BRICS Gridlock and Lock Down New Delhi

In a related set of developments in the Indian capital of New Delhi last week, major roads were cordoned off or clogged for hours (a dangerous thing given the red-blooded Delhi driver's reputation for road rage), Tibetan residents (and others mistaken for Tibetans) were rounded up and detained -- and economists, foreign-policy analysts and naysayers came crawling out of the woodwork (or its cyberspace equivalent).

The occasion was the fourth summit of BRICS, the annual conclave of the world's major developing economies -- Brazil, Russia, India, China and, since 2010, South Africa.

In the narrowest interpretation, revealing man as homo economicus -- as a rational and self-interested actor, empirically proven to be too often focused on short-term gains and losses -- the BRICS summit made me late for a dinner party on Wednesday last week. But there was much more to it than that. As Brahma Chellaney wrote in the Hindustan Times, in a piece titled (yes, what else?) "BRICS in the wall":

The BRICS grouping, after all, represent more than a quarter of the Earth’s landmass, over 41% of its population, almost 25% of world GDP, and nearly half of all foreign-exchange and gold reserves. [...] BRICS represents the first important non-western global initiative in the post-Cold War world.

Impressive numbers, to be sure. But do they represent an aggregate mathematically significant but politically inconsequential? After all, we're not talking sums here, but of the power of a group to advance what its members see as their joint interests. And there we face a riddle. Chellaney also pointed out:

The disparate nature of the group’s membership -- bringing together the world’s largest autocracy and democracy, as well as commodity-exporting and resource-hungry economies -- has prompted cynics to dismiss BRICS as an acronymic ingenuity without substance. To its protagonists, however, BRICS is a product of the ongoing global power shifts, and has the potential to evolve into a major instrument in shaping the architecture of global governance.

The summit was presided by Prime Minister Manmohan Singh of India and the presidents of the other four countries, who between them came up with something called "The Delhi Declaration." The prose in this capacious document was characteristically joyless, as collaborative and diplomatic writing tends to be ("We do not support plurilateral initiatives that go against the fundamental principles of transparency, inclusiveness and multilateralism").

More importantly, the thinking was, at least to my eye, not particularly ambitious, hobbled somewhat by the clashing foreign-policy positions of the major countries in the group, on issues such as the civil war in Syria, whose regime is supported by China and Russia. The summit's actors enjoined the Western powers to act responsibly in Syria, Iran, Afghanistan and Palestine without criticizing any one in particular, and demanded "that the Heads of IMF and World Bank be selected through an open and merit-based process."

No signs here yet of a new world order developing, unless one reads the line "We express our strong commitment to multilateral diplomacy with the United Nations playing a central role in dealing with global challenges and threats" as a critique of unilateral action by the U.S. Even here, the following sentence "In this regard, we reaffirm the need for a comprehensive reform of the UN, including its Security Council" provides much food for thought, China being one the powers unwilling to endorse India's bid for a permanent seat (and thereby veto power) on the Security Council.

The summit's most interesting decisions in the realm of concrete action were the signing of an agreement to promote intra-BRICS trade in local currencies to challenge the monopoly of the U.S. dollar, and to propose the setting up of a development bank to mobilize resources within the bloc. There was also material of interest in Singh's speech, particularly his admission that:

The conceptual analysis that produced the positive BRICS narrative was based on a model of catch-up growth in which supply side constraints were not adequately addressed. Today, it is clear that constraints such as the availability of energy and food for countries that account for more than 40% of the world population can impede the entire story. Water is another critical area of scarcity which needs much greater attention than it has received thus far. We have much to learn from each other in how to handle these problems, and there is also room to cooperate internationally.

[...] Each of our countries is grappling with how to pursue 'green' growth without compromising on current needs. At the core of this complex issue is the use of fossil energy and the impact that it has on the environment. We must reduce energy intensity of GDP by promoting energy efficiency and developing clean energy sources. This calls for greater investments in research and development, sharing of best practices, and encouraging transfer of technology. A dialogue between energy producers and consumers would also help in ensuring stability in energy markets.

