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The BRICS Mechanism: Growing in Maturity

CIIS Time:01 02, 2018 Writer:Wang Youming Editor:Wang Jiapei


 

As a result of flexibility in accordance with the changing international situation, the BRICS mechanism has been adjusting its own role, avoiding the inherent mode of conservatism, generalized functions and low efficiency commonly seen in other multilateral arrangements. It has broken free from the traditional narrow framework as a representative of the major emerging economies only, and is now taking a broader view to incorporate the interests of all developing countries. The BRICS group, deeply engaged in global governance, is committed to continuous institutional reform and transformation from a short-term risk response mechanism to one of long-term cooperation for global governance. In the coming “golden decade,” the BRICS should become even more innovative, drawing on wider sources of wisdom to provide unique solutions and substantially strengthening partnerships, to increase further its authority and influence in international affairs and position itself as an exemplary multilateral cooperation mechanism for the new century.

 

Steady Development of the BRICS Mechanism

 

Since the start of the BRICS countries’ dialogue and cooperation, there has been regular adaptation to changes in the global economic environment. In particular, the BRICS has made great efforts in two major areas of mechanism building.

 

Expanding representativeness

When the BRICS concept was first initiated, the target object of its positioning and mechanism building was confined to newly emerging economies. Such a positioning was born out of the limited knowledge of those behind the initiative about the role of major emerging countries in the evolving international system, and was also due to the opinion of some scholars that the BRICS should focus on the integration and breakthrough of their interests in the face of a changing world order. However, in the wake of the first BRICS summit which witnessed remarkable progress, noises emerged from the West and some developing countries alike with regard to the group’s representativeness, as the BRICS only accounted for a few major emerging economies with no participation of many other developing countries. With major changes taking place in the world economy and a new international order emerging, it was argued, the BRICS countries were collectively bargaining with developed countries to reshape the global system of interests, in which process other developing countries were marginalized and their interests sacrificed. In the face of these concerns and complaints, the BRICS has clarified its role, establishing the group as the representative of all developing countries rather than just the major emerging economies, thus refuting the claim that the BRICS was “over-concentrating on their own benefits.” The BRICS has persisted in speaking on behalf of all developing countries, and placing the development issue, which is of most concern to developing countries, at the top of its agenda. As Chinese Foreign Minister Wang Yi said, the BRICS cooperation mechanism “carries not only expectations from the people of BRICS countries, but also those from emerging markets and developing countries.”[1]

To this end, a dialogue pattern of “BRICS+N” has been established. Whenever a BRICS summit takes place, a dialogue with leaders of regional developing countries will also be held. For example, during the summit in Fortaleza, Brazil, a dialogue with leaders of South American countries was held. On the sideline of the Ufa summit in Russia, the BRICS leaders convened a dialogue with leaders from the Eurasian Economic Union (EEU) member states and the Shanghai Cooperation Organization (SCO) members and observer states. During the Durban summit in South Africa, there was a dialogue with leaders from African countries. At the Goa summit in India, a dialogue was held between the BRICS leaders and their counterparts from the member states of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).

At the BRICS summit in Xiamen, China upgraded “BRICS+N” to “BRICS+,” that is, the dialogue held alongside the summit was not limited to regional developing countries, but instead covered representative developing countries around the globe, thus greatly expanding the circle of friends. This demonstrates unequivocally that the BRICS members do not capitalize their status as major emerging powers to disengage from cooperation with other developing countries. On the contrary, the BRICS countries remain part of the developing countries’ bloc, and share with others an aspiration of reshaping the world order in the new century. Both upward forces in the international structure, BRICS and other developing countries have a common objective of accelerated development and shared appeals for safeguarding their legitimate interests, pursuing their own development paths, and promoting a fairer and more reasonable international order. A review of declarations and outcomes at previous summits shows that the BRICS has always been following the broader group of developing countries, and in particular issues of development in Africa and the least developed countries.

