Professor Georgy Toloraya is the Executive Director of the BRICS National Research in Moscow, Russia and associated with the Russkiy Mir Foundation
During the preparation of the Brazilian Summit, the event seemed to be an ordinary one, even though it was the beginning of the second BRICS Summits series. The summit was dedicated to a non-conflicting topic, that of inclusive growth, through which the organisers wished to emphasise that the association was developing for the benefit of each member states and of all mankind. This topic did not contain anything sensational in itself, and, in addition, the agenda of the Brazilian summit was influenced by the domestic political priorities of this country and, above all, by its social problems.
However, the sudden and unexpected worsening of BRICS member Russia’s relations with the West in the spring of 2014 gave the summit a considerable geopolitical burden. The Russian experts who had organised, at the initiative of the Russian National Committee for the BRICS research, a series of talks in July of this year around the summit, particularly noted the importance that the developing countries` leaders had replied to Russia`s request and expressed their solidarity on the Ukrainian crisis. This showed that the United States’ insinuations about “Russia’s international isolation” don`t have any solid basis.
Therefore, there is a natural and constant increase of the BRICS role as a discussion platform around major political issues and conflicts at high level international decision making. This is illustrated by the fact that in Brazil, behind closed doors, all key issues of global governance, of regional conflicts, and of the global macroeconomic situation were carefully examined, whereas the result of those discussions consisted of states’ positions. Important issues were examined regarding the situations in Syria and Iraq, the alarming state of affairs in relation to the emergence of the Islamic State (IG) which is questioning the very foundations of a civilised state, and the regional conflicts in Africa and elsewhere.
What conclusions can be drawn from the results of the summit in Brazil? All BRICS countries, without exception, are treating with extreme disapproval the West’s desire to circumvent the UN and the UN Security Council. During this summit the leaders decided to strengthen coordination within the United Nations in order to keep it powerful and important among other organisations. In this respect, the Russian experts expressed their concern about the fact that the alternative could be that NATO becomes responsible for the maintenance of the global order.
However, the political component has not overshadowed the economic cooperation issue inside the BRICS and the management of the global economic processes. Something to note, though, is that the tolerance of the BRICS countries is at the end: there is a lack of progress in the reforming of the global management system, and the BRICS leaders noticed some stagnation of the IMF reform. By this time since October 2012, all of the IMF shareholders should have ratified a package of documents adopted as early as December, 2010, but they haven`t done that, yet, because the United States Congress is against them. The declaration adopted at the BRICS Summit contains now a final deadline for the ratification, which is December, 2014. The world trade is increasingly regulated by the WTO universal rules, and in the free trade zones they are often non-transparent and exclusive (such as the Transatlantic and Transpacific Partnership). Still, the most sensational decisions were those establishing a new development bank and the foreign exchange reserves pool. We already knew about these intentions, but this view was never taken seriously, except more by the Western critics.
Therefore, this decision making was seen as a qualitative progress of the BRICS, which will greatly change the global economic architecture. “The Summit of Brazil, according to the Russian experts, will make history in terms of global economy and association, primarily due to the decision to create the BRICS Development Bank and a Currency Reserve Pool. The total available resources for these two structures will reach 200 billion dollars. The bank aims to achieve two main objectives: giving long-term loans and financing sustainable developmental projects. The Currency Reserve Pool is the BRICS mutual guarantee system”.
The bank and the pool are among the ten largest development banks and financial security networks worldwide. The Russian experts noted the democratic nature of the operations: the Bank shall make decisions by consensus, which distinguishes it from other international banks dominated by the West, whereas the management team will be formed on a parity basis. The bank is open to the participation of other shareholders, including the international financial institutions. Two thirds of the investments will be implemented on the BRICS territories. The Russian experts attach huge importance to the fact that the BRICS financial institutions will be the first coordination and analysis centres of the BRICS strategy, and they highlight the importance of analyses and forecast in the framework of these institutions as a first solid step toward the institutionalisation of the BRICS. Also, the experts do not consider justified the complaints directed at the Currency Reserve Pool which would undermine (according to some people`s view) the Bretton-Woods system, since there are other similar networks, the European Monetary System, the Chiangmey Initiative in the South East of Asia, etc. Yet, indeed, the creation of the bank is a clear signal about the current need to reform the financial and monetary architecture in the interest of all countries in the world.
For Russia, it is important that negotiations were launched on the draft of the BRICS economic development strategy, something Russia initiated in the first place. The aim of the project is to develop recommendations for investments, trade, and economic and legal cooperation strategy within the BRICS. Russia has already proposed 37 projects for the future cooperation “road map”. For example, possibilities could be the establishment of a fuel reserve bank, a kind of “energy swap” locating the GLONASS stations in the BRICS and using this navigation system, and the establishment of a Staff Training Centre in the field of metallurgy, which plays an important role in the BRICS`economy. Another project launched further from Russia’s initiative relates to the fight against drugs, the decision to start cultural and international information security cooperation projects.
The summit`s results confirmed that, despite all the differences between the participating countries, they all share four strategic interests:
– establishing the BRICS as an alliance of global political and economic reformers;
– maintaining the role of the UN as a guarantor of the international security;
– using to the utmost the possibilities of complementarity of the member countries’ economies;
– promoting cooperation in order to modernise society.
The Russian scientists have remarked with satisfaction that four points of the final declaration of the summit mentioned the Council of Experts Centres, created last year by the academic representatives of the five countries. Also, specific tasks have been established, and in order to fulfil them, Russia will have to devote considerable force next year, when it will take over the presidency of the association.