16 areas of cooperation.7 Many of these areas have, till date, remained more of intention rather than of actualization.
In fact, in terms of specific instances, there are a number of issues between China and Russia on the one hand and between China and India on the other that could hinder the future of BRICS cooperation. It has been rightly observed that
“Strategic tensions between the Asian BRICS are a key factor in their relations. As Chinese economic and strategic influence increases in Asia and further afield, especially Africa and South America, these strains might increase. … Tensions also exist in China’s relations with India, partly due to growing competition between them for economic influence in states such as Nepal, Burma/Myanmar, and Cambodia. … Some Indian security analysts perceive a growing Chinese encirclement of India through its maritime influence in the region. … These tensions persist despite their involvement in the Shanghai Cooperation Organization, of which China and Russia are full members and India has observer status. Another key contemporary issue on which the BRICS have different priorities is climate Russia. … Russia has diverged from the other BRICS on key aspects of ‘post-Kyoto Protocol’ environmental negotiations in calling for binding targets for everyone, something the Chinese and Indian governments in particular reject” (Luckhurst, 2013: 257).8
Hence for the sake of tractability and focus, this section will discuss a specific issue where there has been some apparent progress, viz., the NDB.
The NDB was conceived in the fourth BRICS Summit in New Delhi (2012). Later, following the report from the finance ministers at the fifth BRICS summit in Durban (2013), the leaders agreed on the establishment of the NDB, and finally during the sixth BRICS Summit in Fortaleza (2014), an agreement establishing the NDB was signed. In the Fortaleza Declaration, the leaders stressed, “The NDB will strengthen cooperation among BRICS and will supplement the efforts of multilateral and regional financial institutions for global development, thus contributing to collective commitments for achieving the goal of strong, sustainable and balanced growth”.
There are at least two distinct ways in which one can see the genesis and rationale of the NDB. The first is clearly the dissatisfaction of the emerging economies with the governance of the Bretton Woods institutions, like the International Monetary Fund and the Word Bank, which are quota based as the quotas tended to represent an archaic global economic power structure.9 All the BRICS countries on different occasions have expressed dissatisfaction over the state of governance and democratic deficit in the IMF or World Bank. Second, and more importantly, almost all the BRICS countries have accumulated some foreign exchange reserves which are normally investment in safe assets, primarily in the form of securities of governments issuing four major currencies, US dollar, Euro, Pound Sterling, and Japanese Yen (of course, led by US dollar). Admittedly, there are differences in foreign exchange holding across BRICS countries. Illustratively, in 2017, China’s forex reserves stood at nearly US $3 trillion, as compared with little more than US $360 billion for both Brazil and Russia, little over US $400 billion for India, and around US $42 billion in South Africa. More interestingly, all these countries have experienced a steep and steady rise in their forex reserves from the late 1990s to early 2010s (Figure 5). The presence of such substantial forex reserves made the establishment of the NDB comparatively easier for the BRICS countries.
Thus, the NDB was founded during the fifth BRICS Summit in Fortaleza in July 2014 and launched on July 7, 2015, with an initial authorized capital of US $100 billion and initial subscribed capital of US $50 billion, equally shared among founding members. Effectively, it functioned as a multilateral development bank with the “objective of financing infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, complementing the efforts of multilateral and regional financial institutions toward global growth and development”.10 The professed main objectives of NDB operations are four-fold: (a) fostering development of member countries; (b) supporting economic growth; (c) promoting competitiveness and facilitating job creation; and (d) building a knowledge-sharing platform among developing countries. In 2016–2017, the NDB approved loans involving financial assistance of over US $3.4 billion for projects in the areas of green and renewable energy, transportation, water sanitation, irrigation, and other areas. In particular, as per the NDB’s General Strategy Document, sustainable infrastructure development is at the core of NDB’s operational strategy of 2017–2021, and it is going to dedicate about two-thirds of its financing commitment to this area.
Figure 5:Foreign exchange reserves of BRICS countries (USD billion).
Source: World Bank.
Has the NDB been effective in its operations? One may note its sharp contrast to the Asian Infrastructure Investment Bank (AIIB). With its headquarter in Beijing, the AIIB commenced operations in January 2016 and has now grown to more than 50 approved members from around the world. Has the NDB got the attention it deserved? It has been aptly noted:
“The launch of the NDB has been over-shadowed by the China-backed Asian Infrastructure Investment Bank (AIIB). While the AIIB is consistent with a model of structural-driven change in global politics, the NDB necessitates a more nuanced analysis around collective agency. With 26.06 per cent of voting rights and a 30.34 per cent … stake of the US$100 billion capital base …, China possesses a de facto veto in the AIIB. In sharp contrast the initial subscribed capital of US$50 billion in the NDB is equally shared among its five members … While the NDB has so far restrained from expanding beyond the BRICS, the AIIB opened up to 57 founding members thereby driving a wedge between those countries willing to follow Beijing’s lead and those (notably the United States and Japan) resistant in doing so. Although the extent of the global reach of the NDB is still very much in doubt, the AIIB is tied more explicitly to the ‘One Belt One Road’ (OBOR) … designed to advance infrastructural development both on the westward land route from China through Central Asia and on the southerly maritime routes from China through Southeast Asia and to South Asia, Africa, and Europe” (Cooper, 2017: 275).
Thus, it appears that the spirit of multilateralism in the NDB could have been a laggard in comparison with the AIIB that has been dictated by Chinese interest.
Concluding Observations
Having described the genesis and establishment of the BRICS block, this chapter has tried to gauge different elements of heterogeneity. Such heterogeneity exists in terms of different matrices, such as size of the economy, operation and state of monetary and fiscal policies, exchange rate flexibility, and quantum of foreign exchange reserves. The presence of such heterogeneity is accentuated by the presence of China whose size tends to overshadow all other economies in the block. Perhaps the effective emergence of the BRICS block purely in terms of economic multilateralism without any binding force of history, politics, or shared identity is difficult.11 On the contrary, the presence of complex political issues among the three major partners of the block (viz., China, Russia, and India) could have made the BRICS block suffer from blue baby syndrome, thus bringing into question its healthy existence (if not the longevity).
References
Baracuhy, B. (2012). “The Geopolitics of Multilaterism: The WTO Doha Round Deadlock, the BRICs, and the Challenges of Institutionalised Power Transitions”, CRP Working Paper, University of Cambridge.
Bernanke, B. S. (2006). “The Chinese Economy: Progress and Challenges”, Speech at the Chinese Academy of Social Sciences, Beijing, China, December 15, 200, available at https://www.federalreserve.gov/newsevents/speech/bernanke20061215a.htm (accessed during January–March 2017).
Cooper, A. F. (2017). “The BRICS’ New Development Bank: Shifting from Material Leverage to Innovative Capacity”, Global Policy, 8(3): 275–284.
Exim Bank (2016). “Intra-BRICS