The BRIC acronym
has served to add a dramatic flair to shifting global power structures by
envisioning a club of up-and-coming BRIC countries challenging a world order
built on the bedrock of imperialism. But this isn’t accurate. The accord that
is assumed in the BRIC grouping is imaginary. It doesn’t exist.
Of course, that’s not to say that the sum economic power of the BRIC
countries is not impressive. Quite the contrary, combined GDP growth in BRIC
countries since 2001 is tantamount to the appearance of one new Japan plus a
new Germany in the global economy [1]. But that’s just a development success
story, not an international organization. The combined economic clout of the
BRIC countries does not engender any kind of sustained foreign policy
coordination, whether in political, military, or even economic affairs. And
this shouldn’t come as too much of a surprise. After all, this is a bloc borne
not of diplomatic negotiation, shared ideology, or overlapping interests, but
rather the turn of phrase of a Goldman Sachs analyst back in 2001; an analyst
who, at the time, hadn’t even visited three of the four countries in question
[2].
Consider the case of China and Brazil. Both are developing countries
with the same presumed end-point: a highly-developed and diversified economy
that is globally competitive. But, is it possible for both these countries to
achieve this goal when they’re essentially following the same track and
competing for the same markets, or will one of them be left behind? It’s quite
possible that the truth lies in the latter.
Although China became Brazil’s largest trading partner in 2009,
Sino-Brazilian economic relations have evolved somewhat of a north-south
dynamic over the course of the past two decades. In other words, Brazil’s
resource wealth has been used to fuel China’s industrial development. So far,
the results have been a mixed blessing for Brazil. Its primary exports like soy
and iron ore have boomed at the expense of value-added industries such as
footwear and aircraft manufacturing [3]. Similarly, while China may be a
valuable source of foreign investment, most of this money is targeted at
infrastructure that can facilitate higher levels of primary exports [4].
These problems are so pronounced that Brazil’s manufacturing capacity
is actually shrinking. In the 1980s, manufacturing accounted for 27 percent of
Brazil’s GDP. By 2011, the number had shrunk to a mere 15 percent [9]. January
of this year alone saw a month-on-month fall of 2.1 percent in industrial
production [5].
Brazil thus finds itself in the unenviable position of riding an
economic wave that might very well be short on long-term economic benefits. The
deeper Brazil sinks into economic interdependence with China, the more domestic
job creation opportunities it loses [9].
The government in Brasilia seems to be taking note of this. Just last
week, Brazil’s foreign minister threatened to hold down the value of the real
in order to help Brazil’s domestic industries compete with cheap foreign
imports. As justification, he declared “we are not going to just sit by and
watch while other countries devalue their currencies to give them a competitive
advantage.” It’s pretty obvious who the ‘other countries’ in question are; or
rather is.
Interestingly, the economically corrosive nature of this BRIC linking
may come to be a boon for Brazil’s relationship with the United States- a
country that is paradoxically a better balanced trade partner by virtue of it
being a market for Brazilian manufactured goods. The Obama administration delivered a massive
snub to Brazilian President Dilma Rousseff this week by declaring that the United
States won’t be extending the formality of a state visit for her visit in April
because it’s an election year. This stance might have been forgivable had it
not been announced during a state visit from British Prime Minister David
Cameron. Yet, the Brazilian government has been relatively silent on the snub,
and Rousseff seems willing to proceed without the pomp of a state visit. This
seems to indicate a willingness on the part of President Rousseff to repair the
damage done by her predecessor. Perhaps Brazil is eyeing an escape from the noose
of BRIC economics.
And then there’s the military overlap between India and China. These
two BRIC countries are currently locked in what might be termed as an ‘arms
race: lite,’ behavior that’s not becoming of supposed close partners. Beijing
recently announced that its annual defense budget would be $106 billion in
2012, excluding foreign procurement [6]. As always, analysts can only guess at
what the real number will end up being. On the other side of the Himalayas, the
Indian government jacked up its defense budget by 17 percent and it’s currently
locked in negotiations over what could become the largest fighter-jet purchase
that the world has seen in 15 years [7].
The list of geopolitical sticking points between these two BRIC
countries is extensive. It includes China’s ‘string of pearls’ in the Indian
Ocean and its patronage of Pakistan, a long-standing border dispute, and the
continued existence of the Tibetan government-in-exile in India. But in the
interest of brevity, there’s one overarching point that should be emphasized:
both countries are starved for energy imports. They compete for the same
sources and are desperate to ensure the security of shipping lines that snake
through each other’s backyard. This is a strategic reality that precludes the
two countries ever getting too close, no matter how catchy the proposed acronym
is.
As for where Russia fits into all of this, a simple question will
suffice: Will a nationalistic, re-assertive Russian foreign policy commit
itself in any real way to the matrix of byzantine and often antagonistic
interests stemming from three other developing countries? Probably not, and if
for whatever reason the newly-coronated Putin government decided to do so, it
would mark a radical departure from how Russia has historically viewed itself
in world affairs.
The BRIC concept, birthed in the gilded halls of Goldman Sachs, had a
kind of infectious logic to it ten years ago. It was like an ideological set of
training wheels, preparing us all for international multi-polarity. However,
its relevance as an analytical tool never extended beyond a brief period when
fear of American hegemony was enough to smooth out conflicting interests among
BRIC members. Fast-forward to the present and this is a bloc of four developing
countries can’t even decide on the establishment of a BRIC development bank
[8]. It is as it always has been: every BRIC for itself.
Zachary Fillinham
Business & Investment Opportunities
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