Laying new BRICS in Durban
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At their summit this week, member countries should firm up a financial architecture in a South-South context
As the leaders of BRICS countries meet for their fifth summit in Durban this week, it might be instructive to conduct a reality check to assess where the BRICS project is headed. There is no doubt that the acronym BRIC, which was originally thrown up by an American investment bank purely as an arbitrary aggregation of large emerging economies, has occupied the collective mindspace like no other acronym in the alphabet soup of regional trade or security arrangements in recent years. The BRICS cannot be slotted as a purely trade or a security grouping. This ambiguity seems to be its special brand proposition so far, though it provokes strong reactions (for and against) from the scholars and practitioners located east and west of the Suez. That a Wall Street firm should have sparked off the idea of an emerging pressure group against West-dominated financial arrangements lends itself to rich irony.
The fifth summit, to be held in South Africa, has special significance. South Africa is a more recent entrant to the group, which originally comprised Brazil, Russia, India and China. The country is trying to position itself as a representative of the entire African continent. Africa is seen by all as the next big driver of global growth. As part of a larger BRICS initiative, the Chinese are already talking about setting up an African development bank. This is interesting because it seems to follow the pattern adopted by the West as it defined the global financial architecture after the Second World War.
For instance, the BRICS development bank, formalised at the New Delhi summit last year, will be positioned on the lines of the World Bank to drive development funding in emerging economies. The African development bank that Chinese officials have lately been talking about could play the role of the Asian Development Bank, which was largely funded by Europe, the US and Japan to drive development in poverty-ridden Asia in the 1970s. The African development bank could also be imagined as a loose subsidiary of the BRICS bank, which will help fund development in Africa.