Hey there, time traveller!
This article was published 29/3/2013 (1128 days ago), so information in it may no longer be current.
If this week’s BRICS summit in Durban, South Africa, passed you by, we don’t blame you. The leaders of Brazil, Russia, India, China and South Africa met, as they do once a year, to advance their common interests. They found, as they do once a year, that they don’t have many, so not much happened.
What’s worse, one common interest they do have is ill-served by the BRICS grouping and by their leaders’ desire to develop formal institutions around it. That valid interest is to give big fast-growing nations — a group that extends far beyond the arbitrarily selected club of BRICS — the voice they should have at the World Bank, International Monetary Fund and other global economic bodies. In pursuing this goal, the BRICS leaders would be wise to be less ambitious for their ill-sorted alliance and more ambitious for the developing world as a whole.
Summits must have something to discuss and this week’s gathering focused on plans to create a new development bank, supposedly to rival the World Bank. One wonders how seriously even the BRICS’ leaders are taking this idea. It was considered at the previous summit, and after a year of study and consultation, it is barely inching forward. Basic issues such as the apportioning of capital contributions, the eventual location of the bank (an especially sensitive topic) and even what exactly it would do remain unresolved. The lack of progress amounts to tacit agreement that nothing is ever going to happen.
So much the better. The BRICS don’t need their own development bank. What they need is to pool their influence with that of other big and fast-growing nations so that existing development institutions aren’t run for the sole convenience of the United States and Europe.
This is a legitimate grievance. It’s scandalous that an arrangement formed decades ago in a different geopolitical era still controls representation and appointments to the top jobs. Under this deal, an American always leads the World Bank and a European always leads the IMF. That’s indefensible — yet the BRICS couldn’t line up behind an alternative candidate for the World Bank job last year (it went to Jim Yong Kim, an American) or for the IMF in 2011 (Christine Lagarde of France got the nod). On the issue where their alliance makes best sense, they failed to unite, let alone lead the emerging economies as a whole.
An investment analyst at Goldman Sachs famously came up with the BRIC designation (South Africa was an afterthought) in 2001, and it was of doubtful utility even in that line of work. These countries’ export markets, import requirements, industrial structures, sources of finance, problems, prospects and levels of development are all quite different. In geopolitical terms, the alliance is even more pointless.
It’s usually good to meet and talk, but institution-building — such as the plan to create a new bank — involves an outlay of money and effort that would be better spent on repairing the institutions we already have.