 

Deeply engaged in global governance

Eight years after the BRICS concept was first put forward, the leaders of the BRICS countries held their first summit. At the time of a continuing global financial crisis, the BRICS countries, as representatives of newly emerging economies, focused on the most pressing issues facing the world economy, i.e. how to deal with the global financial and economic crisis, and promote reforms in international financial institutions so as to better safeguard the interests of emerging economies and developing countries. It shows that the BRICS, right from inception, was basically a short-term mechanism for crisis management. With the evolving and increasingly unpredictable changes facing the international arena and the global economic structure, the BRICS leaders have come to realize that the current global governance fails to fully reflect the reality that developing countries are rising as a group, and is also far removed from the great changes taking place in the global political and economic landscape. The BRICS leaders are also keenly aware that the sustainable development of newly emerging economies is closely related to the rules-making discourse power in global governance. If developing countries still fail to share the leading role and initiative in global governance in the new century, the interests of the BRICS cannot achieve any fundamental breakthrough. Only if the BRICS is able to discuss and formulate global rules with developed countries on an equal basis can developing countries free themselves from the multiple shackles. Therefore, the BRICS has quickly shifted focus from mere economic cooperation to comprehensive participation in global governance. Since then, every BRICS summit has discussed and designed a roadmap for developing countries to participate in global governance, and in so doing the BRICS mechanism has transformed from short-term risk response to long-term cooperation on global governance.

Changes in outcome statements of subsequent summits confirm the growing gravitas of the BRICS mechanism. The statement issued after the first summit contained only 16 paragraphs, while statement of the Ufa summit ran to 77 paragraphs. The Goa summit’s statement went even further with 109 paragraphs, covering various aspects of world affairs including traditional and non-traditional security issues, political dialogues, economic cooperation and cultural exchanges, covering hotspot and difficult issues worldwide as well as global strategy and geopolitics. The BRICS’ deep involvement in global governance has become a prominent feature in the changing international arena. As Chinese Foreign Minister Wang Yi said at the meeting of BRICS Ministers of Foreign Affairs on the margins of the 2016 UN General Assembly, the BRICS countries have elevated the representativeness, equality and effectiveness of global governance to an unprecedented level.

 

Strengthening of the BRICS Mechanism

 

The further strengthening of the BRICS requires a permanent change of role in global governance, namely, from a participant in global governance and globalization to a leader in promoting globalization towards an open, inclusive, beneficial, balanced and win-win direction. Every further strengthening of the BRICS is closely related to changes around the world at the time. When fundamental change takes place in the global arena and global governance landscape, multilateral mechanisms, if they fail to keep up with these changes and make timely and necessary readjustments to their roles, means and objectives, will lag behind world political and economic structural change and become out of touch with the times.

At present, global governance and transformation of the international system have entered the “post-West” and “post-order” era, and major changes have taken place in the new round of globalization. Donald Trump, very much a representative of the non-establishment camp in opposition to globalization, was elected President of the United States. He attributed the US economic recession, middle-class frustration, social conflicts and many domestic problems to globalization, wantonly criticized the global free trade system, pushed forward a new populism making frequent use of the mantra “America first.” But in practice this really means “America only.” Trump also conveys a message of trade protectionism under the pretext of “fair trade.” Brexit from the other side of the Atlantic gives a helping hand to anti-regional integration and anti-globalization. The global governance process is also faced with severe challenges while the trend of anti-globalization runs rampant. On June 1, 2017, President Trump fulfilled his campaign promise by announcing the US withdrawal from the Paris Agreement on climate change, thus posing a setback to global climate governance. Globalization has increasingly become a target assailed by Western powers, and is taken as a scapegoat for domestic social unrest and clashes of interests generally. Western countries have turned from globalization promoters to opponents.

In the face of Western demonization of globalization and rising damaging forces against global governance, the BRICS countries, as participants and beneficiaries of the global free trade system, need to redefine their role, from the participants in globalization and global governance to leaders in the process. The immediate effect will be to restore the original vision of globalization and justify globalization so that the BRICS will become a positive force in global governance, and lead globalization in the right direction. Second, at the time when major European countries and the US turn inward-looking and embrace isolationism and nativism, the BRICS should make great efforts to carry forward globalization and global governance, and unite a vast number of developing countries and those developed countries that still believe in globalization, in combined resistance against the conservative anti-globalization trend. And third, the BRICS should play a prominent role in world affairs at vital stages in the development of globalization, and lead the opposition against anti-globalization forces in the US and the UK. The BRICS countries need to become leaders in the new era of globalization. They should take the initiative in setting new rules for global free trade, safeguard multilateral trade, help build an open world economy, and establish fair and reasonable global governance rules, and improve the system of global governance.

