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Brazil will not have much time to recover following the excitement of the World Cup and its final on 13 July in Rio when a day later on the 14th it will be hosting the 6th BRICS Summit some 2600 kilometres away in Fortaleza. The former event will have of course an immeasurably greater impact, both nationally and internationally, than the latter.
Nonetheless, we propose to assess the BRICS event both prior to its occurrence in a "pre-summit preview" and we will afterwards write our "post-summit analysis". We also refer readers to the article we wrote on the 2013 BRICS summit in Durban South Africa, which we entitled: "The BRICS are here, but where is the mortar?"
The BRICS, we argued then, is a somewhat artificial concept and construct, being a term coined by then Goldman Sachs chief economist, Jim O'Neill. Initially there were four – Brazil, Russia, India and China – later joined by South Africa. It was never clear what they have in common, except possibly for the fact that, with the exception of South Africa, they are quite big. Brazil, Russia, and India are all economies with a GDP of more than USD$2 trillion and China has become the second largest economy in the world (with a GDP of more than USD$7 trillion in market exchange rate terms). The recently released International Comparison Program results indicate that the BRICS already accounted for 29 % of the world economy in Purchasing Power Parity terms in 2011 (compared with 35 % for the G7 economies); and the combined population of the BRICS at roughly 3 billion people dwarfs the 745 million in the G7.
Four of the five leaders – Dilma Rousseff, Vladimir Putin, Xi Jinping and Jacob Zuma – have met before, while the just elected Narendra Modi will be the new boy. An invitation has been sent to Cristina Fernández de Kirchner, President of Argentina. The agenda, at least so far as we can see, is rather vague. According to the official website "the BRICS will emphasize social inclusion and sustainable development. The debate will be informed by the theme 'Inclusive growth: sustainable solutions'". That is the theme de rigueur from the café down the road to the snowy heights of Davos and the White House. So it is obviously a "must" for Fortaleza.
The official site engages in some self-congratulation by proclaiming that: "since its first summit, in 2009, BRICS has consolidated its position as a positive force for the democratization of international relations and for the enhancement of existing institutions of international governance". Ukraine and some of the countries in the South China Sea might require some persuading on that score. As to the enhancement of existing institutions of international governance, India nearly sabotaged last December's very modest WTO Bali package, and that is but one of many counter examples.
There are some concrete items on the agenda, notably the New Development Bank (NDB) as the BRICS answer to the Western dominated World Bank. Such an initiative can play a positive role in addressing the financing gap for required investment in infrastructure in developing countries. The reality, however, is that its impact is still years away. With an expected start-up capital of USD$50 billion ($10 billion in cash and $40 billion in callable capital; to be eventually raised to $100 billion in 5 years), even under very optimistic assumptions the new bank would need 20 years to reach annual lending levels similar to those currently provided by the World Bank, according to a recent UNCTAD study. Moreover, the politics of coordinating the individual interests of each shareholder (including the debate on headquarters' location, with Shanghai being the frontrunner) will not be a walk in the park. Nor is it clear how it will fit in with the recently announced China sponsored Asian Infrastructure Investment Bank (AIIB).
It is of course a good thing that world leaders meet and converse. Two of the BRICS, India and China, have a difficult and potentially conflictual relationship – including both territorial and (arguably far more serious) water disputes – but it is extremely unlikely that such bilateral tensions would be raised in Fortaleza: it would be bad for the atmosphere! Furthermore, while the idea of the BRICS summit is to address global issues, specifically to provide an alternative perspective to that of the West, all five, as well as their guest Argentina, have a number of critical domestic issues and possible crises that require focused attention and for which the collective wisdom or action of the BRICS is unlikely to contribute. This is in addition to the fact that there are few global issues that come to mind on which the BRICS are likely to find solid agreement. The BRICS summit is highly unlikely to provide any boost to the Doha Round, for example, even though the meeting will be held in the new WTO Director General's, Roberto Azevêdo, home country. Actually, both India and South Africa have now been making noises that suggest they are willing to backtrack on the most important achievement of the Bali Ministerial (the Trade Facilitation Agreement).
So, a year after our initial article on the BRICS summit, the preview to the coming one in Fortaleza leaves us with the same question: where is the mortar?
Perhaps this will be clearer after the summit when we write our post-summit analysis!
Carlos A. Primo Braga is Professor of International Political Economy at IMD, and Director of the Evian Group@IMD. He teaches in the Orchestrating Winning Performanceprogram.
Jean-Pierre Lehmann is Emeritus Professor of International Political Economy at IMD, Founder of the Evian Group and Visiting Professor at the University of Hong Kong and NIIT University in India.
