The BRICS fallacy

The fall of the BRICS shows that the US is still indispensible to the world economy

Author: Ana Palacio
November 12, 2015

The recent downgrade of Brazil’s credit rating to junk status was followed by a raft of articles heralding the crumbling of the BRICS (Brazil, Russia, India, China, and South Africa). How predictable: schadenfreude almost always follows bad news about the BRICS, whose members were once hailed as the world’s up-and-coming economic powerhouses and next major political force.

There is something deeper going on here. The world’s seeming obsession with the BRICS’ perceived rise and fall reflects a desire to identify the country or group of countries that would take over from the US as global leader. But, in searching for the ‘next big thing’, the world ignores the fact that the US remains the only power capable of providing global leadership and ensuring some semblance of international order.

Clearly, the BRICS are a thing. They are just not the thing

The story of the BRICS is a familiar one. It began as a technical grouping in 2001, when the British economist Jim O’Neill lumped them together (without South Africa) and gave them their catchy name for the sole reason that they were all large, rapidly growing emerging economies. But, recognising that economic power could translate into political influence, the BRICS held their first informal meeting in 2006, and their first leaders’ summit in 2009. The bloc was going places – or so it seemed. But seven years, seven summits, and one new member (South Africa joined in 2010) later, the significance of the BRICS remains hotly debated.

Cracks in the foundations
The disparities among the BRICS are well known. China’s economic output is nearly twice that of the rest of the BRICS combined, and roughly 30 times that of South Africa. Their governance models are vastly different, from India’s robust democracy to Russia’s illiberal model to China’s one-party system. Russia and China, both permanent members of the UN Security Council, have offered, at best, lukewarm support for the other BRICS’ aspirations to join them. And then there are its members’ bilateral disagreements, including a heated territorial dispute between India and China.

Nonetheless, the BRICS have acted in concert on more than one occasion. Last March, amid near-universal condemnation of Russia’s annexation of Crimea, the country’s BRICS counterparts – even those that had long supported the inviolability of borders and non-intervention – abstained from a UN General Assembly resolution affirming Ukraine’s unity and territorial integrity.

Three months later, the BRICS released their Leaders’ Summit Declaration condemning the imposition of economic sanctions on Russia by the EU and the US. Most concretely, the long-anticipated New Development Bank, run jointly and equally by the five BRICS countries, opened its doors in Shanghai in July. Clearly, the BRICS are a thing. They are just not the thing.

The BRICS arose at a time when much of the world, especially the advanced economies, was mired in crisis. The ‘fall of the West’ narrative ran alongside that of the ‘rise of the rest’. But the story has not played out quite as anticipated.

Economically, the BRICS are facing serious challenges. In addition to a well-documented growth slowdown, China has lately experienced considerable stock-market turmoil and currency devaluation. The Brazilian and Russian economies are contracting; South Africa’s growth has slowed; and India, though maintaining relatively strong growth, must undertake important reforms.

The BRICS have also failed to fulfil their promise of international leadership. At the beginning of the decade, Brazil showed a certain aspiration, along with Turkey, to press ahead with an alternative nuclear deal with Iran. But that proposal fell apart, and, amid pressure from corruption scandals and falling commodity prices, Brazil left the global stage.

South Africa and India also continue to punch below their apparent weight internationally (notwithstanding Indian Prime Minister Narendra Modi’s visibility). As for Russia, the only traditional world leader of the bunch, the Kremlin’s Ukraine policy has done severe damage to the country’s international profile – damage not even its possible diplomatic coup in Syria can undo.

Bricks don’t float
Only China has displayed an inclination to lead, as exemplified by President Xi Jinping’s visit to Washington DC last week, which produced major announcements on climate action, cyber security, and international development. China has also been pursuing initiatives like the Asian Infrastructure Investment Bank and the revitalisation of the Shanghai Cooperation Organisation. But China’s growing assertiveness, particularly in the South China Sea, has fuelled the perception that it is more of a threat than a leader. All in all, the BRICS no longer seem to be rising.

At the same time, the core of the West no longer seems to be declining. Although Europe remains mired in crisis and existential self-doubt, and Japan is still finding its feet after two decades of economic stagnation, the US is as relevant as ever. Indeed, no major global challenge – from conflict in the Middle East to climate change to global financial regulation – can be confronted without American engagement. America’s enduring dominance will rile many, and with good reason.

A quarter-century after the Cold War’s end, the world should have arrived at a more equitable and balanced way of getting things done. But it has not, and no other single power is in a position to take America’s place. Europe is too inward looking; China inspires too much suspicion; and India, despite showing signs that it is preparing for a greater global role, lacks enough international authority on its own. As a result, nearly 20 years after former US Secretary of State Madeleine Albright dubbed her country “indispensable”, it remains so.

The imperative now is for the US and the world to recognise this. Rather than focusing our attention on alternatives to US leadership, we should be emphasising its importance – an approach that would help to spur the US to rededicate itself to its international responsibilities. There have been hints that this impulse still exists – notably, the Iranian nuclear deal – but they remain inadequate to the challenges confronting the world.

The international order is at a crossroads. It needs the US to guide it – with ingenuity, initiative, and stamina – in the direction of peace and prosperity. Obsessing about who might eventually replace America is bound to get us all lost.

Ana Palacio is former Senior Vice President of the World Bank and member of the Spanish Council of State

© Project Syndicate 2015