BRIC – A New Union of Power in the Face of EU and USA

Cansu ARISOY
30 April 2010
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BRIC is an abbreviation for the initials of Brazil, Russia, India and China which constitute the %15 of the world’s gross domestic product. Since Goldman Sachs economist Jim O’Neill spread the acronym for BRIC in 2001, the BRICs became the hope for the new world order. The BRIC countries are considered as a new power bloc over against the USA and the EU blocs on the multi-polar international world politics.

BRIC carries the meaning that the economic development of these four countries will be reflected as a political power to international arena. According to the predictions this transnational formation will become the world's dominant economic group by 2030. The BRICs are also in the E7 group which includes Turkey, Mexico and Indonesia that have the emerging economies. According to a Price Waterhouse Coopers report:

 

• By 2050, the E7 emerging economies will be around 50% larger than the current G7 (US, Japan, Germany, UK, France, Italy and Canada)
• China is expected to overtake the US as the largest economy in around 2025
• India has the potential to nearly catch up with the US by 2050 (1).

 

At this point briefly analyzing the constituents of the BRIC will be helpful. If we consider Brazil’s, Russia’s, India’s and China’s populations (198 million, 150 million, 1 billion 65 million, 1 million 300 million respectively), we can say that these countries form 40% of the world population with 2 billion 600 million people overall. This means that by having almost half of the world population these four countries have a strategic advantage in terms of population and rich natural sources.

 

In regard to economical development and growth, it is a fact that BRIC countries are further ahead than other so called developed countries. With growth rates of 10% and 7.5% respectively China and India became the most rapidly growing countries in the world in 2009. According to an IMF data, the growth rate of BRIC countries is %5 while developed or developing countries were shrinking. In fact the BRIC countries added more value to global growth than G7 countries (Canada, France, Germany, Italy, Japan, Britain and the USA). In the 2007-2009 period the BRIC countries made 45% contribution to global growth.

 

Moreover there are other striking data about the BRICs. While most of the Western European countries are struggling with huge budget deficits and debts, like Greece; the BRIC countries’ public debt levels are mostly “modest and stable.” It should also be emphasized that “the world’s top two banks are Chinese” (2).

 

It is noteworthy that the BRIC countries are different both politically and economically. In this respect it is predicted that the BRIC could never form a homogeneous entity like the EU. Among them only India and Brazil are well structured democracies; parliamentary and presidential respectively. Russia declared itself as democratic but it moves towards to authoritarianism. Also China has a Communist administration under effect of Marxism. Besides politics and economics, they are linguistically, culturally, traditionally different too.  

 

Despite the differences, all four countries have a strong labor potential and industrial sectors that lead today’s global capitalist economy. With the help of rapid economic developments, the BRIC countries started to take important places on the political floor too. For instance BRIC agreed on to use an alternative monetary unite to US dollar. Also they requested to have a higher voice in World Bank and IMF. These can be considered as a motion to intervene into the political formation of the international platform. The previous meeting of the BRIC leaders was held last June in Yakaterinburg, Russia. At the last BRIC summit on 15th April 2010, China’s Hu Jintao, India’s Mammohan Singh, Russia’s Dmitry Medvedev, and Brazilian host Lula da Silva will seek to advance the impression that the BRICs are uniquely positioned to shape the global economic and political agenda. According to Hindustan Times, India declared that it is against the new sanctions that will be applied to Iran in the last meeting that was held in Brasilia the capital of Brazil. Also Indian President Manmohan Singh announced that in BRIC and IBSA (India, Brazil, and South Africa) summits, India supports dialogue about Iran’s nuclear problem (3).

 


Brazil: the BRIC Star

What kind of concepts does Brazil makes you remember? Most probably first of all football comes to minds. After this, a blue sea, golden sands, samba, coffee, and capoeira...  But Brazil cannot be thought as the next super power or an attractive agent for the investments until recently. Brazil comes into prominence comparing with the other three. Under President Lula da Silva who was elected in 2002 and re-elected in 2006; Brazil shows good signs. Since 2002, Brazil has beaten hyper-inflation. Also “it runs a trade surplus of $40 billion a year, and is on schedule to repay its international debt” (4).

 

Even Brazil is a “corrupt, over-regulated, and violent society with glaring inequalities” (5), it has the 10th biggest economy in the world. Actually during the last crises Brazil is one of the countries which could stand more flexible than any other developed ones in terms of economic growth.


Despite that these countries are different from each other in terms of geography, governance and economic potential; they almost carry the same negative characteristics as Brazil. They were all affected by the last economic crisis. Even some say that Russia does not belong to the same league.


