Saturday, 12 July 2014

BRICS may soon acquire teeth (Pakistan Observer)

M D Nalapat
Friday, July 11, 2014 - In what was probably the first time a summit between two leaders was dependent on a football match, that between Chancellor Angela Merkel of Germany and Prime Minister Narendra Modi of India was postponed. The reason? As Germany swamped Brazil 7-1 in the semi-finals of the World Cup, it would be politically risky for the German Chancellor to not be at hand in Brazil to cheer on her team in the finals. Hence a Germany-India summit planned for July 14-15 in Berlin was cancelled. Ordinarily such changes in schedules are calculated to offend one or the other party, but in this case, Prime Minister Modi ( himself a consummate political strategist) must have fully understood Chancellor Merkel’s compulsions, hence it is unlikely that there has been any angst in Delhi about the postponement of the summit. Should it have taken place, Germany would have been the first country outside the subcontinent that Prime Minister Modi visited after taking over on May 26,2014. This would have created some heartburn in Japan, for Prime Minister Shinzo Abe is a confirmed Indophile who wants his country to host the first global-scale summit of the Modi administration.

Because Germany won the semi-finals and Chancellor Merkel has to be in Brazil ( coincidentally around the same time as Modi himself will be there, to attend the BRICS summit), it is almost certain that Tokyo will in early August be the first world capital officially hosting the new Prime Minister of India. Of course, should Germany lose to Argentina, Chancellor Merkel may wish she had stayed at home to receive the Prime Minister of India, as she would clearly not have brought much luck to her team, nor is it politically a plus to be around when home team crashes to defeat .

Contrary to a plenitude of reports characterising him as focussing on social issues,the core concern of Prime Minister Narendra Damodardas Modi is economics. His task is to lift annual growth in India to well past 10%, hopefully even to 15%. Should such a rate continue for a generation, the country would reach Middle Income status, and the sickening sight of underfed and under-educated beggar children on street crossings in the metropolitan centres of India will disappear. It is a measure of the failure of the successors to the British that nearly seven decades after freedom, the country still has over 300 million wretchedly poor people, and in fact, that about 700 million citizens of the Republic of India live in conditions that a civilised person would not wish upon an enemy. Prime Minister Modi hails from the practical, pragmatic state of Gujarat, and the weltanschauung (world-view) of this prospering state has suffused his policies. It is in such a context that both Japan and Germany are crucial in his plans. The Japanese and the Germans can be excellent technology and manufacturing partners. While India has software skills, the country lags far behind in manufacturing excellence. A combination of German and Japanese skills in the latter, if harnessed to the former, can create a unified economic ecosystem with the potential to compete globally against all comers, and inflict at the least 2-1 defeats on them, if not always 7-1 victories in the sphere of global competition.

It is in the context of generating faster growth that the BRICS meeting in Brazil assumes significance. The gathering has powerhouses across continents, except North America. China has become the second-largest economy in the world, and if the present leader, Xi jinxing, replicates the success of his predecessors Jiang Zemin and Hu Jintao, will surpass the US before he remits office after the customary two 5-year terms granted by Chinese Communist Party convention to its General Secretary, who these days is also President of the Peoples Republic of China. Aware that markets in Europe and the US are growing much slower than those in countries elsewhere, Xi will seek to leverage his diplomatic outreach to ensure privileged access for Chinese companies to such markets. In such a context, if BRICS becomes a fully-developed association rather than what it now is, a talking shop, that would help not only China but the other four members: Russia. South Africa, Brazil and India. The clear intent of Beijing is to use the mechanism of BRICS to set up a BRICS bank which could stimulate growth in member-countries. Equally crucially, what is needed is a BRICS headquarters, so that the association becomes more formalised and greater coordination can take place between its members. While the headquarters of a BRICS bank would most likely be in Shanghai, because of the much larger contribution of China to its finances, the best location for a BRICS headquarters would be India, for the reason that the country is a diplomatic crossroads, friendly with East and West, North and South.

Should the Brazil meeting conclude with just another closing statement and a photo-op, the leaders assembled these would have lost an opportunity to give teeth and salience to this major grouping of powers. Certainly Prime Minister Modi can be expected to lose no opportunity to ensure that practical decisions get taken, and that a BRICS bank and a BRICS headquarters becomes a reality. In a multi-polar world, BRICS can be a major player, should the leaders of the five countries meeting in Brazil next week decide so.

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