There are different opinions in Western political and academic circles and even among some scholars from the BRICS countries, on whether the BRICS is capable of leading globalization and global governance to a new level. Some scholars believe that although its economic strength today is far greater than it was in the past, the BRICS does not have the capability and experience to lead globalization; although major European countries and the US are now inward-looking and have become more isolationist and conservative, they will undoubtedly unite in opposing, dividing and blocking the BRICS if the BRICS and other developing countries attempt to play a leading role in globalization and global governance. Despite all these reproaches and controversies, the BRICS is now fully equipped to take globalization to a new level whether in terms of economic strength, capability of making rules for global governance, or emotional appeal to the rest of the world.

With regard to economic strength, the scale and power advantage of the economy are key factors in establishing a leading position in globalization. Europe and the US, in the first and second waves of globalization, were in the vanguard of the world economy and they were certainly leaders in the evolution of globalization. Today, the world economic structure has undergone significant changes, and the BRICS has become the engines driving global economic growth. In recent years, the BRICS has made bigger contributions to world economic growth than Western countries. According to International Monetary Fund statistics, in 2016 the emerging market economies including the BRICS and other developing countries contributed 80% of global economic growth. In recent years, some BRICS countries have experienced difficulties and downward pressures in their economy, but the huge development potential of the BRICS countries still exists. The BRICS countries still remain the locomotives in world economic growth and perform outstandingly in global free trade. Therefore, in terms of its economic strength and development potential, the BRICS is perfectly capable of realizing the transition from participant to leader in globalization.

With regard to innovation in global governance and globalization generally, the BRICS countries have become a new driving force. The BRICS mechanism, in the short period of only ten years, has demonstrated great vitality and creativity. Take the BRICS New Development Bank (NDB) as an example: from its establishment to the issuing of its first loan, it has functioned expediently, concisely and efficiently in only a short span of time. This is in strong contrast with the West-controlled, dilatory and inefficient World Bank, the IMF and other existing international financial institutions. The NDB, breathing fresh air into the global multilateral financial system, has attracted attention and praise from the international community. According to the NDB President K.V. Kamath, the bank will significantly increase projects in member states, and in the next two years will implement over 10 projects in Russia; and invest US$1.6 billion in China in green development projects with priorities in wind energy and environmental protection. Some analysts believe that the BRICS is fully capable of introducing a new system of global governance, providing more international public goods, and playing a greater role in global governance and international affairs.

The BRICS has also demonstrated its ability to establish new rules for globalization and global governance. In recent years, every BRICS summit has proposed constructive suggestions concerning reforms to world economic and financial governance, and has explored new rules of global governance. In this respect, the BRICS has shown global vision that stands out from both strategic and historical perspectives, thus winning respect from around the world. Take China as an example: at the G20 Hangzhou summit in 2016, China demonstrated its rules-making ability in global economic governance. With the combined efforts made by China and other participating members, the Strategy for Global Trade Growth and the Guiding Principles for Global Investment for major economies were formulated. The latter document, in particular, was the first framework for multilateral investment rules, filling the vacuum in global investment management and representing a landmark in the history of global governance. In a meeting of economic and trade ministers held in China in August 2017, the BRICS countries reached agreement on the Outlines for BRICS Investment Facilitation Cooperation, which is the first specialized document produced in the field of global investment facilitation. By vigorously promoting new theories and rules of globalization to the world, China is even hailed by Russian media to become a global leader of the times. In his speech at the Belt and Road Forum for International Cooperation in May 2017, Chinese President Xi Jinping advocated the establishment of a fair, reasonable and transparent set of rules for international trade and investment, and the construction of an economic globalization featuring openness, inclusiveness, mutual benefits, balance, and win-win outcomes. This proposition has received favorable recognition worldwide.

