BRICS must show it can lead: Experts
Updated: 2011-04-15 10:38
By Chen Weihua (China Daily)
NEW YORK - While leaders of the world's five largest emerging economies concluded their meeting looking for bigger roles in international affairs, experts have predicted an optimistic but uneven road ahead.
On Thursday, Brazil, Russia, India, China and South Africa - collectively labeled by the media as BRICS - expressed their opposition to use of force in Libya and agreed in principle to establish mutual credit lines denominated in their local currencies, not in US dollars. They also sought for a bigger voice in the International Monetary Fund and the World Bank after meeting in Sanya, South China's beach resort.
"Given the rising economic heft, it is logical that the BRICS economies should play a more prominent role on the global economic stage," said Eswar Prasad, the Tolani senior professor of trade policy at Cornell University and the former head of the IMF's China division.
However, he said the G20 process still tends to be dominated by advanced economies.
The key priority, Prasad said, is for the BRICS to put creative ideas on the table rather than just react defensively to proposals put forward by advanced economies.
"The BRICS are only gradually growing into this leadership role and their summits should help them craft and refine a common agenda," Prasad said.
David Rothkopf, a visiting scholar at the Carnegie Endowment, said he is optimistic about the BRICS' future in the sense that he believes their rise as an influential force in global affairs is irreversible and is driven by historical factors more so than momentary political opportunism.
"They will gain more prominent roles due to their size and their growth. The roles of the BRICS within international institutions like the IMF, the World Bank and the United Nations must necessarily grow," Rothkopf said.
But he cautioned that the process of changing those roles will be frustrating and slower than it should be. "It will be marked by foot-dragging from established powers reluctant to see their relative influence diminish," said Rothkopf, who played a key role in developing and directing the Clinton administration's Big Emerging Markets Initiative. Rothkopf believes that the BRICS should act as they have been, setting their own agenda and advancing it as best as they can.
"Each situation offers different opportunities for forming coalitions with other powers," he said, adding that on the Libya vote, the collective voted with Germany to abstain and on other issues such as World Bank or IMF structure, they may vote with emerging nations more broadly.
"They need to be flexible and creative. That said, they also must demonstrate that they don't just want to be led, they are ready to lead. They must accept a greater responsibility for helping address global problems and contain global threats if they wish to truly be seen as leaders," he said.
Prasad believes the BRICS economies have a lot at stake as the process of reform of the international system gets under way, citing their concern over the macroeconomic instability and exchange rate volatility among major advanced economies.
He also pointed out that the BRICS economies have conflicting interests in many areas and they constitute an unstable coalition. He was referring to the temporary coalitions with other countries in the G20 process, such as the opposition to quantitative easing policies led by Germany and China during the Seoul G20 summit.
Prasad also noted the differing agenda the BRICS countries have with advanced countries.
While the short-term policy focus of BRICS is to fight inflation, many of the advanced economies are still trying to secure decent growth. "This creates a fundamental tension between the policy needs of these two groups of economies," he said.
"The BRICS are at least united in pushing back against advanced countries' loose macroeconomic policies, including rising debt levels and expansionary monetary policy in many of those economies such as the US," he said.
Rothkopf believes the advanced West must accept that the rise of the BRICS is inevitable.
The five BRICS countries now account for 40 percent of the world's population, 18 percent of global GDP and about 45 percent of current growth. Their combined economic clout is set to increase as their rapid growth continues.
"We need to find ways to work with them where our interests coincide and to manage conflicts where they will arise as they inevitably will," he said.
"In some cases we will be able to use ties with the BRICS to find shorter paths (than G20) to solutions on key issues and on others we will find that divisions within the BRICS make it easier to manage situations and we will try to exploit them," he said.
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