Among the most perceptive reactions to the summit's work was that provided by Ashok Malik, who wrote on Yale Global Online:

At the broadest level, BRICS represents a non-Western – but decidedly not anti-Western – template of growth and development, and of modernity. At an everyday level, it sees itself as a pressure group beginning to challenge a vulnerable Europe for the role of Uncle Sam’s junior partner. [..]

The five leaders committed to trading within the bloc using the currencies of BRICS countries rather than the US dollar. Exuberance on this count was sobered by statistics of intra-BRICS trade: estimated at US$230 billion in 2011, of which $74 billion, or a third, came from India-China trade. Brazil-China trade was about the same quantum. Russia-China trade accounted for another $60 billion. Remove these three pivotal bilateral links and intra-BRICS trade drops to virtually nothing.

In the end, despite their calibrated rhetoric, each of the BRICS countries values its relationship with the United States far more than with the four other BRICS countries combined.Each is actually quite happy with an international system driven by American economic and technological supremacy, underwritten by American security guarantees.

Of course, it was lost on no one that China was comfortably the most powerful player in the group, and that it could use the summit to advance its own interests much better than the other members. "On their part, of course, the BRICS members are watching their own backs, looking out for the growing giant, China," wrote Malik. And in a skeptical piece in the New York Times, Jim Yardley wrote about the tension between the two biggest powers:

Since its inception, the group has discussed creating a development bank to rival the World Bank, and on Wednesday a Chinese official expressed hope that a breakthrough might come this week. Yet to date the proposal has been stalled, partly over worries that China would dominate the new institution. [...]

China is the heavyweight, and thus the natural leader of the group, except that it is the political outlier. As such, distrust is high between India and China, whose border dispute, which goes back decades, is fueling a quiet military buildup on both sides. The two countries differ sharply on Pakistan and the Dalai Lama, the exiled Tibetan spiritual leader. Trade is growing rapidly, but India complains that China has done too little to open its market to Indian firms. China, meanwhile, is suspicious that India is pursuing a containment policy, in league with the United States, through its diplomatic outreach to East Asian nations like South Korea, Japan, Australia and Indonesia.

Indeed, almost the biggest grouse in the Indian press about the summit was the way that the government went out of its way to remove all traces of protest against the Chinese occupation of Tibet by Delhi's vociferous and politically engaged Tibetan population, a move applauded by the Chinese delegation. To some commentators, this hospitality was almost too generous; what the Indian government should have done was hold its own on its stance on Tibet. In a piece called "The Price of Minding Mr. Hu's Delicate Sensibilities," Nitin Pai took the measure of arguments for and against the Indian approach, concluding:

The world -- and especially the countries of East Asia -- are watching. What they saw is a potential counter to Chinese hegemony bend over backwards (a reverse kow-tow?) to please China’s leader. Although they have seen some measures by New Delhi that persuades them of India’s intentions to contribute to the Asian balance of power, such signals risk confusing them. Small and medium-powers in India’s extended eastern neighbourhood will begin to have doubts about New Delhi’s ability to stand up to Chinese assertiveness. This will make it much more difficult for India to pursue its own interests in East Asia.

Finally, the perception that New Delhi ‘appeased’ Beijing yet again will exacerbate the hysteria in the media and public discourse on matters concerning China. Ironically, the UPA government has ended up embarrassing itself in front of its people in order to avoid embarrassing Mr Hu in front of his.

Pai's observations were consistent with those made by Mihir Sharma in a sharply critical piece in the Business Standard, except that Sharma also made the criticism, trivial in a foreign-policy context but crucial in a personal one, that "the Chinese delegation at the Oberoi ate all the mutton chops at the lunch buffet."

The jury, then, is still out on the validity of BRICS as an idea and its potential as a force fragmented by respective political ideologies and economic structures. But it would appear from this small survey that what the world press emphatically endorses at present is the appeal of BRICS as a pun-generator for headlines.

(Chandrahas Choudhury, a novelist, is the New Delhi correspondent for the World View blog. The opinions expressed are his own.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

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