which involves the central banks of India, Bangladesh, Maldives, Myanmar, Iran, Pakistan, Bhutan, Nepal and Sri Lanka. There is an old adage that "markets always find a way' and this has largely been true in the case of imports from Iran. A recent development has been the institution of a settlement mechanism through which India can pay up to 45 percent of its import costs in local currency. India in its Union Budget for FY 2013 paved the way for the efficient working of this mechanism by including a tax exemption for such transactions which would otherwise be classified as "income earned abroad' (by Iran) and therefore be liable up to a 40 percent tax.
A common argument by Iranian Government officials is that if the current sanction regime followed by the U.S and EU has led to the appreciation of oil price by 8 or 10 percent, it has only benefited Iran, which continues to supply oil to its major consumers China and India at more expensive rates. Indeed the cost-benefit works in Iran's favour as Iran is more than able to offset losses due to higher transaction costs with the appreciation of the underlying price of the asset. The BRICS members consist of both net oil exporters and importers and represent 43 percent of the world's population and therefore represent a more than credible global zeitgeist. They have suggested better international policy coordination to maintain macroeconomic growth momentum and curb commodity price volatility as immediate imperatives for the global economy. Since commodity prices are highly correlated with the oil economy, it is in all nations' interests to ensure a viable and stable price for oil to ensure sustainable development in the current sluggish and uncertain global economic growth environment. BRICS provides a platform for India to voice concerns and direct strong criticism against Western countries that directly influence oil prices through the conduct of irresponsible foreign policy outside the international framework. In a way the BRICS platform allows India to express views that the constraints of realpolitik do not allow it to. It allows India's 21st century foreign policy to evolve and emerge to better reflect domestic concerns.
For decades, Iran has faced multiple sanction regimes, for allegedly sponsoring terrorism and for developing a nuclear programme with the intent to make nuclear weapons. The U.S has led such efforts, following a fairly predictable model of incrementally imposing unilateral sanctions each time Iran's governance apparatus has been less than deft in handling its foreign policy priorities and messaging. This default model of response has been used by the U.S administration since the Islamic Revolution, which led to the overthrowing of the Shah of Iran, a close ally of the West. Sanctions have been used by the U.S to achieve highly ambitious foreign policy goals, which history proves, are hard to achieve without simultaneously establishing economic and political synergies (South Korea) or the blatant use of force (Iraq). Repeatedly, studies have shown that sanction regimes cannot work in isolation of comprehensive strategies for engagement. Yet, there has been little or no will to explore alternatives and with the Jewish lobby at Capitol Hill, the policy hostility towards Iran will be hard to reverse.
The problem with imposing sanctions on a country which has the world's third largest proven reserves of oil and second largest conventional natural gas reserves is that the implications are felt globally. An important characteristic of the global oil market is that it is an integrated market. The price of oil is highly correlated throughout the world due to market arbitrage. This means that plurilateral initiatives by the U.S or the EU to curb Iran's economic viability by imposing barriers on the free flow of trade and finance are in effect paid for by all net consumers of oil, including developing countries such as India. Iran's production capacity has also been more or less stagnant for many years at around four million barrels per day. Sanctions have prevented Iran from accessing technology to upgrade oil infrastructure and increase supply, which would theoretically ease oil prices. This is a perverse and fundamentally flawed dynamic. Why should the developing world pay for the foreign policy interventions of the West? Why should India, a country with over 800 million poor and stark levels of energy poverty, subsidise American and European foreign policy and in turn face insurmountable fiscal deficits year after year?
India and Iran share historical ties, and there is definite cultural affinity between the two nations. However, these are not the reasons why Indian policymakers have supported the seemingly ideological stance taken by BRICS members. India imports around 12 percent of its oil from Iran, its second largest supplier after Saudi Arabia. While in a globally integrated oil market, import substitution should theoretically be fairly simple, Iran sells oil to India based on long term supply contracts that offer a competitive rate. Moreover, many of the PSU refineries in India are geared towards the processing of sweet crude oil which is imported from Iran. Mangalore Refineries and Petrochemical Limited (MRPL) and Hindustan Petroleum Corporation Limited (HPCL) in particular are two large PSUs whose profit margins depend to a significant extent on the sweet crude mix imported from Iran. While the private sector, including Reliance, has been fairly quick to respond to the political risk and diversify imports, the public sector understandably cannot adapt as fast (Essar Oil is the private sector exception which was the largest importer of Iranian Crude in the first quarter of 2012). India is certain to continue importing oil from Iran and only the relative quantities in the composite import basket are likely to fall over the long run as gradual refining technology improvements are carried out by the aforementioned PSUs.
