The Dynamics of the BRICS Grouping: Convergences and Disparities with the GCC's Global Posture and Stances

Tim Niblock

1. Introduction

This chapter will begin by defining the aims, interests and objectives around which the BRICS grouping has developed. Use will be made of the joint statements, declarations and action plans issued at the end of the summit meetings of BRICS countries. These documents have become more detailed over time, so it is the most recent declarations (especially the Fortaleza Declaration following the July 2014 6 BRICS Summit in Brazil) which will be given most attention. Nonetheless, it is also important to take note of how concerns and positions have developed over time, as reflected in all 7 of the joint statements and declarations. The chapter will then examine the extent to which the GCC's political economy, structure and its international posture converge with the interests and objectives of the existing BRICS countries.

The trajectory through which the BRICS grouping has developed must first be documented. The organisation's existence is sometimes linked to the development of the term "BRIC", in a 2001 paper by the Goldman Sachs economist Jim O'Neill entitled "Building Better Global BRICs". In practice, though, this is of limited relevance to the emergence of the BRICS grouping. The beginnings of cooperation among the states concerned had occurred before then, and the main organisational structure (in the form of the annual BRICS Summits) did not come into being until 8 years after O'Neill's article – in 2009. The setting for the initial cooperation was the G-20 grouping, established in September 1999. There was a natural tendency for the leading emerging markets and developing countries in this grouping to adopt common positions (given that they related to the global economy in similar ways), and on occasion to act collaboratively.

The countries which were to form the BRICS grouping began to establish formal links of consultation and cooperation among themselves in the late 1990s and early 2000s. China and Russia had come together in the Shanghai Five grouping in 1996 (together with the Kazakhstan, Kyrgyzstan and Tajikistan), and in 2001 this was transformed into the Shanghai Cooperation Organisation (SCO) with the addition of Uzbekistan. In the latter year, China and Russia also signed a Treaty of Good Neighbourliness and Friendly Cooperation. The SCO Charter was adopted at a summit meeting in June 2002. It covered the purposes, principles, structures and form of organisation of the SCO. Some of these were later echoed in BRICS documents. The SCO, however, has an added focus on military and security cooperation, and the economic dimension is more focused on practical cooperation among the countries concerned. At an important SCO Summit in Astana, in July 2005, observer countries were included for the first time, and among these was India (together with Iran, Pakistan and Mongolia). Both India and Pakistan will be admitted into full membership from 2016.

India, Brazil, and South Africa, for their part, formed the IBSA Dialogue Forum in June 2003. This envisaged regular summit meetings among the leaders of the three countries, and consultations among senior officials, academics, intellectuals and other members of civil society. The Brazilia Declaration, which followed the initial summit (as also similar declarations which have followed the subsequent annual summits), covered many of the topics which were to appear later in BRICS statements and declarations: the reform of the United Nations (specifically including expanding the Security Council membership); making the operation of the global economy more inclusive, integrative and equitable; changing the quota system underlying IMF governance; promoting South-South cooperation, etc. There has in practice been more carry-over of ideas and principles from IBSA to BRICS than from the SCO to BRICS.

The first formal move towards the formation of BRICS as an organised grouping took place in September 2006 when BRIC foreign ministers met together on the margins of the opening of the 61 UN General Assembly. The objective was to explore commonalities in their external policies, and possibilities for coordinated action. Similar meetings were held in September 2007 and September 2008. Some other meetings of BRICS ministers and officials were held in 2008, most significantly a heads of state/government in July 2008, and a meeting of Finance Ministers in November 2008 (held in the shadow of the global economic and financial crisis, which powerfully underlined the need for the BRICS countries to defend their interests by acting collectively). These gatherings formed the basis for the key BRICS development: the initiation of Summit Meetings, the first of which was held in June 2009. At the time of writing seven such summits have been held. The conferences have been the following:

First Summit, Yekaterinburg (Russia), June 2009
Second Summit, Brasilia (Brazil), April 2010
Third Summit, Sanya (China), April 2011. The first to include South Africa
Fourth Summit, New Delhi (India), March 2012
Fifth Summit, Durban (South Africa), March 2013
Sixth Summit, Fortaleza (Brazil), July 2014
Seventh Summit, Ufa (Russia), July 2015

Some observers have suggested that economic developments have undermined the coherence and rationale of the BRICS grouping. In 2015 the GDPs of Russia and Brazil not only failed to achieve the high rates of economic growth which all BRICS countries shared in the first decade of the 2000s, but actually declined. Questions have also been raised about whether the Chinese economy can sustain the high rate of growth which has characterised its economy over the past 30 years. Such observations, however, misunderstand the nature of the BRICS grouping. Its primary dynamic does not rest on high rates of growth but on the political commitment of these countries to create a bigger stake for themselves in the global political and economic orders.