Analysts are afraid that the success of the BRIC countries cannot continue under the hard conditions that the crises bring. Eventually the problems might become visible again. The crises would force that to concentrate on their very own domestic problems.  For instance Russia is now concerned with the rising inflation rates. But how long is success likely to be sustained, especially under strains? The economic crisis has forced them to focus on their own domestic problems. In this respect it is argued that: “they are [not] all even emerging, Russia is not emerging and China can’t be regarded as an unprivileged nation. There are commonalities between China, India, and Brazil in that they are all growing quickly. But Russia faces incredible challenges” (6).


On the other hand Brazil’s improving stability compared to other BRIC countries, cannot be ignored. Brazil never stopped its struggle with social inequality. Brazilian President Lula emphasized that “in Brazil, we never lost sight of the need to tackle social inequality; lifting 20 million Brazilians out of poverty since 2003 and making them full citizens” (7).

 

Brazil wants to become a global player and deepen its relations with the other BRIC countries. Its desire to become a permanent member of the UN Security Council is a proof to this. Also the integration of India or Brazil into the “club of the powerful” will strengthen global negotiations about, “climate change, international trade, and investment regimes” (8).

 

Obviously neither Brazil nor India put the interests of the poorest countries’ citizens like the ones in Sub-Saharan region, above their very own citizens. These two countries would try to protect their own benefits. Also there are many more problems that Brazil needs to solve in its own region. The BRIC formulation can be a way for Brazil to become more powerful and manage the problems in South America.

 


Conclusion

Brazil, Russia, India and China: a bloc that is accepted as an alternative to the G7. Each of them is a champion in its own region. They target to develop trade between themselves. These countries are against protectionism and each of them aims to sell more of their own products. In this post-American era which American hegemony has been weakening; a multi-polar world is at its peak. And the BRICs are seen as the new four poles of global economics and international politics.

 

In such multi-dimensional, multi-polar world, the BRICs declared that they promised the democratization of the decision making process. In this respect Brazilian President Lula underlines that Brazil is “committed to building a joint diplomatic and creative approach with our BRIC partners in order to tackle such global challenges as food security and energy production in the context of climate change. It is our best contribution to peace” (9).

 

BRIC countries, which hold the 40% of the world’s population, come to the scene as the new playmakers of the new world order. In this post-American international system the newly constructed economic relationships between these four countries are so crucial. In the short term the BRIC countries attempt to increase the economic interactions among each other. But in the long term, certainly they will take steps to provide the order of the political relations.

 


These four countries take the political authority from their economic power. The future plan of the BRIC countries is to intervene into the crooked order of world politics after reaching an absolute economic power. In fact there is a huge gap between the developing and developed countries. However developing countries have the right to utter their voices. New political system requires that this transnational and powerful political entity will provide justice between the countries and also weaken political and economical instability. Furthermore with their rising power Brazil, Russia, India and China should use their potential to construct transparent and democratic global governance.

 

Each four countries has their own strengthens and they will become more powerful if they can unite on an equal platform. It is a fact that if the BRICs can come together and create a common proposal by exchanging views which will be presented in international meetings like G20; this will be more influential than individual efforts.


Most probably the BRICs will try to gain the political authority by protecting their own economic interests. Some think that the BRIC meetings are beneficial only if the leaders can come together on a platform where they can build consensus and create efficient solutions for the world’s problems. This will make positive contributions in their governance by raising the profiles of their countries.


Although it is said that the BRIC is an artificial entity because it is composed of four countries which do not have anything in common politically and economically; the hope is that: the BRIC will be useful in the new political system. In spite of the global economic crisis, these countries which make enormous contributions to the world economy, should also add value to world peace, justice and equality by leaving their differences aside.

 


Sources
1-http://www.pwc.com/gx/en/world-2050/beyond-the-brics.jhtml
2-http://www.economist.com/world/international/displaystory.cfm?story_id=15912964
3-http://arama.hurriyet.com.tr/arsivnews.aspx?id=14446995
4-http://www.dailyreckoning.co.uk/emerging-market-investment/bric-star-brazil.html
5-http://www.dailyreckoning.co.uk/emerging-market-investment/bric-star-brazil.html
6-http://www.csmonitor.com/Money/2010/0415/In-Brazil-will-BRIC-summit-unify-or-reinforce-their-rifts/(page)/2
7-http://news.yahoo.com/s/csm/20100416/cm_csm/295204
8-http://www.allacademic.com//meta/p_mla_apa_research_citation/2/5/3/1/7/pages253178/p253178-2.php
9-http://news.yahoo.com/s/csm/20100416/cm_csm/295204

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