NEVER before had a new global grouping emerged from the research of an American Investment Banking and Securities Company. But this is what happened when a 2001 Goldman Sachs paper entitled “Building Better Global Economic BRICs” signalled the forthcoming shift of global power away from the G7 led developed world to the emerging, fast-growing economies of Brazil, Russia, India and China, with the acronym BRIC.
On June 16, 2009, the leaders of the BRIC countries held their first Summit in Yekaterinburg, and issued a declaration calling for the establishment of an equitable, democratic and multipolar world order. As it would have been imprudent to exclude the entire African continent from what is a global grouping, BRIC became BRICS with the participation of South Africa at the April 14 Sanya Summit.
China’s decision to hold the BRICS Summit at Sanya, located on the southern tip of the Hainan Island, was obviously not accidental. Beijing’s mandarins are meticulous in their planning and decision-making for such international events. The visiting delegates were no doubt thrilled by the sumptuous Chinese cuisine, the gracious hospitality of their Chinese hosts and the picturesque tourist attractions like the 108-metre high Guanyin Statue and the Buddhist Nanshan Temple.
But what precisely is the strategic symbolism of Sanya and the Hainan Island? Sanya is located close to the disputed Xisha (Paracel) and Nansha (Spratly) Islands in the South China Sea, which China has recently declared as an area of “core interest” like Tibet and Taiwan. The Hainan submarine base, where five nuclear submarines, each armed 12 nuclear tipped with ICBMs, are deployed in underground caves and will also be the home to China’s first aircraft carrier, is located adjacent to Sanya. Chinese naval power concentrated in Sanya has evoked serious concern in both ASEAN and India. Hosting the BRICS Summit in Sanya was evidently a not-too-subtle message to the world about China’s growing military muscle.
Our worthy leaders and mandarins have few equals in giving a spin to whatever emerges from Summits with China or Pakistan. Our scribes, therefore, breathlessly reported after Dr. Manmohan Singh met President Hu Jintao, that there had been a “breakthrough” with China supporting our candidature for permanent membership of the Security Council.
But alas, all that happened was that the Chinese merely said that they “understand” the “aspiration” of Brazil, India and South Africa to “play a greater role in the UN”. Much has been made of China’s decision to avoid “stapled visas” for journalists from Jammu and Kashmir accompanying the Prime Minister to Sanya. The Chinese “gesture” on stapled visas has been reciprocated by a resumption of military exchanges.
But one would caution against too much optimism on continuing peace and tranquility along the border, merely because we have a new “working mechanism” for this. The much touted “Joint Terror Mechanism” with Pakistan only resulted in terrorist attacks on our Embassy in Kabul and the 26/11 terrorist strike on Mumbai. One should realistically place greater emphasis in maintaining peace on our borders with China, not on a “working mechanism” with the Chinese, but on better communications, enhanced and well-equipped military deployments and adequate air power.
New Delhi has, however, been more realistic recently in responding to Chinese diplomatic provocations by the commencement of ministerial-level visits, together with moves for concluding a Free Trade Agreement with Taiwan and a more proactive approach to ties with Japan, South Korea and Vietnam.
Just before the Sanya Summit, Zhu Xiaochuan, the Governor of China’s Central Bank, called for a “super sovereign currency” to replace the dollar. Moreover, the Chinese had earlier played a key role in the so-called “Chiang Mai initiative” as an alternative to the IMF. The initiative was intended to bail out East Asian economies facing economic downturns. China has consistently sought alternatives to the western dominated Bretton Woods financial institutions.
With reserves of three trillion dollars and its foreign aid of $100 billion exceeding the fund transfers of the World Bank, China obviously intends to flex its economic muscle globally. India, which has legitimate concerns about the lack of market-oriented transparency in the valuation of the Chinese yuan has, however, reiterated its faith in the dollar as the global reserve currency and would prefer strengthening the IMF by expansion of “Special Drawing Rights”. But there was an agreement in principle in Sanya to establish credit lines in local currencies, which will insulate recipients from exchange rate risks. It remains to be seen if BRICS can establish such credit lines for infrastructure and other joint projects. At the same time, BRICS believes that the current domination of the IMF and the World Bank by G7 members should end.
The Sanya Summit did, however, signal that despite differences, there was much the partners shared in common on issues ranging from climate change and the continuing relevance of safe nuclear energy to the transfer of financial resources and technology to developing countries. Moreover, despite Russia and Brazil being resource-rich countries, there was a shared concern about prevalent volatility in the prices of energy and food.
The Summit also sent out a clear message that emerging powers intended to strengthen contacts on security-related issues and would coordinate their positions in forums like the Security Council. National Security Advisers of BRICS are to discuss security issues of common concern in China later this year and their Foreign Ministers are scheduled to meet annually in New York. Further, as all BRICS members are presently members of the Security Council, they have agreed to expand contacts on western intervention in Libya. While a criticism of NATO actions has been avoided, BRICS will support the African high-level initiative, which has been rejected by the Libyan opposition in Benghazi.
While there has been much talk of building a multi-polar world order, it is evident that Russia, Brazil, South Africa and India recognise that in an ultimate analysis, China really seeks a bipolar world order, which it jointly dominates together with the Americans. Moreover, there is no dearth of Americans who feel likewise. The Chinese have after all told the American military that while the US Pacific Fleet should wield power in the Eastern Pacific, it should recognise the western Pacific and Indian Ocean regions as China’s spheres of influence. While one wonders if this is realistically possible, India is realising the importance of multiple-level engagement with all major powers. But, given Chinese global ambitions, one has to proceed with due care on engagement with the “Middle Kingdom”. BRICS has to be built patiently, brick by brick.