In the first quarter of 2012, India overtook another BRICS member, China as the largest importer of Iranian Crude, with direct imports of over 430,000 barrels per day. This is in spite of the difficulties of carrying out financial transactions with Iran due to the existing sanctions regime which specifically also targets financial institutions such as the Central Bank of Iran. In 2010, the Reserve Bank of India mandated that oil import payments to Iran would have to be settled outside the Asian Clearing Union (ACU) mechanism, which involves the central banks of India, Bangladesh, Maldives, Myanmar, Iran, Pakistan, Bhutan, Nepal and Sri Lanka. There is an old adage that "markets always find a way' and this has largely been true in the case of imports from Iran. A recent development has been the institution of a settlement mechanism through which India can pay up to 45 percent of its import costs in local currency. India in its Union Budget for FY 2013 paved the way for the efficient working of this mechanism by including a tax exemption for such transactions which would otherwise be classified as "income earned abroad' (by Iran) and therefore be liable up to a 40 percent tax.
A common argument by Iranian Government officials is that if the current sanction regime followed by the U.S and EU has led to the appreciation of oil price by 8 or 10 percent, it has only benefited Iran, which continues to supply oil to its major consumers China and India at more expensive rates. Indeed the cost-benefit works in Iran's favour as Iran is more than able to offset losses due to higher transaction costs with the appreciation of the underlying price of the asset. The BRICS members consist of both net oil exporters and importers and represent 43 percent of the world's population and therefore represent a more than credible global zeitgeist. They have suggested better international policy coordination to maintain macroeconomic growth momentum and curb commodity price volatility as immediate imperatives for the global economy. Since commodity prices are highly correlated with the oil economy, it is in all nations' interests to ensure a viable and stable price for oil to ensure sustainable development in the current sluggish and uncertain global economic growth environment. BRICS provides a platform for India to voice concerns and direct strong criticism against Western countries that directly influence oil prices through the conduct of irresponsible foreign policy outside the international framework. In a way the BRICS platform allows India to express views that the constraints of realpolitik do not allow it to. It allows India's 21st century foreign policy to evolve and emerge to better reflect domestic concerns.
Thursday, April 12, 2012
BRICS, Steel, Mortar....and Money: Samir Saran and Vivan Sharan* 04 April 2012, ORF Analysis
With the Delhi Declaration, BRICS nations, which met recently in the Indian capital, have shown that they have the steel to stand up to traditional power structures, a cohesive vision to jointly respond to development challenges through institutionalisation of concrete mechanisms, and the determination to channel monetary power to strengthen markets, businesses and trade. The Declaration indeed gives insight into the gradual transformation of BRICS, from essentially a response mechanism crafted to address the various development challenges posed by the global financial crisis, to a forward looking entity seeking to enact and enable real global transformation.
The Delhi Declaration extends over 50 paragraphs which are all encompassing in some sense and address many relevant themes for BRICS countries and the developing world at large. The Declaration is significantly more impressive and comprehensive than the 16 paragraph Joint Statement of the BRICS Leaders at the first summit held at Yekaterinburg in 2009 and the sketchy and macro statement of purpose at Sanya last year. The Action Plan within the Delhi Declaration consists of 17 steps which will deepen intra-BRICS engagements. There are three prominent narratives that define the Delhi Declaration - reaffirmation of the UN framework for global governance, disappointment with financial regimes shaped in the mid 20th century and a confidence to tap into economic opportunities that exist within BRICS.
The Delhi Declaration has stamped the intent of BRICS nations to coordinate and collectively respond to global security challenges within appropriate frameworks that give precedence to fundamental principles such as international law, transparency and sovereignty. BRICS members have recognised and re-emphasised the centrality of the UN in dealing with regional tensions and they have explicitly outlined this for specific cases including the Arab-Israeli conflict, the Syrian imbroglio and the contentious Iranian nuclear programme.
The Declaration unambiguously states that "plurilateral initiatives" that go against the fundamental principles outlined earlier, will not be supported by BRICS. The Declaration is clearly against actions such as asymmetric trade protectionism, unilaterally imposed sanctions and taxes imposed on businesses. The EU's Aviation Tax is one such example from contemporary policymaking. In terms of trade, there is strong emphasis on operating within legal instruments such as the WTO and institutions such as the UNCTAD for furthering the inclusive development efforts through consensus and technical cooperation.
