Is BRICS about geopolitics and not economics?

The drifting apart of the BRICS states: more differences than similarities?

This month the summit of the BRICS countries will take place for the tenth time - the emerging economies of Brazil, Russia, India, China and South Africa. But how long will this merger last, given the considerable political and economic differences?

Almost 17 years after the major bank Goldman Sachs coined the term "BRIC" for the fast-growing economies of Brazil, Russia, India and China, which began to compete with the West in economic terms, the group meets in their circle a few years ago South Africa was taken to a summit from July 25-27 in Johannesburg. Although all BRICS countries have grown significantly in the last two decades and have made great strides in eradicating extreme poverty, it remains questionable whether merging into a socio-economic or geopolitical bloc still makes sense. Cooperation between the countries has so far been limited and they are increasingly falling apart in terms of their economic performance: only India and China have been able to maintain their high growth rates.

The group of BRICS countries is very heterogeneous - they are not united by ideology, geography or culture. They are all emerging markets that claim a leading role in their regions simply because of their size. The only real common interest is to stand up to the "Euro-American club" that has ruled the world economy since the 19th century and to allow any Western or international - as they see it - "interference" in their internal affairs to forbid.

Where does the community of BRICS countries stand?

Beyond this common global assessment, efforts have been made to strengthen economic cooperation among one another. In 2015, the New Development Bank was founded as an alternative to conventional institutions such as the World Bank and the International Monetary Fund with an investment capital of 100 billion US dollars for development projects. The BRICS countries put another 100 billion US dollars into the so-called Contingent Reserve Arrangement, a reserve fund that is supposed to protect national economies from financial instability and currency speculation.

Apart from occasional advances, the BRICS countries should create their own reserve currency in competition with the US dollar or set up an alternative to the international payment system SWIFT, efforts to reach an agreement remained rather restrained. To date, the cooperation between the BRICS states has not produced any further alliances based on the Western model, such as NATO or the European Union. This is unlikely to change much in the future.

While in the first years of the new millennium all BRICS countries were still in the process of reducing the economic gap to the western industrial nations, this trend could not continue after a few years. Only the giants China and India are on the right path, while Russia is shrinking and Brazil and South Africa are also falling behind.

Brazilians disappointed in politics

An unflattering saying goes: "Brazil is the country of the future - and always will be." Unfortunately, the recent past seems to confirm this. Widespread corruption, the political instrumentalisation of legal proceedings and the irreconcilable division of the political elite are all affecting political life in Brazil. The fall in commodity prices and the loss of investor confidence have shaken the economy. The currently mediocre economic output with high unemployment of 12.6 percent and the decline in the per capita gross domestic product (GDP) is artificially stimulated by an unsustainable policy of debt-financed government spending. National debt exploded from 51.4 percent of GDP in 2013 to 74 percent in 2017. The budget deficit was 7.8 percent of GDP last year. Socially, Brazil remains a country of social inequality and, with 61,283 murders in 2016, also one of the most violent countries in the world. Despite the economic growth of the past few years, the unequal situation of the ethnic groups has hardly improved.

The Brazilians are disappointed with their government. the Bertelsmann Transformation Index (BTI) report on Brazil states: “Brazil is one of the countries in Latin America where democracy receives the least support. In 2016, only 32 percent of respondents said they preferred democracy over all other forms of government. That was the second worst value in the region after Guatemala. In 2016, approval for an authoritarian government reached 55 percent under certain conditions. "

South Africa on the downside

The situation in South Africa is even worse. The country suffers from even greater poverty, inequality, unemployment and often terrifying violence. The South African economy has seen little or no growth in recent years, with 27 percent unemployment and steadily rising government debt. Debt rose from 27.8 percent of GDP in 2008 to 53.1 percent last year. The country threatens to fall into debt. Debt repayment, the fastest growing budget item, is already eating up 10 percent of total government spending. The BTI's South Africa report states: “Since the National Development Plan was passed in 2010, the country has never even met the target of 5.4 percent economic growth set therein, which should eradicate poverty and reduce inequality by 2030 got close. In 2015, the annual GDP growth rate was a meager 0.5 percent. "

Family-bound and ethnic nepotism are rampant in South Africa, right up to the former President Jacob Zuma, who had his private property renovated at the expense of the state. The country is still ethnically divided; according to the BTI report, “there is little trust between the historically defined ethnic groups of the country. (…) Most South Africans still live in ethnically homogeneous residential areas. ”In addition, black Africans, who are divided into different ethnic groups, are increasingly showing“ latent xenophobic attitudes ”in attacks on other African migrants. South Africa's BTI value for democracy has shrunk from 8.7 out of a possible 10 points in 2006 to 7.6 points as respect for freedom of assembly and expression has fallen.

Emigration is also high in South Africa. Many white skilled and educated citizens are leaving the country to leave crime and grievances behind and look elsewhere for better economic opportunities. South Africa is making no headway economically, socially and politically: it may remain an influential player in Africa, but it is no longer a role model for others.

