When Barack Obama was struggling to trim his horrendous budget deficit by $ 4 trillion over the next 12 year period and the North Atlantic Treaty Organisation or NATO was embroiled in a costly military intervention in Libya, the leaders of five nations calling themselves BRICS (Brazil, Russia, India, China and South Africa) met in summit in Sanya in Hainan Province of Southern China last week. The Sanya Summit ended on April 14, 2011 with a joint statement issued by the five leaders which is now known as Sanya Declaration.
In a previous My View titled ‘If Chindia cannot oust the West, why not use BRIC Plus?’ (available at: http://www.ft.lk/2011/01/17/if-%E2%80%98chindia%E2%80%99-cannot-oust-the-west-why-not-use-bric-plus/), I argued that BRICS is a diverse group with China as the most important country in the group in terms of rising economic and political power and all others are yet to gain economic supremacy in the world. Hence, the logical inference is that the combination of the five countries does not make common bed fellows and cannot have a long term economic relationship in which each party will get equal economic benefits. But this is true if they confine themselves only to economic matters.
The Sanya Declaration
The Sanya Declaration cleared the doubts by making BRICS, as announced by the South African President, Jacob Zuma in the subsequent press conference, a multi – centric diplomatic force. To give credence to this, BRICS leaders took immense pride in noting that all of them are permanent members of UN Security Council and they have a right to make themselves known in world issues, not in quantitative terms but in qualitative terms. The Russian President, Dimitri Medvedev, expressed this view in a different setting, saying that they all should work together to strengthen the UN System meaning that its current leaning toward US and EU interests should be corrected. The declaration too, while highlighting the financial cooperation among BRICS, touched upon extant global political issues such as the Libyan crisis and the need for resolving it peacefully in a manner satisfying the wishes of the Libyan people. They also talked about
the need for developing renewable energy and taking strictest safety measures when harnessing nuclear power for energy purposes.
The Sanya Declaration has not proposed a road map for implementing its key points. Hence, all in all, it is nothing but a wish list of five emerging global leaders for recognition and active participation in global matters as equal partners.
BRICS as a growing global political force
BRICS still has no recognition as a formal body set up by an international agreement subscribed to by all the five nations. Yet, its annual summit meetings have now been formalised with India hosting the next summit in 2012. Hence, it is apparent that it is expanding its original informal mandate of functioning as an economic cooperation group into a powerful global political force.
This has in fact brought a new dimension to the extant global political and diplomatic landscape.
The Death of the Third World
After the World War II and with the emergence of the cold war between the West and the Soviet Union, the world was divided into three groups based on military and political affiliations.
The first world comprising the developed western countries in North America, Western Europe, Oceania and Japan came into being with the signing of NATO and the South East Asian Treaty Organisation or SEATO. Then, the Soviet Union and its East European Bloc joined together by signing the Warsaw Pact and came to be known as the Second World. The countries which did not belong to both these power groups calling themselves Non – aligned Nations became the third world. While in the old terminology the first world and the second worlds were considered as developed countries, the third world was synonymous with ‘poor’, ‘undeveloped’, ‘underdeveloped’ or ‘developing’ countries. The majority of the countries in Asia, Africa and South America belonged to this third world category.
Third-worldism
The rampant poverty and underdevelopment in the third world category also gave rise to a new type of third world economics, an ideology known as ‘Third-Worldism’. There is no single document or a book that highlights this ideology, but it consists of loose and separate writings by many. The third world writers like Samir Amin, Amin Mazrui and Carlos Ramirez-Faria and political leaders like Egypt’s Gamal Abdel Nasser, Ghana’s K. Nkrumah and Tanzania’s Julius Nyerere were in the forefront of propagating this ideology in 1960s and 1970s. When one examines the basic tenets of third-worldism, one may find many close kin of this ideology in all the countries, including Sri Lanka.