The aftershocks from the financial crisis are still a cause of concern to the BRICS nations. The pre-occupation with Europe has distracted attention from the social transformation programmes and poverty alleviation efforts among BRICS members. The Delhi Declaration has spelt out the "immediate priority" of restoring market confidence and getting global growth back on track. The steps to address such concerns will include attempts to rebalance global savings and consumption, furthering of regulatory and supervisory oversight in the financial markets, increasing the voice of developing and emerging nations in global financial governance and the institutionalisation of financial mechanisms to redirect existing capital to tackle development imperatives.
The BRICS members have therefore announced a working group led by the Finance Ministers of the individual nations, in order to examine the "feasibility and viability" of a BRICS Development Bank. When formed, such an institution will likely be able to shift and contextualise the development discourse within and outside BRICS and therefore is one of the most significant actionable outcomes. It is evident that such a multilateral institution is not meant to compete with existing ones, but rather, to enhance lending and investment to create sustainable development trajectories. Contrary to expectations several high ranking Chinese policymakers, including the Assistant Foreign Minister, Ma Zhaoxu, have supported the idea.
The BRICS members have clearly outlined that the purpose and nature of Bretton Woods Institutions such as the World Bank, must shift from being essentially a mediation instrument to enable North-South cooperation, to one which can actually prioritise "development issues" and overcome the "donor-recipient dichotomy". They have also called upon the World Bank to mobilize greater directed resources and enable development financing at reduced costs through financial innovations and improved lending practices. Indeed for BRICS, the focus on World Bank and IMF reforms has remained constant through the years, yet the Delhi Declaration articulates these concerns more lucidly than ever before.
Given that intra-BRICS trade has been consistently on the rise over the past decade, BRICS Leaders have endorsed the conclusion of the Master Agreement on Extending Credit Facility in Local Currency under the BRICS Interbank Cooperation Mechanism and the Multilateral Letter of Credit Confirmation Facility Agreement between their respective EXIM/Development Banks. Such steps to mitigate market risks and enable local currency transactions will only add to the existing momentum and build resilience in BRICS economies to global business cycle fluctuations and exchange rate volatilities. Notably, BRICS have also endorsed the market led efforts to set up a BRICS Exchange Alliance between the major stock exchanges of BRICS, which will enable investors to efficiently allocate capital across BRICS economies and invest in the BRICS growth story.
The unity and purpose of BRICS has been the target of speculation and scepticism from various quarters. With the Delhi Declaration, BRICS members have been able to assuage such doubts as they have begun to create a credible hedge against traditional global narratives of security and development. They have simultaneously been able to project that there is resolution within the group to deal with issues that are not only of immediate concern but even those that will need attention in the future. The Delhi Declaration paves the way for the institutionalisation of BRICS cooperation, making BRICS a significant transcontinental and politically united force. In Sanya BRICS spread wide to include South Africa; in Delhi they went deep to include substance.
(Samir Saran is Vice-President and Vivan Sharan an Associate Fellow at Observer Research Foundation. The Foundation hosted the BRICS Academic Forum in March this year)
The Delhi Declaration extends over 50 paragraphs which are all encompassing in some sense and address many relevant themes for BRICS countries and the developing world at large. The Declaration is significantly more impressive and comprehensive than the 16 paragraph Joint Statement of the BRICS Leaders at the first summit held at Yekaterinburg in 2009 and the sketchy and macro statement of purpose at Sanya last year. The Action Plan within the Delhi Declaration consists of 17 steps which will deepen intra-BRICS engagements. There are three prominent narratives that define the Delhi Declaration - reaffirmation of the UN framework for global governance, disappointment with financial regimes shaped in the mid 20th century and a confidence to tap into economic opportunities that exist within BRICS.
The Delhi Declaration has stamped the intent of BRICS nations to coordinate and collectively respond to global security challenges within appropriate frameworks that give precedence to fundamental principles such as international law, transparency and sovereignty. BRICS members have recognised and re-emphasised the centrality of the UN in dealing with regional tensions and they have explicitly outlined this for specific cases including the Arab-Israeli conflict, the Syrian imbroglio and the contentious Iranian nuclear programme.
The Declaration unambiguously states that "plurilateral initiatives" that go against the fundamental principles outlined earlier, will not be supported by BRICS. The Declaration is clearly against actions such as asymmetric trade protectionism, unilaterally imposed sanctions and taxes imposed on businesses. The EU's Aviation Tax is one such example from contemporary policymaking. In terms of trade, there is strong emphasis on operating within legal instruments such as the WTO and institutions such as the UNCTAD for furthering the inclusive development efforts through consensus and technical cooperation.
