With BRICS, we seem to have mistaken an acronym for real policy.
If there is anything recent years should have taught us, it is this: be wary of investment bankers bearing gifts. One of the most durable of such offerings — thanks to Goldman Sachs — is a seemingly harmless acronym: BRIC. This was shorthand for grouping the four largest (in GDP terms) emerging market countries, Brazil, Russia, India, China, when grouping countries as “rich” and “poor” was beginning to appear vaguely antediluvian. Thus far, as boring economic memes go, the acronym has been rather sticky but harmless.
It has generated a cottage industry of pundits coining alternative acronyms. The BRICs themselves felt a sense of international kinship, added an “S”, an actual country (South Africa), conducted summits, postured and issued lofty communiqués. Up till now, it was all cheap talk; but the northeastern Brazilian city of Fortaleza changed all that. Now the BRICS have actually put some real mortar between them: they’ve committed real money to become “equal” partners in a New Development Bank. Now, that decade-old investment banking make-believe product carries a real cost. This is worrisome because there are several faultlines running through.
The first faultline affects the club’s global credibility. One member, the “R” nation, has seen sanctions imposed by the US and the EU for having invaded a sovereign country, annexed territory and perhaps being the source of weaponry that brought down a civilian airliner. Far from making the appropriate sympathetic noises in a timely way, it has done as much as it can to obfuscate and block access to evidence or recovery of the bodily remains of innocent victims. This does not bode well for the reputation of the BRICS as a globally responsible coalition.
The second faultline has to do with the credibility of the BRICS among its own members. Consider the “C” nation. Its leadership must, in private moments, be asking why it is hanging out at the children’s table. Its own China Development Bank and Export-Import Bank are so large that they have made more loans than the World Bank. The proposed new BRICS entity seems no more than a toy in comparison. As a small sign of how irrelevant the New Development Bank’s $10 billion ask is, consider that President Xi Jinping rounded off his tour of South America with a unilateral loan from his own development bank of $7.5 billion to Argentina and established an office in Venezuela, made a loan of $5.7 billion there, to top off at least $40 billion lent since 2008. Now that is grown-up money. It is hard to imagine why this new entity is anything more than an exercise in geopolitical game-playing for China, with table stakes that are the …continued »