The Venezuelan journalist, Carlos Rangel, in a book titled ‘Third World Ideology and Western Reality’ and published in 1985 (translated into English as Third-Worldism and hence, credited for coining the term) has listed the main features of third world ideology as follows:
first, the development of the western world and the underdevelopment of the third world are mainly attributed to the old colonial rule exercised by the developed West over the third world countries;
second, there is no way of achieving wealth and prosperity by one country without harming another country;
third, the developed world exploits the developing countries by selling their industrial products at inflated prices and buying the primary products of the developing world at suppressed prices;
fourth, the external debt is a way for both the Western World and the multilateral lending organisations to exercise new colonialism on the third world countries;
fifth, there is a cultural colonialism on the third world countries through downgrading the local and indigenous practices and values and superimposing the values of Western culture on them, and
sixth, the brain drain from the third world countries to the West is another way of robbing the intellectual wisdom of the former by the latter thereby denying the developing world the opportunity to attain its true growth potential.
While these are debatable and are not substantiated by real world economic data and facts, the fall of the Berlin Wall in 1989 and the simultaneous dissolution of the Soviet Bloc removed the Second World from the scene. Since the third-worldists drew much of their ideology from the Second World, the collapse of the Second World saw the collapse of the Third-Worldism too. However, in some parts of the world, the ideology continued to prevail with some national leaders of selected countries in the Middle East, Africa and Asia continuing to propagate the third worldism to protect their power base till recently. But, according to economist Fabio Rafael Fiallo who wrote an article to The Wall Street Journal on March 22, 2011, the last remnants of the ideology has seen its eventual demise with the recent revolutions in Egypt and Tunisia and the continuing unrest in Libya (available at: http://online.wsj.com/article/SB10001424052748703818204576206391411710346.html).
Now the Second World is no more and, therefore, the world is divided into two groups: developed countries and developing countries. Ironically, the former Second World is now categorised in the latter as emerging economies together with several other countries including China and India.
BRICS is an off-shoot of the emerging countries to make a separate political and economic grouping among the developing countries. Thus, with the entry of BRICS to the scene, Fiallo may prove to be wrong.
BRICS divides the world into three groupings once again
With BRICS coming forward as a separate grouping at its Summit Meeting last week, the world is now divided into three groupings once again: the developed world consisting of the Organisation for Economic Cooperation and Development or OECD, BRICS as an independent separate grouping and other emerging and developing nations.
BRICS is made up of the leading nations in four continents, namely, Asia (China and India), Africa (South Africa), South America (Brazil) and Europe (Russia). Hence, except Australia and North America, BRICS has influence in four other continents. It boasts of 40 percent of the world population, 80% of the world’s recent economic growth, 18 percent of the world’s output and 24 percent of the world trade. At present, there are no other candidates vying for its membership and, hence, it will continue to function as an exclusive group with the current five members for sometime.
Implications of BRICS’s emergence
However, trade and economic cooperation among BRICS countries is still at a very low level and all these countries depend heavily on the rich West for continued economic growth and sustenance. Hence, unlike in the old division between the first world and the second world, BRICS cannot completely shed the rich West and emerge as an independent economic force. As it is, if the West grows, so will the BRICS. If, on the other hand, the West falls, so will the BRICS.
Hence, the BRICS arrangement today may be aiming at two goals in the long run. The first is to benefit from the perceived high growth of BRICS countries by developing a common market for each other’s goods and services and develop a common currency for trade and other transactions. Since BRICS keeps a substantial part of their excess foreign exchange reserves in USA and the balance in EU, it stands to lose if the respective asset values fall due to the profligate policies adopted by both USA and EU. Hence, if BRICS can park its excess reserves among their own member countries, it can reduce the risk too. By way of a preliminary arrangement for this, prior to the Summit just concluded, an agreement was signed by the BRICS countries to enable the state development banks in respective countries to lend to each other.
