As the final preparations for the 6th BRICS Summit at Fortaleza (Brazil) get underway, there are mounting expectations from this grouping of emerging powers. Ever since its conception in 2001 (at that time it was only BRIC), the five-nation grouping has come a long way and has generated increasing interest and curiosity among other countries. What are the expected outcomes from the sixth BRICS summit to be held in Fortaleza, Brazil July 14-16?
Business with BRICS
To begin with, let us take a brief look at the event itself. The Fortaleza summit marks the beginning of a new cycle. A full round of five summits has been completed. The multilateral grouping can be legitimately proud of some of its achievements. The grouping itself expanded from BRIC to BRICS in 2011 by coopting South Africa. Intra-BRICS trade has grown more than 15 times in the last 12 years and stands at US$ 230 billion. It is expected that it would cross US$ 250 billion by 2015.
On the reform of global financial institutions, some success was achieved at the G-20 Summit in Seoul in 2010 when the quota allotment and the voting right shares in the IMF and the World Bank were revised marginally. The BRICS countries are continuing to press for further reforms leading to a greater voice in these institutions for the developing world. This includes changes in the selection processes of their heads.
The grouping has focused on intra-BRICS cooperation straddling a variety of sectors. These include agriculture, health, education, science and technology, Urban Development and inclusive growth. Even though they don’t make the headlines, there has been a steady progress in such cooperation. There has been sharing of experiences and learning from each other’s best practices. There are working groups in each of these sectors where government representatives from the five countries interact.
On the Track 2 side, the two important fora are the Business Forum and the Academic Forum. Under the Business Forum, the Chambers of Commerce and Industry of the five countries meet regularly with a view to enhancing business promotion. One idea that was concretised recently was to create a BRICS Business Portal where all the business opportunities of the five countries will be available at one place. This is an effective way of increasing the awareness about possibilities. The other idea yet to be implemented is to simplify visa procedures for the businessmen to encourage greater travel.
The Academic Forum provides intellectual inputs for the summit on all issues of interest. The preparatory forum for the summit was held in Rio de Janeiro in March 2014. In the 10 Ssssions covering all aspects of importance to BRICS at the Forum, experts in their respective fields provided ideas and inputs. A BRICS Long-term Vision Document is also being prepared by the BRICS Think-tank Council (BTTC). This will cover five major areas: Promoting Cooperation for Economic Growth and Development; Peace and Security; Social Justice, Sustainable Development and Quality of life; Political and Economic Governance; and Progress through Knowledge and Innovation Sharing.
The two major initiatives that have been talked about since the Durban Summit in 2013 are the Contingency Reserve Arrangement (CRA) and the BRICS Development Bank. It appears that the CRA is almost finalised and it is likely that an announcement to this effect will be made in Fortaleza. As per information available, the CRA will have a Fund of US$ 100 billion with an equal pledging of US$ 20 billion from each country. The arrangement is aimed at easing occasional foreign exchange crisis in the member countries.
As regards the BRICS Development Bank, a lot has been written about the proposal. The initiative evolved with the idea of recycling the savings generated in the BRICS economies. At the Durban Summit, the leaders mandated the Finance ministers to study the feasibility of such a project and come up with proposals. The finance ministers have been meeting regularly on the sidelines of G-20 and other multilateral fora. The last such meeting was in Melbourne (Australia) just a week ago. The four critical aspects on which a final decision is yet to be taken are: the nomenclature of the Bank, the capitalization model, the location of the headquarters and the presidency. Hopefully, by July 15, there would be some clarity on these points. The general feeling on capitalization seems to be that all members will have equal shares of US$ 10 billion thus making a Subscribed Capital of US$ 50 billion. In addition, there could be commitments from other interested countries and banks for US$ 50 billion making an authorized capital of US$ 100 billion. This amount would be leveraged to have access to loans at favorable interest rates from the international financial markets. If the four critical aspects are decided in Fortaleza, the bank could start disbursing from 2016.
The burning global issues of the day like Iraq, Syria, Afghanistan, Ukraine and Jihadi terrorism are bound to come up in the discussions among the leaders. Ever since the Sanya Summit in 2012, there has been a steady increase in the number of global political and strategic issues mentioned in the final declarations. One can expect mention of the above issues in the Fortaleza Declaration. What would be interesting is to see how the slightly differing perceptions of the five emerging powers on these issues are reconciled.
(Mr H.H.S. Viswanathan is Distinguished Fellow, Observer Research Foundation. This article has been written exclusively for India Writes Network, www.indiawrites.org, an e-journal and magazine focused on international affairs and the India Story.)