The BRICS countries have their own advantages with regard to the appeal and affinity of global governance ideas. To play a leading role in globalization and global governance requires a strong network of connections and an extensive circle of friends. During the previous waves of globalization, the Western values of democracy, freedom and the free market were popular around the world, and these values and development concepts have become firmly rooted in the political and economic system in some developing countries. Today, however, Western countries blame globalization for their selfish interests, and are in effect reversing the trend of globalization by their isolationist and populist approach. They even accuse globalization as a word that “come to signify a new bogeyman, a set of rapacious powers beyond national control.”[2] Such comments have caused dissatisfaction and discontent among many developing countries and even some developed countries, who believe that the US and European countries, after growing rich through globalization, are now trying to make themselves “great again” by rejecting globalization. In contrast, the concepts and development pattern advocated by the BRICS countries have received widespread praise and appreciation. Among them are the China-proposed Belt and Road Initiative, concept of building a “common community of shared future for mankind” and the principle of “wide consultation, joint contribution and mutual benefits,” which embody a commitment to free, fair and open global trade and have also earned acclaim around the world. Even in the United States, China’s visionary concept of inclusive development has been well received. In addition, when global governance encounters institutional obstacles, the BRICS concepts and proposals for reforming and improving global governance so as to allocate world resources on a fair and equitable basis have also won positive response from many developing countries. The emotional appeal of BRICS countries to lead the development of globalization and global governance is clearly on the rise. Many scholars believe that the emerging economies, with the BRICS as their representative, are capable of assuming leadership in future free trade and globalization.

 

Forthcoming “Golden Decade” of the BRICS

 

The building of the BRICS mechanism now enters its second decade. The next ten years will serve as a link between what has gone before and what comes after, and will also be a critical period for the BRICS to deepen its institutional building and break new ground in the context of significant changes in global governance and globalization. Confronted with unprecedented opportunities and continuous challenges, the BRICS countries need to make concerted efforts, and manage properly a series of relationships that concern mechanism building, current interests and long-term objectives.

 

Words and deeds

Words and deeds are related in the BRICS mechanism building. Sometimes deeds are mixed with words, and sometimes the other way around. It is difficult to separate the two and incorrect to see them as opposites. As far as multilateral mechanisms are concerned, both words and deeds are indispensable, and they are conducive to the building of effective and robust mechanisms. For example, some scholars hold that the statements concluded at every BRICS summit with as many as 100 clauses are just words that carry little significance as they are so wide-ranging in content with no legally binding obligations on the BRICS countries. This is not the case. Admittedly, it seems that the BRICS summit every year is a bustling event with a declaration embodying comprehensive issues and ineffective solutions. However, the symbolic significance of the summits as well as the statements should not be underestimated, as they send signals to the outside world that major emerging countries are united with a common purpose and intention to act. They also convey a message to the international community that major emerging countries are making efforts to change their discourse power in the world which is not commensurate with their increasing economic might. It even shows clearly to the West that although the emerging economies are not monolithic and not as close as family members, they are very much determined to make concerted efforts to change the unfair and unjust power structure of the world. Therefore, even though the BRICS declarations and statements contain many diplomatic wordings and unbinding clauses, the rhetoric’s connotation and meaning has profound significance. Speaking in one voice on many international issues, the five countries of the BRICS have placed unprecedented pressure on the West. Public announcements and statements communicate the BRICS proposals to the world and the content highlights a very different approach and pattern of thinking in comparison with contemporary Western approaches in addressing global hotspot issues. They also demonstrate clear and consistent principles followed and positions taken by the BRICS, in stark contrast to the West.

Therefore, the announcements show clearly the following key points: in the ongoing evolutionary process of globalization, there is a louder voice calling for a rejection of the established world order and current approach to global affairs; a growing voice that also advocates a new approach and new leadership in international affairs. This voice now resonates forcefully around the world and represents a legitimate claim for change. In the face of a changing international environment and complicated international relations, the fact that leaders of newly emerging countries now frequently sit down together for wide-ranging discussions on major global issues demonstrates a significant change, and the fact that they subsequently announce publicly as many as 100 constructive proposals with one voice also represents progress. It goes without saying that this change sends shockwaves around the world, particularly with particular resonance in the West.

