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BRICS living up to commitments
July 28, 2018, 3:44 pm
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Leaders of the five-nation bloc comprising Brazil, Russia, India, China and South Africa (BRICS) concluded their tenth official summit in Johannesburg, South Africa, on 27 July, with a call for open and inclusive multilateral global trading system and that inclusive socio-economic development could not be achieved in a world that is insecure and unsafe.

At the inaugural session of the annual three-day summit, South African President Cyril Ramaphosa called on BRICS to form partnerships to translate the vision of the second decade of union into reality through deepened co-operation on industrialization, innovation, inclusiveness and investment. He urged member countries to work together in the face of rising global protectionism.

In his address at the inaugural session, President Xi Jinping of China warned that the world was at a crossroads with a choice between confrontation and cooperation in trade. In a pointed reply to US President Donald Trump’s threat to impose tariffs on all Chinese exports to the US, the Chinese president said that there would be “no winner” in global trade war, and that protectionism and unilateralism would have dire consequences for international markets.

Indian Prime Minister Narendra Modi, addressing BRICS leaders on Thursday, reaffirmed the country’s commitment to multilateralism, international trade and a rules-based world. He also said that India wanted to work with other member nations on the Fourth Industrial Revolution (4IR), and called for a sharing of best practices and policies in the area. He said the 4IR will have more importance than capital. "High-skill but temporary work will be the new face of employment. There will be radical changes in industrial production, design, and manufacturing," he added.

The 10th summit of BRICS marks a decade of the bloc’s endeavor to extend and advance their mutual cooperation in ways that meaningfully promote their economic development agendas, as well as that of other developing countries. Ten years since the creation of the bloc there is a widespread perception that the group has failed to live up to the hype the acronym helped generate. But this is not wholly true.

Together, they account for 26.46 percent of world land area, 42.58 percent of world population, 13.24 percent of World Bank voting power and 14.91 percent of IMF quota shares. According to International Monetary Fund’s (IMF) estimates, BRICS countries generated 22.53 percent of the world GDP in 2015 and has contributed more than 50 percent of world economic growth during the last 10 years.

According to the BRICS Information Centre at the University of Toronto, in a rarity for such international gatherings, most of the commitments made by BRICS leaders at their past summits have been adhered to. The Center found that in the seven years from 2011, when South Africa joined the bloc as its fifth member, to 2017, the rate of compliance to commitments made at summits was a surprisingly high 77 percent on average. This is far higher than that achieved by many regional or global organizations, and similar to that of the G7 over the same period but without the tetchiness witnessed at the last G7 summit in Canada.

The one area where the grouping has exceeded expectations is the New Development Bank (NDB) that was established in 2014. The NDB has been able to successfully mobilize resources for the infrastructure and sustainable development projects in the five nations, as well as in other emerging economies. The NDB supports public and private projects via loans, guarantees, equity participation and other financial instruments.

Speaking to the media in Johannesburg ahead of the BRICS Summit, the President of NDB Kundapur Vaman Kamath said that the bank would approve a total of US$7.5 billion worth of infrastructure projects by the end of 2018. “The bank would now go beyond the core renewable energy sectors that we earlier focused on, into areas such as rural ecosystems, restoration of water supply, particularly in rural areas,” said Mr. Kamath.

Another area where the bloc has merited compliment is in setting up the BRICS Contingent Reserve Arrangement (CRA). Established in 2015, the CRA with its capital of $100 billion is widely regarded as a rival to the IMF. The CRA is a framework for the provision of support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures. The objective of CRA is to provide protection against global liquidity pressures, including currency issues when the national currency of a member is adversely affected by global financial pressures.

The bloc has also been trying to find new ways of engaging in international affairs by leading on key issues such as climate change, regional security and anti-terrorism. India is also looking to set up a BRICS rating agency, reasoning that the methodologies of Fitch, Moody’s, S&P and other agencies based in the developed world are biased against emerging economies.

 

 

 

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