The Russian economy freezes

That leaves Russia, India and China - three nations that strive to be great powers. With the military support of Syrian President Bashar Al-Assad, the annexation of Crimea and the support of eastern Ukrainian separatists, Russian foreign policy is increasingly focusing on confrontation with the West. Western sanctions have had a moderate impact on the country's economy.

Economic growth has stagnated despite the Kremlin showing impressive discipline at the macroeconomic level. Despite the recession, the national debt is only 12.6 percent of GDP and unemployment is low at 4.7 percent. The Russian course seems to be both economically and politically sustainable in the foreseeable future. The BTI country report on Russia notes: “So far, the Russian government and people have overcome the difficulties. Both seem to have agreed that Russia, the largest country in the world, can only survive as an independent power and should neither become part of the EU nor a member of NATO nor enter into too close ties with China. "

Even if Russia is still an electoral democracy with some restrictions, Russian citizens feel very little connected to democratic values ​​and processes. In addition, the BTI report states that “a radicalization of nationalist tendencies in Russian society” can be observed. "Due to the developments in Ukraine and the finding of a fifth column among liberal and western-minded intellectuals, human rights activists have been sidelined and tensions within Russian society are increasing."

International public opinion about Russia is very divergent. The West is very critical of the country, while India and China are much more benevolent.

India on the up

Let's look at India and China, by far the largest BRICS countries. India can look forward to a moderately high growth rate of 6.7 percent last year. The middle class is growing, poverty is decreasing. Prime Minister Narendra Modi, a Hindu nationalist who has been in office since 2014, continues to enjoy great popularity. The Hindu majority is increasingly determining public opinion at the expense of the country's many other ethnic minorities, although Hindus are in fact slowly decreasing in number due to the birth rates of Muslims. In 1951 they made up 84 percent of the population; in 2011, 80 percent of Indians were Hindus.

The BTI country break for India states: "Since 2014 and also during the period examined in this report, the willingness of political leaders to defuse such structural conflicts has significantly decreased." The authors nevertheless consider it unlikely that India will break due to its diversity could, if only because the population is too fragmented and there are simply too many different groups: “The fact that no major violent conflicts have broken out is less due to de-polarizing measures by political actors than to the multitude of dividing lines, which mostly do not overlap and thus the Counteract the formation of large oppositional camps. "

For this reason, India's economic and political importance is likely to increase steadily in the coming years and contribute to the importance of the Asian continent in the global system. In terms of nominal GDP, India's economy is already larger than Italy's and will in all likelihood soon overtake France and Great Britain as well.

The dizzying growth of China

China is an exception among the exceptions in many ways. It is the only genuine one-party dictatorship in the BRICS countries. The BTI Country Report China paradoxically states, “The government continued to responsibly address a wide range of social issues and step up efforts to improve public services. At the same time, the government has tightened the screws even further and is preventing any form of dissent. ”China is characterized by a competent government that does not grant any civil or political rights, as well as breathtakingly fast socio-economic development.

In some ways, China has already surpassed the European Union and the United States economically. If the convergence goal is strictly pursued and, for example, a standard of living like that in South Korea is achieved, then the Asian giant will be economically stronger than the entire western world put together. Crucially, China's unusually impressive innovation and technology capabilities are key here. The BTI country report states: “The area of ​​research and technology is quite advanced in China and is still improving. The expenditures for research and development as a share of the GDP rose from 0.6 percent in 1995 to 2.1 percent in 2015 and are thus higher than in Europe today. "

China, with its predominantly Han Chinese population, who are increasingly using Mandarin as the predominant language, is nowhere near the ethno-religious dividing lines that traverse India. All of this suggests that China will maintain its leadership role in the 21st century.

Historic opportunity for the BRICS countries

This short analysis gives an insight into the very different courses of the BRICS countries, which are shaped by their own history and culture, the current state of development and the level of human capital.

In summary, it can be said that Brazil and South Africa have to struggle so much with difficulties and internal conflicts that they will hardly develop into influential international actors. Russia will continue to play an important role in Eurasia, while India and especially China will continue to grow in prosperity, power and influence. This situation raises the question of what actually still holds the BRICS countries together. With regard to economic cooperation, it remains to be seen whether it can become more efficient and develop further.

China is likely to be the decisive factor again. The country maintains close relations with Russia and is pursuing the integration of the Asian economic region. However, China's relations with other Asian neighbors such as Japan, Vietnam or India are generally strained. In the BTI ranking, China's value for regional cooperation fell from 8 out of 10 possible points in 2010 to just 5 points in 2018.

The situation is favorable for the BRICS countries and China. The European Union is caught in an internal crisis and there are moves in the United States to withdraw from world affairs. Time will tell whether the BRICS countries can take advantage of this opportunity and expand their claim to leadership.

Craig James Willy is a journalist specializing in EU affairs.

Translated from English by Karola Klatt.