Of course, statements of unity and confidence as well as the determination to change the old order are by no means enough. Practical deeds and concrete progress in mechanism building are also necessary. The BRICS can only develop steadily and continue to emerge through practical, demonstrable achievements and tangible progress. The BRICS New Development Bank and the BRICS contingency reserve arrangement are two remarkable exemplar achievements. They are landmark projects, very distinctive compared with other multilateral mechanisms. They are distinguishing signs for the BRICS, and their establishment and functioning exert undeniable pressure to reform the IMF quota system and the overall world financial governance on certain major Western countries. The most pressing matter at present for the BRICS is effective management of the NDB and its reserve arrangement. What is more, they should meet the needs of the growing BRICS mechanism, make further efforts to accelerate this growth, such as the establishment of a BRICS rating agency and the BRICS news agency in order to gain greater discourse power and representation in shaping the new international order and in necessary reforms of the global governance system.

In short, in the BRICS mechanism building, both words and deeds are indispensable, and they should supplement each other and work in unison, thus promoting and deepening the building of the BRICS mechanism continuously.

 

Bilateral and multilateral relations

In the building of a multilateral mechanism, bilateral relations and multilateral relations are also a pair that both interact and restrain each other. An effective relationship between bilateralism and multilateralism should create a symbiosis: bilateral relations enhance multilateral relations, while multilateral relations lead to further development of bilateral relations, thus forming a symbiotic framework in which the two assist and promote each other. On the contrary, in an internecine relationship, bilateral relations hinder the development of multilateral relations, while multilateral relations fail to provide opportunities and platforms for restoring and improving bilateral relations, and the pair will descend into an ever vicious circle where the pair impede and drag each other.

Of the bilateral relations among the BRICS member states, the China-India relations have the most uncertainties and highest complexity. If handled improperly, it will inevitably become the biggest constraint in the BRICS mechanism building. In recent years, China-India relations, though not “strange bedfellows” as have been depicted by the Western media with phrases like “a ferocious battle between the dragon and the elephant” and “one mountain is not big enough for two tigers,” is constrained by historical grievances, territorial disputes, and a rivalry of interests as well as third-party factors like Pakistan, causing continuous bickering and rising contradictions in bilateral relations. To prevent deteriorating Sino-Indian relations that could lead to a hijacking of the entire BRICS mechanism, more attention should be paid to the possible negative impacts on multilateral cooperation caused by bilateral clashes, and great efforts should be made through various approaches to prioritize the settlement of problems in bilateral relations. Whilst the negative impacts of bickering bilateral relations should not affect multilateral cooperation, benign factors in bilateral relations that intertwine with the multilateral mechanism could be used ingenuously to resolve certain inharmonious bilateral relations. For example, taking into consideration the fact that Russia enjoys good relations with both China and India, Russia should be encouraged to play a unique role as mediator to resolve contradictions between China and India caused by India’s misunderstanding and miscalculation on issues of great concern. Multilateral platforms such as the BRICS summits and meetings among senior officials of BRICS countries could also be used for China and India to increase interactions. The two sides could have small-scale meetings on the sideline of general meetings to talk about thorny issues like the border, India’s accession to the UN Security Council, and anti-terrorism, thus making multilateral mechanisms an invaluable platform for bilateral interactions, conducting in-depth exchange of views, dispelling misunderstandings, clarifying respective positions and getting controversies under control.

To be succinct, although the BRICS does not yet stand as one family, member states should work actively to tackle their bilateral disputes for the sake of their common interests in a multilateral mechanism, no matter how complicated the entanglements of their bilateral interests are. Only by so doing can the five member states stand together in unity to show their strength and maximize their interests.

