BRICs take baby steps toward greater global clout

By Stuart Grudgings – Analysis

BRASILIA (BestGrowthStock) – The world’s leading emerging powers found little new to agree on in their summit in Brazil, but their assertive tone in demanding more clout in global financial institutions and setting of a deadline for the reforms shows they are slowly becoming a more potent group.

In a joint statement at the end of their second summit, the so-called BRIC nations of Brazil, Russia, India and China called for swift reforms of the World Bank and the International Monetary Fund to give a greater say to developing nations.

The call itself was not new from a group that was born out of the global financial crisis with a shared goal of shifting the balance of decision making from advanced economies.

But the timing of the united front before this month’s G20 finance ministers and IMF meetings in Washington and a November deadline for the reforms to be completed showed a growing confidence and cohesiveness, analysts and diplomats said.

“Naming times and dates are a way to put on greater pressure and also a possible way for the BRICs to declare a victory by saying that because of this pressure we were able to get things done,” said Michael Glosny, a China scholar at the Massachusetts Institute of Technology who follows the BRICs.

Huge differences in national goals and tensions in security and economic policy have prevented the BRICs, which account for about 20 percent of global economic output, from agreeing concrete cooperation in most areas.

They have rowed back from talk last year of setting up a new reserve currency to rival the U.S. dollar and have made no headway on forming joint institutions.

Vague statements from leaders on the group’s goals have reinforced a view that the BRICS, dominated by China in terms of its economic size and influence, have little in common beyond being large and developing.

REFORM PRESSURE

Yet the group does have shared interests in dealing with economic inequality, food and energy security.

On their central goal of gaining more say in how the global economy is run, they have achieved a more united front that is putting pressure on advanced countries to concede more voting power, more quickly in the IMF and World Bank.

“I think the feeling is that this is a much more aggressive statement of what has come before,” said a Western diplomat in Brasilia, who spoke on condition of anonymity.

Brazil, which had appeared to be satisfied with a 5 percent voting shift to developing countries, now looks poised to hold out with the other BRICs for a bigger change.

“We’re not satisfied with the pace of reforms,” Brazil’s Foreign Minister Celso Amorim told Reuters.

The G20 group of major advanced and developing economies has agreed to support a quota shift of at least 5 percent toward developing countries, but other emerging economy groups are pushing for 7 percent.

“The IMF and the World Bank urgently need to address their legitimacy deficits,” said the BRICs’ joint statement, calling for quota reforms to be completed by the November G20 summit in South Korea.

The lack of bold new agreements in other areas does not necessarily mean the young group is not making progress in strengthening ties and building mutual confidence behind the scenes, said Anthony Spanakos, a Brazil scholar at New Jersey’s Montclair State University.

“Much of what is happening is consultation and norm-building, but the symbolism of joint action and leadership that is independent of the U.S. and Europe is important as well,” he said.

The BRICs called on the G20 to be more active in coming up with a strategy for the post-crisis world and said it wanted to play a role in the process.

Beyond that, however, there was little detail given on the BRICs’ vision for the new global financial order.

“Playing a larger role and having greater influence is more than just increasing representation and voting shares,” said Glosny.

“From the statement … it’s not clear what they want that role to be or how they would want to wield that influence.”

Stock Report

(Additional reporting by Emma Graham-Harrison and Raymond Colitt; Editing by Todd Benson and Chris Wilson)

BRICs take baby steps toward greater global clout