The aftershocks from the financial crisis are still a cause of concern to the BRICS nations. The pre-occupation with Europe has distracted attention from the social transformation programmes and poverty alleviation efforts among BRICS members. The Delhi Declaration has spelt out the "immediate priority" of restoring market confidence and getting global growth back on track. The steps to address such concerns will include attempts to rebalance global savings and consumption, furthering of regulatory and supervisory oversight in the financial markets, increasing the voice of developing and emerging nations in global financial governance and the institutionalisation of financial mechanisms to redirect existing capital to tackle development imperatives.
The BRICS members have therefore announced a working group led by the Finance Ministers of the individual nations, in order to examine the "feasibility and viability" of a BRICS Development Bank. When formed, such an institution will likely be able to shift and contextualise the development discourse within and outside BRICS and therefore is one of the most significant actionable outcomes. It is evident that such a multilateral institution is not meant to compete with existing ones, but rather, to enhance lending and investment to create sustainable development trajectories. Contrary to expectations several high ranking Chinese policymakers, including the Assistant Foreign Minister, Ma Zhaoxu, have supported the idea.
The BRICS members have clearly outlined that the purpose and nature of Bretton Woods Institutions such as the World Bank, must shift from being essentially a mediation instrument to enable North-South cooperation, to one which can actually prioritise "development issues" and overcome the "donor-recipient dichotomy". They have also called upon the World Bank to mobilize greater directed resources and enable development financing at reduced costs through financial innovations and improved lending practices. Indeed for BRICS, the focus on World Bank and IMF reforms has remained constant through the years, yet the Delhi Declaration articulates these concerns more lucidly than ever before.
Given that intra-BRICS trade has been consistently on the rise over the past decade, BRICS Leaders have endorsed the conclusion of the Master Agreement on Extending Credit Facility in Local Currency under the BRICS Interbank Cooperation Mechanism and the Multilateral Letter of Credit Confirmation Facility Agreement between their respective EXIM/Development Banks. Such steps to mitigate market risks and enable local currency transactions will only add to the existing momentum and build resilience in BRICS economies to global business cycle fluctuations and exchange rate volatilities. Notably, BRICS have also endorsed the market led efforts to set up a BRICS Exchange Alliance between the major stock exchanges of BRICS, which will enable investors to efficiently allocate capital across BRICS economies and invest in the BRICS growth story.
The unity and purpose of BRICS has been the target of speculation and scepticism from various quarters. With the Delhi Declaration, BRICS members have been able to assuage such doubts as they have begun to create a credible hedge against traditional global narratives of security and development. They have simultaneously been able to project that there is resolution within the group to deal with issues that are not only of immediate concern but even those that will need attention in the future. The Delhi Declaration paves the way for the institutionalisation of BRICS cooperation, making BRICS a significant transcontinental and politically united force. In Sanya BRICS spread wide to include South Africa; in Delhi they went deep to include substance.
(Samir Saran is Vice-President and Vivan Sharan an Associate Fellow at Observer Research Foundation. The Foundation hosted the BRICS Academic Forum in March this year)
Monday, April 2, 2012
Quoted in Times of India, 1 April, 2012.
http://articles.timesofindia.indiatimes.com/2012-04-01/special-report/31270010_1_brics-robert-zoellick-world-bank/2
Power of 5
Far from Delhi's decked-up roundabouts and sanitised hotels, Robert Zoellick was aboard a boat on Wednesday, crossing the river Bhitarkanika on his way to a village in Orissa. After greeting the villagers with folded hands, the World Bank president sat down to talk to a global news agency. A few stock questions later, the Bank chief turned his attention to the proposed BRICS bank. "It's a complicated venture which will have a hard time getting off the ground and match the expertise of the World Bank," Zoellick said.
It was hard to miss the symbolism of Zoellick's foray into a dark corner of India and raise doubts about a new development bank just one day before the leaders of Brazil, Russia, India, China and South Africa (BRICS) met in the Capital to thrash out the nitty-gritty of the Delhi Declaration. It was clear that the Bank didn't want a new global rival that couldn't be controlled from Washington.
But by Thursday evening, BRICS leaders had proposed to trade among themselves in their local currencies, made significant progress on the setting up of the new development bank, expressed their concern at the slow pace of quota and governance reforms in IMF, and decided to abide by UN sanctions and not the unilateral ones imposed by the US and European countries on Iran and Syria. "We wish to see these countries living in peace and regain stability and prosperity as respected members of the global community," the declaration said.
