BRIC AND THE NEW WORLD ORDER

Can the world’s largest emerging markets convert their growing economic power into greater geopolitical clout?

The fact that the world’s largest emerging markets (the so-called BRIC: Brazil, Russia, India, and China) will alter the global financial landscape in the coming decades has become a substantive argument and gained ground in the investment community. However, at what extent can the BRICs convert their growing economic power into greater geopolitical clout, presenting a strong geopolitical influence and reshaping the world affairs?

 

While the global recession is expected to delay for much of this year and next in the U.S., Japan and Western Europe; BRIC’s economic scenario is not so alarming. Although Russia was severely caught in the financial storm, economic output in China, India and Brazil continue to grow and finances are sound, supported by prudent policies, large foreign currency reserves and growing domestic markets. BRIC’s economic growth rate has slow down due to weaken demand from matures’ markets, but it is offset by affluent domestic markets and increasing trade cooperation among emerging economies. According to the World Bank, developing countries’ share in world trade rose from 16% in 1990 to 30% in 2006, led by China and with Brazil and India not far behind. The World Bank also projects further increases in developing countries’ share in world trade to 45% by 2030. Unlike past global crises, this crisis differs in a way that it started in the Western economies and that emerging markets are in a much stronger position due to accumulation of foreign reserves, large domestic markets and increasing trade cooperation.

  

Despite the fact that the four BRIC nations have been seeking to form a political club, none of them has gained influence in the leadership structure of the IMF or World Bank. And although Russia is part of the G-8, it is under severe pressure to be kicked out as it political and economic situation worsens. To be able to convert their growing economic power into greater geopolitical clout, the BRIC nations need to overcome internal conflicts and align their political interests.

 

The link among the BRIC countries has always been weak. Although they are all populous countries with emerging market economies, the BRICs have huge differences in their industrial bases, political systems and overall progress. China and India are manufacturing based economies and big importers, while Brazil and Russia are large exporters of natural resources. Brazil and India are liberal democracies, while Russia is a limited democracy and China is a one-party state. 

 

Domestic problems and regional conflicts may also prevent BRICs from gaining global political influence. The four BRIC nations need to strength their rule of law and root out corruption if they were to become dominant forces in the global political stage. Moreover, China's and Russia's disregard for human rights and democracy could be a problem in the future, as is the possibility of conflict over Taiwan in the case of China. India's border conflicts with Bangladesh and dispute with Pakistan over Kashmir can restraint India’s political power in the region as well. 

 

Besides their problems and issues, the BRICs have become major players on the world scene. Brazil is energy self-sufficient, one of the world's foremost producers of alternative fuels and a powerful voice in global-trade talks. Although Russia does not have a particular economic strength, it is a strategic energy exporter and military power. India has the world's fastest-expanding work force and has become a very important technological center. It is also very active in energy diplomacy, exploring oil and gas in Southeast Asia, the Middle East and Africa. Finally, China, as the world's fastest-growing economy, has gained considerable political strength and defies international conventions on currency, copyrights, Darfur, and Tibet.

 

The U.S. foreign policy should not underestimate BRICs’ potential to project their power in the world.  BRIC nations are starting to set the agenda in their own neighborhoods, and they are also conducting global diplomacy very confidently. The U.S. foreign policy should aim to restore trust and confidence in America’s standing and leadership in the world by strategic and cooperative partnership with BRIC nations in order to redesign a new world-order. World policy-making forums should be reorganized and the G-7 should be adjusted to incorporated BRIC’s representatives.

 

In a world shaken by global recession and with the decline of U.S. hegemony, the BRIC nations have the economic power and international ambitions to conquer geopolitical clout. Although the U.S. will regain some degree of influence, the global balance of power is changing rapidly to a multi-polar order. The major factors that may prevent BRIC from strengthen its political influence lie in the group internal differences and political divergences. If the BRIC nations can overcome these differences and see their interests aligned, they can become a coherent and powerful organization with political clout to change the world order. 

Carolina Freire - April, 2009

This report may be forwarded or republished on your website with attribution to www.briccenter.com.

 

Copyright 2009 BRIC CENTER.