 

Relations with the G7

The relationship between the BRICS and the G7 remains complicated. There has been overall cooperation and competition between the two mechanisms in general, and integration as well as clashes of interests among member states across the two mechanisms. Generally speaking, collision, rivalry and competition with the G7 have been ever present in the BRICS mechanism building. Currently, the aspirations of BRICS stretch far beyond its subordinating place in world affairs in the new century and delve deeply into the area of rules-making power in a new world order, while the G7 still strives to maintain its dominant position in the existing world order, at least for the time being. To be specific, the BRICS member states have diversified relations with G7 member countries, and the G7 is by no means monolithic. The United States and Europe often have clashes of interests, and EU members find it hard to act in concert. However, it is not true that the G7 will soon withdraw from the top table, as predicted by some scholars. On the contrary, the G7 has stepped up their level of internal and external interactions while the BRICS is becoming increasingly cohesive. The West is not willing to relinquish its hegemony in the world order in the new millennium. The US and Europe, in their scramble for a leading role in the new international order, may compete to win over some BRICS countries for their own benefits. However, when the BRICS stands up alongside the West on international rights and interests, and challenges Western leadership of key international institutions, the G7 countries would again coordinate tacitly in their efforts to block any power-sharing bid by an outsider.

In the face of such complicated relations between the BRICS and the G7, as a whole or as individual countries, the BRICS must clarify its overall interests and the interests of individual member states. It should avoid a situation in which individual members’ particular interests sacrifice cooperation and cohesion across the BRICS countries, or a situation where individual members are forced to worsen or sever their ties with the G7 simply for the interests and overall goals of the BRICS. In fact, most BRICS members do not intend to make the mechanism a platform for confrontation with the West; nor do they want to see the BRICS labeled as an anti-West mechanism. Senior officials from India and Brazil have repeatedly said that they would rather quit the BRICS if the mechanism turns out to be an anti-West instrument. India, in particular, neither wants to see an over-politicized BRICS, nor wishes it to be an assertive challenge to the US and Europe to the extent that its relations with the West are adversely affected. Most scholars from the BRICS countries believe that it is undoubtedly a correct choice for a united BRICS to strive for the discourse power and representation commensurate with their own interests in world affairs. However, it is not in the interests of the BRICS member states if the mechanism becomes only a self-interest group or a counter-mechanism irreconcilable with the West. Even Russia, when suffering from Western punishment and containment, gave up its efforts to establish a new political and security alliance through the BRICS when it found that other BRICS members did not share its idea to create distance with the West. Russia’s understanding of the BRICS positioning has returned gradually to reality, and thus the BRICS member states have always remained cautious on expanding their cooperation to the military field.

Although the five countries of the BRICS work to gain power and interests in world affairs from the G7, their efforts are confined to the international power that is commensurate with their own strength, rather than to “move whoever’s cheese.” The West should not regard the BRICS as snatchers of power. Therefore, the relationship between the BRICS and the G7 is by no means confrontational, but rather a relationship based on win-win cooperation. Although the world is made up of two major camps of developed and developing countries, the two groups are not destined to confront each other, rather they should “sail in the same boat.” Especially at the time when the world economy is in slow recovery, developed and developing countries should join hands to set the world free from economic difficulties, eliminate trade barriers, find common interests, and achieve breakthroughs in their own interests while maintaining overall cooperation, instead of putting self-interest first at the expense of others. The G7 should take due consideration of the concerns and appeals of the BRICS, and achieve win-win outcomes by making concessions to the BRICS and demonstrating more inclusiveness and responsibility.

 

How to Innovate the BRICS Mechanism

 

The sustainable development of the BRICS lies in the continuous innovation of the mechanism and enhanced operational capability. The BRICS needs new ideas to operate the current mechanism, and it needs all the more to explore creative cooperation mechanisms and governance institutions.

 

Building NDB into a new-type multilateral financial institution

The BRICS New Development Bank is the first large-scale international multilateral financial institution established by major emerging countries. The international community has continuously followed the operation of the bank and its further development.

On strategic objectives, the NDB should focus on the long-term interests of the BRICS countries and prioritize sustainable development as a key investment area, avoiding quick success and instant benefits. This approach was echoed by NDB Vice President Leslie Maasdorp who said that the NDB should not focus only on immediate short-term interests, but rather it should build a framework for long-term development, spanning the next 20, 25 or even 30 years.