On June 16, 2009, the leaders of the BRIC countries held their first Summit in Yekaterinburg, and issued a declaration calling for the establishment of an equitable, democratic and multipolar world order. As it would have been imprudent to exclude the entire African continent from what is a global grouping, BRIC became BRICS with the participation of South Africa at the April 14 Sanya Summit.
China’s decision to hold the BRICS Summit at Sanya, located on the southern tip of the Hainan Island, was obviously not accidental. Beijing’s mandarins are meticulous in their planning and decision-making for such international events. The visiting delegates were no doubt thrilled by the sumptuous Chinese cuisine, the gracious hospitality of their Chinese hosts and the picturesque tourist attractions like the 108-metre high Guanyin Statue and the Buddhist Nanshan Temple.
But what precisely is the strategic symbolism of Sanya and the Hainan Island? Sanya is located close to the disputed Xisha (Paracel) and Nansha (Spratly) Islands in the South China Sea, which China has recently declared as an area of “core interest” like Tibet and Taiwan. The Hainan submarine base, where five nuclear submarines, each armed 12 nuclear tipped with ICBMs, are deployed in underground caves and will also be the home to China’s first aircraft carrier, is located adjacent to Sanya. Chinese naval power concentrated in Sanya has evoked serious concern in both ASEAN and India. Hosting the BRICS Summit in Sanya was evidently a not-too-subtle message to the world about China’s growing military muscle.
Our worthy leaders and mandarins have few equals in giving a spin to whatever emerges from Summits with China or Pakistan. Our scribes, therefore, breathlessly reported after Dr. Manmohan Singh met President Hu Jintao, that there had been a “breakthrough” with China supporting our candidature for permanent membership of the Security Council.
But alas, all that happened was that the Chinese merely said that they “understand” the “aspiration” of Brazil, India and South Africa to “play a greater role in the UN”. Much has been made of China’s decision to avoid “stapled visas” for journalists from Jammu and Kashmir accompanying the Prime Minister to Sanya. The Chinese “gesture” on stapled visas has been reciprocated by a resumption of military exchanges.
But one would caution against too much optimism on continuing peace and tranquility along the border, merely because we have a new “working mechanism” for this. The much touted “Joint Terror Mechanism” with Pakistan only resulted in terrorist attacks on our Embassy in Kabul and the 26/11 terrorist strike on Mumbai. One should realistically place greater emphasis in maintaining peace on our borders with China, not on a “working mechanism” with the Chinese, but on better communications, enhanced and well-equipped military deployments and adequate air power.
New Delhi has, however, been more realistic recently in responding to Chinese diplomatic provocations by the commencement of ministerial-level visits, together with moves for concluding a Free Trade Agreement with Taiwan and a more proactive approach to ties with Japan, South Korea and Vietnam.
Just before the Sanya Summit, Zhu Xiaochuan, the Governor of China’s Central Bank, called for a “super sovereign currency” to replace the dollar. Moreover, the Chinese had earlier played a key role in the so-called “Chiang Mai initiative” as an alternative to the IMF. The initiative was intended to bail out East Asian economies facing economic downturns. China has consistently sought alternatives to the western dominated Bretton Woods financial institutions.
With reserves of three trillion dollars and its foreign aid of $100 billion exceeding the fund transfers of the World Bank, China obviously intends to flex its economic muscle globally. India, which has legitimate concerns about the lack of market-oriented transparency in the valuation of the Chinese yuan has, however, reiterated its faith in the dollar as the global reserve currency and would prefer strengthening the IMF by expansion of “Special Drawing Rights”. But there was an agreement in principle in Sanya to establish credit lines in local currencies, which will insulate recipients from exchange rate risks. It remains to be seen if BRICS can establish such credit lines for infrastructure and other joint projects. At the same time, BRICS believes that the current domination of the IMF and the World Bank by G7 members should end.
The Sanya Summit did, however, signal that despite differences, there was much the partners shared in common on issues ranging from climate change and the continuing relevance of safe nuclear energy to the transfer of financial resources and technology to developing countries. Moreover, despite Russia and Brazil being resource-rich countries, there was a shared concern about prevalent volatility in the prices of energy and food.
The Summit also sent out a clear message that emerging powers intended to strengthen contacts on security-related issues and would coordinate their positions in forums like the Security Council. National Security Advisers of BRICS are to discuss security issues of common concern in China later this year and their Foreign Ministers are scheduled to meet annually in New York. Further, as all BRICS members are presently members of the Security Council, they have agreed to expand contacts on western intervention in Libya. While a criticism of NATO actions has been avoided, BRICS will support the African high-level initiative, which has been rejected by the Libyan opposition in Benghazi.
While there has been much talk of building a multi-polar world order, it is evident that Russia, Brazil, South Africa and India recognise that in an ultimate analysis, China really seeks a bipolar world order, which it jointly dominates together with the Americans. Moreover, there is no dearth of Americans who feel likewise. The Chinese have after all told the American military that while the US Pacific Fleet should wield power in the Eastern Pacific, it should recognise the western Pacific and Indian Ocean regions as China’s spheres of influence. While one wonders if this is realistically possible, India is realising the importance of multiple-level engagement with all major powers. But, given Chinese global ambitions, one has to proceed with due care on engagement with the “Middle Kingdom”. BRICS has to be built patiently, brick by brick.
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