The second is to promote trade among BRICS countries and thereby develop a fall back mechanism when the West, on which these countries still depend pretty much, could not buy their products due to periodic economic recessions. Such a mechanism is necessary, because relying on a single group of countries for selling one’s products is a risk in the current volatile global economic scenario. BRICS, on the other hand, is fast growing and has the capacity to buy each other’s products in the event of a general global recession.
This leaves the developed West, BRICS and other developing nations in three separate economic and political groups. However, unlike in the past, there is no economic hostility among these countries, though there are some political hostilities among a few selected countries.
Impact on the developing world
The rest of the developing countries today are in a precarious situation. They all have recognised that trade in goods and services are the prime contributor to economic growth, prosperity and wealth creation. Yet, the world trade is increasingly becoming skewed, leaning toward the rich West and BRICS which account for about 80 percent of the world’s total exports. It is like the rest of the developing world is faced with a glass ceiling above them. They can see the prosperity and prospects above, but cannot reach it because they cannot break the ceiling. Hence, however much they try to build a viable export base, it is difficult for them to break the ceiling and move upward.
This is truly disappointing because they have to remain passive spectators of world’s wealth being enjoyed by the developed world and the BRICS countries.
The frustration that may arise from these disappointments will make the developing world militant and rebellious as it had done during the cold war period. When a group of countries is unable to realise their goals, it inevitably leads them to believe in various conspiracy theories on others trying to exploit them. This provides a fertile ground for the third world to re-emerge and the third-worldism to flourish in a new form.
It is true that the rich West is going through a difficult phase today. Yet, they as a group are growing at about 2 to 3 percent annually. Since they are growing, there is no an erosion of the well-being of the people of those countries. BRICS, on the other hand, is
growing closer to double digit numbers making their citizens richer by every year. The rest of the developing world, it appears has to lag behind both the rich West and BRICS. This would inevitably widen the gap between the developing world and the rest of the world.
The Danger of the Rise of Economic Nationalism
Throughout history, mankind has been susceptible to the claims of conspiracies perpetrated against them by many unseen enemies. One important conspiracy is that foreigners are always bent on destroying their culture, economy and civilisations. In the past, the enemy was the rich West. Now, in addition to the rich West, BRICS too will be considered enemies. The popular sentiments growing against the Indians and the Chinese in contemporary Sri Lanka are a case in point.
This is again the fertile ground for breeding economic nationalism by crafty national leaders in developing countries.
Economic nationalism rejects the market and preaches the virtues of self sufficiency in everything. At household levels, irrespective of the nature of occupation in which one is engaged for a living, self sufficiency in food is promoted as a way to beat the rising cost of living and perceived irregularities of the market. But, the old adage is that ‘Jack of all trades is Master of none’ and therefore, when one devotes his time for an activity for which he has no speciality, he loses on every count because his outcome becomes inefficient. For instance, if a manufacturer of brass fixtures is asked to grow his own vegetables, he will not do well in both his traditional occupation and the new engagement.
At a national level, economic nationalism rejects international trade. Buying goods manufactured by other nations is considered an activity promoting incomes of peoples in those countries. Hence, imports are considered a taboo. But, on the other hand, selling one’s goods to foreigners is considered virtuous. But, what matters is that one cannot sell unless he is prepared to buy from others too. If all nations try to become sellers as upheld by economic nationalism, no nation would be able to sell; the solution is for all nations to do both buying and selling simultaneously.
BRICS has understood this well and tries to build a diversified trading partnership with all the countries in the world.
Should the rich West get scared of the emergence of the BRICS grouping as a separate economic and political force? Not at least for the moment. All the BRICS country leaders were driven to the Summit Venue in shining black Mercedes Benzes piloted by equally shining black Audis, both manufactured in Germany. Hence, for the moment, BRICS does not pose a threat to the rich West.
But the developing world, unless it learns to shed third-worldism and economic nationalism, will find the emergence of BRICS as a second force a threat as well as a denial of opportunities.
(W.A. Wijewardena can be reached on waw1949@gmail.com)
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