With regard to operation, the NDB should balance efficiency and quality, that is, guaranteeing the quality of projects while avoiding complex and cumbersome approval procedures frequently seen in other multilateral financial institutions, and reducing operational costs, to create a flexible, efficient, transparent and convenient financial mechanism.

As for organizational structure, the NDB should strive to achieve flat management to avoid the bureaucratic and multi-layered governance hierarchy, and create a specialized, internationalized and professional management team.

In the area of service, the NDB, while paying attention to profits, should focus on inclusive development, guiding and serving recipient developing countries to obtain loans for use instead of treating them arrogantly with lots of harsh loan terms. China’s former Finance Minister Lou Jiwei suggested that the NDB should pay more attention to support services. He said that in addition to providing financial support, the NDB should also be committed to providing high-quality support services to developing countries.

With regard to financing, the NDB needs to build a diversified financing mechanism to enhance its own functional capacity. As Lou Jiwei put it, the NDB should develop actively local currency business, and provide stable and cost-effective financing channels for member countries; at the same time, it should encourage extensive participation by policy operating institutions, commercial banks and insurance funds in infrastructure investment.

In short, the development of the NDB should, as it is named, focus on infrastructure development, new energy and green development, to promote sustainable growth. The NDB should learn from previous successful experience in the area of international financial governance, eschew age-old malpractices of multilateral development banks, establish a flexible, efficient and professional operational mode, and present a new image and a new style of multilateral financial institution fit for the 21st century.

 

Uniting for IMF veto power

After nearly six years of delay and waiting, the IMF’s 2010 reform was finally realized, with an approximately 6% increase for emerging economies in their voting rights. China’s voting rights rose to 6.068%, ranking third, while India, Brazil and Russia are among the top ten. The United States’ voting rights dropped slightly to 16.47%, but it still retains the veto power. The IMF has always promised to continuously improve its quota formula and governance structure. However, obstruction of the latest reform from the US Congress for five consecutive years makes it clear that the BRICS countries would come across more difficulties in their efforts to increase voting rights. The developed countries, especially the United States, will not let go of their dominance lightly. The last minute agreement to increase the BRICS countries’ voting rights only resulted from a lack of alternative actions. The concessions made by the developed countries and the extent of their concessions were carefully orchestrated so as not to diminish in any way their dominant position. As a result, no BRICS country alone will ever be able to gain the veto power that the US now enjoy.

Since no individual BRICS country will achieve a breakthrough in IMF reform, we have to consider other options. According to IMF rules, any major decision must obtain at least 85% of approval votes. With 16.47% of voting rights, the US can veto any matter that it considers does not accord with its interests. Since no BRICS country now or in the future will hold more than 15% of the voting rights, a more realistic goal is to seek for a breakthrough in the combined voting rights of the BRICS countries. At present, after the IMF 2010 quota and governance reforms, the aggregate voting rights of the BRICS countries have reached 14.131%, a small step away from the 15% threshold for veto power. Therefore, in the IMF’s upcoming 2017 reform, the BRICS countries should have a realistic objective: to achieve an early breakthrough of the 15% threshold of voting rights. Similar suggestions have been given by India’s Prime Minister Narendra Modi and Russia’s Foreign Minister Sergei Lavrov.

 

Developing cultural exchanges into a new pillar

The objective of the BRICS at the current stage is to become the most influential platform for South-South cooperation in the world today. The BRICS practices in the first decade have shown that the mechanism has significantly marched forward in terms of hard power in the areas of economic cooperation and global governance. However, there are weaknesses in its soft-power building. First, cultural contacts and exchanges among the BRICS countries are far lagging behind and the understanding “deficits” of each other’s cultures have long existed. Experts and scholars hold no worries over a shortage of cooperation projects or any lack of funds. What they are concerned about most is insufficient understanding among the people, which is hindering cooperation. Second, the international influence of BRICS countries’ soft power is not commensurate with their economic size. The Western value system still occupies the dominant position in this respect.