2. The Aims, Interests and Commonalities Underpinning the BRICS Grouping

While there are many statements, declarations and action plans which are issued during and after BRICS summits, these do not directly explain the rationale for the existence of the organisation – i.e. what it is which has drawn this particular group of countries together, and what they hope to achieve by working together. The contention made here is that four key elements have drawn them together. These are:

1. Similarity of economic status in the global economy. The economies of the BRICS countries have all become significant to the global economy, as a result of the high rates of growth they have achieved in recent times and the nature of their resource-bases. The size and significance of their GDPs is reflected in their membership of the G20 grouping.

2. Belief that this group of countries can gain economically by working together. The economic gains envisaged by the governments would flow from three processes:

• Gaining a more significant role in global economic management. The perception here is that global financial and political-economic institutions need to be re-structured. The operations of the latter institutions are perceived as serving the interests of the countries which manage them – largely the established leading global economic powers. By acting collectively to re-structure these institutions, with a more broadly-based representation in the management, the BRICS countries can benefit their own economies and those of the developing world in general. They will be better-equipped to safeguard their interests in the global economy, and to block the adoption of measures and policies which are harmful to their economies.

• Enhancing economic exchange between them, covering the full range of sectoral activity: trade, investment and finance. While substantial economic exchange already exists (to varying degrees, depending on the country), there is clearly a belief that there is further room for expansion and that this should be proactively promoted. This is necessary in order to ensure that the BRICS economies are not overly-dependent on their relations with Western economies. Such over-dependence must be avoided, so as to ensure that BRICS economies are not damaged by a recurrence of economic instability in the West. Close economic relations among BRICS countries, therefore, will act as a stabilising force underpinning their further economic development, and requires deliberate planning collectively.

• Sharing experience of best practice, given that they face some of the same problems in developing their economies and in managing their relations with the global economy.

3. Commitment to preventing global institutions (in particular the United Nations) from being used to further the interests and objectives of the Western powers – especially on matters which relate to the sovereignty of UN member states. This not only involves seeking to establish common positions when such issues arise, but also acting collectively in demanding the re-structuring of the Security Council of the UN so as to ensure that the views of BRICS countries carry more weight and influence. The significance of the United Nations in representing global opinion is emphasised.

4. Pronounced alignment with the global South, with a commitment to promoting South-South cooperation generally, and to defending the interests of Less Developed Countries in the global economy.

Governmental perceptions of commonality, whether in economic or political realms, do not necessarily equate to actual commonality. It is important, therefore, to examine the aspects covered in the previous section and consider the realities of commonality. Do the BRICS countries actually share a common position relative to the global order (economically and politically), and does this provide a coherent basis for collective action and activity?

3. The Realities of Convergence and Difference: Similarity of Economic Status in the Global Economy.

The BRICS organisation publishes statistics which compare the economies of the five countries, and the data does indicate both their collective importance and also a significant level of commonality among them. With regard to their collective importance, the 2012 BRICS Report portrays their collective significance to the global economy as follows:

Together, the BRICS account for more than 40 per cent of the global population, nearly 30 per cent of the land mass, and a share in world GDP (in PPP terms) that increased from 16 per cent in 2000 to nearly 25 per cent in 2010, and is expected to rise significantly in the near future. If one compares the GDP in PPP terms for 2010, four economies figure among the G-20 top ten, with China, India, Russia, Brazil, and South Africa in 2nd, 4th, 6th, 8th, and 26th place, respectively. In terms of contribution to growth of PPP-adjusted global GDP of the world, these five economies accounted for 55 per cent during 2000-8, and their contribution is expected to rise in the coming years. However, as per the criterion of GDP at market prices, among the members of the G-20, China holds the 2nd position while Brazil, India, Russia, and South Africa hold the 7th, 9th, 11th, and 19 th positions, respectively.

