As the developed world is increasingly leaning toward protectionism, the emerging nations seem to take the lead in shaping the contours of an alternative globalization with BRICS serving as the backbone of these processes. The BRICS+ paradigm, which can make the process of global economic integration more inclusive and comprehensive, was discussed at a Valdai Club event in Moscow on July 19.
Presenting the concept of BRICS+, Yaroslav Lissovolik, a Valdai Club Programme Director and the author of the latest Valdai Paper, said that the concept was originally proposed by Chinese foreign minister Wang Yi soon after China assumed BRICS presidency in early 2017 and was reiterated last month during the meeting of foreign ministers of BRICS states. According to Wang Yi, the idea is to turn BRICS “into the most influential platform for South-South cooperation in the world.” However, details on the exact blueprint of BRICS+ are sorely lacking at this stage, Lissovolik said, and the Valdai Paper attempts to discuss the framework of how this process could work.
The move to increase BRICS’ outreach in the developing world reflects the growing role of regional trade arrangements. In today’s world, there are more trade deals than countries themselves, Lissovolik said. Membership of BRICS and regional trade areas often overlaps and some of these free trade deals give rise to broader trade arrangements, as is the case with the Common Market of the South (MERCOSUR) and the Southern African Customs Union (SACU), whose preferential trade agreement entered into force on April 1, 2016. When China advanced its “BRICS free trade area” proposal, other BRICS countries alluded to difficulties in following this format due to the transfer of trade policy to the regional trade arrangements level, Lissovolik added.
Another sign of increasing importance of regionalism in BRICS policies was the decision of India as a host of the 2016 BRICS summit to invite members of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) to hold a joint summit with the BRICS.
Describing the potential composition of BRICS+, Lissovolik mentioned, apart from Mercosur, SACU and BIMSTEC, such regional trade arrangements as the South Asian Association for Regional Cooperation (SAARC), the China/ASEAN free trade area, and the Eurasian Economic Union.
Arguably, not all of the states participating in these trade blocs would contribute to the success of BRICS+. According to Georgy Toloraya, it would make sense to divide the closest partners of BRICS into two groups: observers, which can take part in BRICS summits and sectoral meetings on a permanent basis, and partners for dialogue. He singled out Mexico, Argentina, Nigeria, Egypt, and Indonesia as the countries, whose participation in the BRICS+ format would be most promising. “It is crucial that an expanded concept of BRICS includes developed economies to make their contribution feasible,” he said.
Importantly, there already exists a network of development institutions to support BRICS+, Lissovolik said, with the New Development Bank (formerly known as the BRICS Development Bank) potentially performing a coordinating role in the cooperation between the regional development institutions.
Projects, which could be implemented as part of the BRICS+ paradigm, and lead to emergence of an area of cooperation between North and South, East and West, include development of trans-Eurasian transport infrastructure and cooperation between national payment systems of the BRICS states, according to Oleg Preksin, High Commissioner for Finance and Investment of the Eurasian Economic Cooperation Organization (ЕЕСО). On the financial side, the top priority should be given to investment, as ensuring proper inflow and outflow of capital across the BRICS area is the most urgent need, Preksin said. For this, the project must be supported by business circles, otherwise the initiative will be top-down, non-systematic and ad hoc, Lissovolik added.
The world where the United States is no longer the global leader needs a connected global leadership system, said Jean-Pierre Lehmann, Professor of international political economy at the International Institute for Management Development, who joined the event via video link from Lausanne. According to him, BRICS, which he called “an interesting concept”, faces numerous challenges, like the “explosive” relations between China and India or domestic issues which attract most of the policymakers’ attention, as in Brazil. However, we live in an era, which requires thinking the unthinkable, he said.
BRICS+ has potential benefits for global economic development, like its ability to galvanize the integration process in the developing world and address the voids in economic integration, but it has potential pitfalls as well, Lissovolik said. Protectionist impulses are getting stronger across the global economy, including the potential BRICS+ members. Also, there are concerns about the domination of the platform by one country of region. Finally, there is the issue of its connectivity with integration projects in the developed world. But building bridges to similar networks in the developed world is crucial even though this goes beyond the original Chinese idea of platform for South-South cooperation, he concluded.