Looking behind the BRICS veneer

Lowy Interpreter

Nick Bryant, in his thoughtful and insightful contribution of 29 June ('India no longer shining'), asks whether the 'I' in BRICS should now better stand for Indonesia rather than India, given the rapidly fading gloss on the Indian growth story.

I would go further and propose that the whole 'BRICS' notion should be done away with, as it no longer corresponds to a single economic and political phenomenon, let alone a consistent success story altering world economic history. After all, 'BRIC' (the progenitor of BRICS) was a Goldman Sachs invention, and look where that bank is now.

More seriously, if we examine the economies of the individual countries, on two the jury is still out (China, South Africa) and the three others will almost certainly go into stagnation if not outright decline over the coming years. Nick has shown us this for India.

Russia had its brief moment in the economic sun in a period of unusually rapid price increases for its raw materials and resulting shopping sprees by a handful of its tycoons and artful dodgers. But few would argue that Russia was (certainly not in the Soviet period), is (within ASEAN, Russia is quite simply not taken seriously as an economic power) or will be a rising economic power without a fundamental change in governance and political culture.

Russian influence on the international scene is almost solely a function of hard security or, to put it bluntly, of arms, its own and the ones it exports.

As for Brazil, in a devastating piece in the May/June 2012 issue of Foreign Affairs, Ruchir Sharma of Morgan Stanley (oops, another bank which has slipped badly) quotes Arminia Fraga, Brazil's former Central Bank President, who fears a 'lost decade' of relative decline similar to the 1980s unless Brazil undergoes fundamental (and thus unlikely, at least in the short term) changes in its political culture.

Of course, this rather sweeping indictment of a tried and trusted expression in the vocabulary of the international relations chattering classes will have to be tested with far more in-depth economic examinations of each BRICS country and its prospects. Furthermore, the indictment does not mean that the 'Rise of the Rest' phenomenon is not taking place.

What it means is that (a) each country, very much including emerging markets, will have to be judged and classified on its own merits; and (b) that the old and trusted warhorses of the world economy, the US and Europe, will probably have to be relied on for a global upswing in the medium and long term, despite the present state of doubt regarding the former and outright fears regarding the latter.

As I indicated in this space a couple of months ago ('Australia at the St Gallen Symposium'), important representatives of economic bellwether industries (commodities, telecommunications) are newly and generally bullish on 'the West'.

Dr Daniel Woker is the former Swiss Ambassador to Australia, Singapore and Kuwait and now a senior lecturer at the University of St Gallen, Switzerland. Originally published by The Lowy Institute publication The Interpreter. Reproduced with permission.