This was a giant leap forward, much more than what skeptics like Zoellick had expected. In the days leading to the summit, the air was thick with negativity. "What do they talk at these summits? It's just a talk shop and a photo op," an American diplomat had said, making no effort to hide biting sarcasm. The same day, an op-ed piece in the New York Times argued that the focus of the new bank was misplaced. "It is the fundamental incompatibility of the BRICS nations , not their lack of organisation, which prevents this collection of emerging economies from acting as a meaningful force on the world stage," the op-ed said. In this western worldview, BRICS is an idea whose time hasn't come.
By Thursday evening, however, the mood at the summit was upbeat, with ministers, diplomats, businessmen and journalists smelling a change in the air. "BRICS is not an idea. It's already a reality. The balance of the existing global order is tipping," says Jackson Schneider, vice-president of Embraer, the Brazilian aviation giant. "If BRICS has no force, why is the NYT wasting so much ink and time on us?"
The problem with the view from New York is that it ignores ground reality. Today, the BRICS countries account for 25% of global GDP based on the purchasing power parity of national currencies; 30% of land area and 45% of the world's population. The bloc's contribution to global economic growth has now reached almost 50%, making this group the principal driver of global economic development. "Last year, trade between the BRICS countries stood at around $230 billion and we are targeting $500 billion by 2015. We all are important countries in our respective regions and we want the world architecture to be more inclusive," says MariaReis, the top Brazilian diplomat for BRICS affairs, also known as the 'BRICS Sherpa'. "We are not against anyone but we want changes in terms of transparency in global affairs."
Signs of change are already there. On the morning of the meeting, the Syrian prime minister sent a letter to his Indian counterpart Manmohan Singh about the situation in his country and his government's commitment to the peace process. By evening, the BRICS leaders had taken a collective and clear stand: no foreign interference in Syria. "By making clear that issues likeSyria, Iran and Palestine-Israel dispute be resolved within the UN framework, the BRICS leaders have moved from plain rhetoric to specific areas, and have also given a message to those countries which tend to act unilaterally outside the UN framework. It's a huge development," says Vivan Sharan, an associate fellow at the Observer Research Foundation which hosted the BRICS academic forum this month in preparation for the summit.
Experts like Sharan see the Delhi summit as a success in terms of the changing global order. "They have demanded specific reforms in the IMF-World bank structure. Now Exim banks will be able to give loans to each other in local currency. This is deepening of financial integration. Even on the issue of a development bank, it's a win-win situation for everyone. This summit has cleared a lot of noise and confusion," says the ORF expert. "I don't see any major obstacle in the creation of the BRICS bank."
The bank, according to participants in the summit, is now a question of when and not if. This can fundamentally change the existing world order. "According to the West, in the global village, the Chinese manufacture , the Indians provide services, the Brazilians do farming, the Russians supply oil, and we are a source of cheap labour. But, not anymore," says a South African diplomat. "Because of our history, the entire African continent is looking at the BRICS bank."
If BRICS has become a force to reckon with, it's because of the hard work done by a lot of people. Contrary to the perception that BRICS leaders meet once a year to click some snaps together, the members have already put in place a number of mechanisms to deepen their cooperation. In the past couple of years, there have been a number of meetings between BRICS ministers for trade, other ministers for agriculture, health, and a contact group on economic and trade issues. "The BRICS countries today comprise new growth poles in a multipolar world," says Sudhir Vyas, secretary (economic relations), in the ministry of external affairs and the Indian sherpa for the summit.
Though the BRICS countries have been meeting and talking for the past eight years, they realised their power only in 2008, when the western economies began to wobble. "During the financial crisis, the BRICS countries played a vital role as drivers of growth that helped the global economy. They are not a threat to global growth, but an opportunity for global growth," says Vyas. Despite suspicions in the western capitals, no one in BRICS is seeking confrontation . "We need very much the euro zone to recover. No one wants this crisis to aggravate," says Maria Reis of Brazil.
Of course, there are challenges ahead, even misgivings . But everyone is willing to give BRICS a chance. Li Zhongmin, an expert on the grouping at the Chinese Academy of Social Sciences, says it was essential for their future for the members to "finance each other's infrastructure projects, internationalise their currencies , provide trade credit to each other, ease visa norms and encourage investment in each other's country."
All this was achieved at BRICS 2012. Now the next step should be the creation of an institution -a new global bank -that holds the grouping together. "Foremost amongst the reasons for the creation of the institution is the need for BRICS to assume pole position in global financial governance,'' says Sharan of ORF.
On Thursday evening, the delegates were confident that the bank will be a reality sooner than later. It could be real good news for India, which was the first country to propose this bank.
On Friday, Zoellick landed in Delhi, met ministers and businessmen and told them how the World Bank "can help India meet the challenges ahead."
Zoellick is going to retire soon. Is he trying extra hard to sell an idea whose time may be up?
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