Home' Trinidad and Tobago Guardian : July 12th 2015 Contents SBG14 FINANCE
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt JULY 12 • 2015
The BRICS countries were
supposed to change the
world as they transitioned
from being simply a
acronym to a more uni-
fied group of countries
with a growing institu-
tional capacity to project economic influence.
The large and dynamic emerging economies
of Brazil, Russia, India and China (with the
later addition of South Africa to round out
the acronym) were supposed to herald a shift
in the world s centre of economic gravity.
The long-dominant but aging economies
of the United States, Japan and the European
Union would be, if not replaced, at least forced
to make room for the spry newcomers.
Well, there s been a shift alright, but not
really the one that was envisioned only a few
years ago. Instead of bounding into the annual
summit that began today youthful and strong,
the BRICS countries are more likely to resemble
a group of tottering old men, leaning on each
other for support and chattering on about
their various infirmities.
China, by far the largest economy among
the five BRICS nations, is looking at an eco-
nomic slowdown that has analysts concerned
about its prospects for continuing the rapid
growth that has set it apart from other nations
for many years. A major decline in the country s
stock market and the government s heavy-
handed application of capital controls has oth-
ers questioning the wisdom of investing there.
Russia, which is hosting the summit in the
city of Ufa, is expected to show negative growth
this year, the combined result of a decline in
global oil prices and international sanctions.
And the prospects for the future do not look
particularly rosy for Moscow. As a result of
its invasion of Ukraine s Crimean peninsula
and its continued support of rebels in eastern
Ukraine, the European Union recently voted
to extend sanctions until January of next year,
with further extensions possible.
South Africa, meanwhile, is battling stagfla-
tion and is facing sub-two per cent growth
in 2015, while Brazil is looking down the dou-
ble-barrel of stagflation and negative economic
growth for the year.
Of the five, India appears to be faring the
best in the near term, with estimates of eco-
nomic growth approaching eight per cent in
2015. But even there, many analysts are con-
cerned about the reliability of the economic
numbers being provided publicly.
According to Bruce Jones, director of the
Foreign Policy program at the Brookings Insti-
tution, the economic prospects for the BRICS
countries aren t the only thing that has changed
in recent years. China s political and military
position, particularly in the Pacific, has become
much more forceful. And Russia s behavior in
Ukraine, combined with a general bellicosity
toward its neighbours, has also altered previous
"The strategic tensions between the BRICS
are now more visible," Jones wrote in a blog
post this week. "In the period immediately
after the global financial crisis these were over-
shadowed both by their aim of recovering
from the crisis, one shared with the West, and
their common ambition to gain a greater voice
in the management of the global economy.
But China s growing assertiveness has shaken
He adds, "Far from cozying up to China,
several of the BRICS are nervous about China s
direction, and keen to restore and refresh their
ties with Washington."
With regard to Russia, however, Jones says
not to expect too much in the way of con-
demnation or even a collective cold shoulder.
"The members will do the exact opposite
of isolating Russia; they ll be on stage with
Putin and they ll refrain from any public crit-
icism of his strategy in Ukraine. They aren t
particularly happy with his strategy there but
their view is: This is not our problem."
Coming out of the summit, Jones says, the
BRICS countries can be expected to "double
down on their pitch for a greater role in global
economic governance." Indeed, he points out,
"The BRICS slowing collective growth lends
all the more urgency to their concern to increase
their voice and decision-making role in the
global economy." Reuters
Russian President Vladimir Putin
said on Thursday that a new BRICS
bank would become fully opera-
tional and finance energy projects
next year as emerging markets
attempt to challenge the Western-dominated
The BRICS nations---Brazil, Russia, India, China
and South Africa---which represent 40 per cent
of the world s population, agreed in 2013 to estab-
lish their own development bank, with estimated
capital of US$100 billion (90 billion euros).
Crucial to their efforts to undermine Western
hegemony is also a US$100-billion pool of cur-
Russia---which has suffered huge currency
fluctuations and struggled to attract investors
since the outbreak of the crisis in Ukraine---sees
the bank and the currency reserve pool as an
alternative to international financial institutions
like the IMF and World Bank that are dominated
by the United States.
"The New Development Bank will be financing
large-scale transport and energy projects and
industrial development," Putin said after talks
with the leaders of China, India, Brazil and South
Africa in the city of Ufa in the Urals.
Putin said the first projects would be launched
next year, adding that Russia would by the end
of the year put together a blueprint mapping out
investment cooperation between the BRICS
"We ve conducted consultations with our busi-
ness circles and have already put some 50 projects
and business initiatives onto the roadmap," Putin
said, noting these included proposals to establish
an energy association and an energy research
Russia and China have agreed to use each oth-
ers currencies to promote bilateral trade and
investment, with Putin saying on Thursday that
Russia would be keen to expand the use of national
currencies with other BRICS countries.
"I think that such development with India,
Brazil and South Africa would be interesting and
could no doubt lift the level of trade turnover,"
"A pool of nominal currency reserves, with
capital of US$100 billion, will give us an oppor-
tunity to react to financial market fluctuations
in a timely and appropriate manner," he added.
BRICS economies look
more like rubble at summit
...bank to finance energy projects from next year
Presidents of Brazil,
Russia, India, China and
South Africa attend the
BRICS summit in Ufa,
Russia, Thursday, July 9,
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