By stating their willingness to help the crisis-hit eurozone, emerging powers – Brazil, Russia, India, China and South Africa – stressed once more their key role in world geo-economics and politics. However, the BRICS remain too different to define common interests and should not have a centre-stage role in Europe's crisis, writes Susanne Gratius from the Madrid-based think-tank FRIDE.
Susanne Gratius is a senior researcher at the Madrid-based think tank FRIDE. She contributed this commentary exclusively to EURACTIV.
"During the past few days the BRICS – Brazil, Russia, India, China and South Africa – professed their willingness to help crisis-torn Europe. However, when they met to discuss the issue on 22 September in Washington DC, the group did not make any significant decision.
The noise made by the BRICS stressed once more that these countries will play a key role in world geo- economics and politics. Recently, the BRICS transformed from an economic bloc into a platform for global demands, including regular summits. The 'S' for South Africa which has been added to the label guarantees a broad regional coverage. Brazil, Russia, India and China already represent 17.4% of global GDP and are the motor of global economic growth.
The BRICS initiative evidenced Europe's weakness to solve its own economic problems. Current divisions between member states and Germany's new role as a veto player will contribute to increase the perception of European decline and the failure of regional integration.
There is a need for a coherent approach and firm and convincing internal solutions. To avoid long-term trade-offs, the EU cannot let the situation to be solved by third parties and should instead limit the space for external protagonists.
Particularly Brazil's and China's proactive stance on the financial turbulence in Europe and the United States has less to do with solidarity than with clear defined self-interests. In the Brazilian case, at her recent speech at the UN General Assembly, President Dilma Rousseff made clear that the group will participate in the decisions regarding the global crisis and has asked for a reform of the international financial system.
Brazil wants more vote and voice for the BRICS at the World Bank, the International Monetary Fund and other multilateral organisations. Despite recent changes, Brazil, the sixth largest economic in the world, still holds a lower IMF quota than Belgium, which ranks 21st. Apart from Brazil's global interests, relations with Portugal have traditionally been strong, Spain is a major foreign investor, and Germany is its main European trade partner.
A weak euro and a recession in the EU space will obviously affect Brazil's own economic prospects, particularly taking into account that at the moment the Brazilian real is too strong to be competitive.
A similar conclusion can be drawn for China. The country's high growth rates also heavily depend on exports to the EU and the United States and thus on a rapid recovery of both. But Chinese demands are different. China's support for the euro – through additional funds for the IMF or by buying more European bonds – is conditioned upon the European Union's recognition of China as a market economy and the lifting of the arms embargo.
Is it worth it for the EU to abandon 'European principles' in exchange for some economic relief? From an EU perspective, instead of buying European debt titles it would be much better if China decided to revaluate its artificially weak national currency.
But should these emerging powers play a role in saving the euro? The answer is probably not, for two major reasons. First, the BRICS do not play in the European league, but their own. More than allies or 'strategic partners", the BRICS are competitors of the EU.
A reform of the international financial system will entail a reduction in European influence. Whilst a reform might be the rational thing to do if one looks at the economic figures world-wide, it is still not realistic. To begin with, once again the IMF chief post was given to a European. Second, not all BRICS share European values and principles. To increase the EU's economic interdependence with China and Russia will have a political impact on traditional European assets such as human rights and democracy and the final goal of global governance based on rules and norms.
As it turned out, the BRICS are too different to define common interests on third partners. But even if they would have been able to 'help Europe', the BRICS should not have a protagonist role in Europe's crisis. Their participation will become part of the problem rather than of the solution. But the fact that the EU's own fragility has offered the BRICS a public space for initiatives reflects that decision-making processes are clearly shifting away from Europe."