The most recent figures from the IMF put the position yet more favourably for three of the BRICS countries. In the figures for 2014, China for the first time emerged as the largest global economy in terms of GDP at PPP, with India in 3 position, Brazil moving up to 7, Russia retaining the 6position, and South Africa falling to 34. When the relevant figures are put in overall non-PPP GDP terms, they do not sound quite so impressive, but they remain substantial. IMF 2013 figures show BRICS combined GDP as making up 21% of global GDP. Even in GDP at market prices, however, the BRICS countries have accounted for more than half of global economic growth over the period since 2008. Population figures for 2013 give the BRICS a slightly higher share of global population than appeared in the 2012 BRICS Report: 43% rather than 40%. Intra-BRICS trade flows reached $282 billion in 2012 and the target was for these to have reached $500 billion by 2015. The actual figures for 2015, however, have not been published at the time of writing. In 2002, the trade stood at only $27.3 billion.

While the BRICS countries are collectively a highly important component of the global economy, they differ substantially in their economic weight – so much so that they may appear not to cohere well as an economic grouping. The GDPs of the five states in 2013 came to $8.25 trillion for China, $2.43 trillion for Brazil, $1.95 trillion for each of Russia and India, and $390.9 billion for South Africa. China's GDP, it can be seen, came to more than half of that of the BRICS total. A very large gap, therefore, separates China at the top from South Africa at the bottom. In 2013 China became the second largest economy in the world, and calculated by PPP was the largest. China's foreign reserves, moreover, made up about three-quarters of the $4.4 billion held by the BRICS grouping collectively.

Nonetheless, some other measures create a more balanced picture of the comparative strengths of the economies. Per capita GDP for 2012 was estimated for the five countries as follows: Russia $13,765, Brazil $12,340, South Africa $7,636, China $6,094, and India $1,592. South Africa's inclusion in BRICS, moreover, reflects the South African economy's significance within the African continent, and the need for the BRICS grouping to have an African member. The BRICS grouping is therefore strengthened by the inclusion of South Africa in its membership, and South Africa's membership gains weight and significance through that. As for India, Russia and Brazil, while their economies are substantially smaller than China's, they are nonetheless of considerable global importance (as noted above ranked respectively at 3rd, 6th and 7th in terms of PPP).

4. Collective Concern to Obtain for BRICS Countries a Significant Role in Global Economic Management

The consistency and strength of the BRICS campaign to obtain a more significant role in global economic management will now be examined, with some analysis of the measure of success achieved.

The topic has in fact been a significant concern of all BRICS Summits since the organisation was established. In the first Summit, in 2010, much of the concluding Joint Statement revolved around the issue, directly or indirectly. The third paragraph states:

We are committed to advance the reform of international financial institutions, so as to reflect changes in the world economy. The emerging and developing economies must have greater voice and representation in international financial institutions, and their heads and senior leadership should be appointed through an open, transparent, and merit-based selection process. We also believe that there is a strong need for a stable, predictable and more diversified international monetary system.

Similar statements were made in a prominent position in all subsequent Summit Joint Statements and Joint Declarations. The eThekwini Declaration, which followed the 2013 Summit, was particularly explicit as to the measures which needed to be taken. It projected the BRICS role, furthermore, in terms of the demands of developing countries generally:

We call for the reform of International Financial Institutions to make them more representative and to reflect the growing weight of BRICS and other developing countries. We remain concerned with the slow pace of the reform of the IMF. We see an urgent need to implement, as agreed, the 2010 International Monetary Fund (IMF) Governance and Quota Reform. We urge all members to take all necessary steps to achieve an agreement on the quota formula and complete the next general quota review by January 2014. The reform of the IMF should strengthen the voice and representation of the poorest members of the IMF, including Sub-Saharan Africa. All options should be explored, with an open mind, to achieve this. We support the reform and improvement of the international monetary system, with a broad-based international reserve currency system providing stability and certainty. We welcome the discussion about the role of the SDR in the existing international monetary system including the composition of SDR's basket of currencies. We support the IMF to make its surveillance framework more integrated and even-handed. The leadership selection of IFIs should be through an open, transparent and merit-based process and truly open to candidates from the emerging market economies and developing countries.