In fact, the lack of cultural cognizance among the people in the BRICS countries has already affected their economic, trade and investment cooperation. Taking corporate culture as an example. Chinese companies often encounter problems in other BRICS countries: working overtime in Chinese factories is often mistaken as sweatshop behavior, and hard-working Chinese workers are regarded as “ascetic monks.” Similarly, Chinese enterprises are not well versed with other countries’ corporate cultures and they often complain that local workers are difficult to manage and treat. In addition, the disadvantageous position in soft power also restricts the BRICS from playing a full role in world affairs. Proposals and values put forward by the BRICS are not easily understood and acknowledged by the international community, often depicted as “easier said than done” and not so down-to-earth as those articulated by the West.

Therefore, the establishment of BRICS cultural institutes is a necessity. Within the existing BRICS University Alliance, every BRICS university which is a member of the alliance can establish a BRICS cultural institute. Admitting undergraduate exchange students for a period of one year, the institute aims to introduce cultural features of BRICS countries, familiarize the students with each country’s historical traditions, living habits and social values, and promote mutual cultural identity. At the same time, the institute is launched to promote quality cultures of BRICS countries, and enhance the persuasiveness, influence and impressiveness of BRICS cultures on the international level. The curriculums should cover wide-ranging forms of traditional and modern cultures, and introduce great thinkers, cultural masters and literary classics in each BRICS country through multiple channels, with profound analysis on their connotations. The institutes could promote further cultural exchanges through activities like the “BRICS cultural week,” or set up a “BRICS fund for cultural exchanges” to increase mutual learning and present brilliant BRICS cultures to the world.

 

Establishing the BRICS forum on globalization and global governance

The founding of the Shangri-La Dialogue, the Boao Forum for Asia, among other high-end forums, has attracted worldwide attention with a well-known reputation. These forums have shown an increasingly important role in multilateral mechanisms, since they bring together senior government officials, business elites and top scholars. As a melting pot of wisdom and a combat arena of ideas, the forums host the debate and exchanges of various views and opinions. They also come in diverse forms, including both conventional inter-governmental regular exchanges and more free-style interactions among private enterprises, non-governmental organizations and think tanks. There have been many forums established as part of the BRICS mechanism, but most of them are regular dialogues for ministers and the business community. There is not yet a comprehensive forum that combines plenary and parallel meetings. At the time when the BRICS is transitioning from a global governance participant to a globalization leader, establishing a BRICS forum on globalization and global governance could be considered.

The forum should be a large-scale and high-end comprehensive forum different from BRICS summits and the established BRICS specialized forums. Not limited to BRICS countries, participants from both the East and the West could be invited to explore new ideas, new perspectives and new strategies on globalization and global governance. The forum could develop in a multi-dimensional direction, led by senior government officials’ meetings (preferably at the prime ministerial level) and supported by specialized forums on economic and trade, environment, science and technology, think tank, entrepreneurs and young leaders. In addition to debate and justification of globalization and critical discussions of various examples of distorted rhetoric, the forum is further tasked to comprehensively elaborate on BRICS propositions on globalization and global governance, particularly the consensus reached among BRICS countries. For example, all BRICS countries advocate the path of economic globalization, political multi-polarization and cultural diversity, and agree on the global governance concepts in accordance with the spirits of the UN Charter. They endorse the settlement of hotspot and difficult issues in traditional and non-traditional security fields through peace and dialogue, oppose protectionism in trade and investment, and emphasize that global governance should reflect the interests and demands of most developing countries. The consensus and propositions of the BRICS countries should serve as a foundation to lead global governance in a more just and fair direction.

 

 

Wang Youming is Senior Research Fellow and Director of the Department for Developing Countries Studies, China Institute of International Studies (CIIS).

 

 

 

Source: China International Studies, November/December, 2017.



 

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[2]Bill Emmott, “Literary Life: It Is Time for a New Liberal Lexicon,” Financial Times, March 15, 2017, https://www.ft.com/content/f9c2f130-08ad-11e7-ac5a-903b21361b4