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Are we witnessing the Emergence of a New Block?

The experts assert that the significance of “emerging markets” is increasing day by day. While the global economy and the “developed states” are struggling with the recession [2], developing states have reached stability in economic growth and continue to move upwards in the global economy. These states have not only transformed themselves, but have also become new centers of riches and trade. Moreover, they are not only impacting global competition but are also affecting the most developed and trusted domestic markets [3].

China is seen as the leader within the emerging markets. It has become the center of attention because its capacity to influence other states’ economies has increased. Even though we acknowledge that thinking within the “Cold War” framework is wrong (though there are some who resist thinking outside of it), formation of unofficial and loosely structured blocks, which do not fit into the classical formation of blocks, is likely in the future. For example, BRIC states, which are articulated as a whole, could end up establishing a block by becoming political powers via building upon their current economic advantages.

The increasing interest in BRICs is the result of (1) the necessity to place these states in a theoretical framework, as defined in financials terms [4], and (2) the possible effects of these states on international politics beyond economic terms.

Parts of a Significant Chain
The term “BRICs”, which is used to describe the fastest growing world economies of Brazil, Russia, India and China, was created as a financial term and has gained increased usage since. According to Goldman Sachs researchers, these four states will become the leading economies of the world by 2050. In the “Dreaming with BRICs: The Path to 2050,” published in 2003, researchers argue that:

“Over the next 50 years, Brazil, Russia, India and China—the BRICs economies—could become a much larger force in the world economy… If things go right, in less than 40 years, the BRICs economies together could be larger than the G6 in US dollar terms. By 2025 they could account for over half the size of the G6 (US, Japan, UK, Germany, France and Italy). Currently they are worth less than 15%. Of the current G6, only the US and Japan may be among the six largest economies in US dollar terms in 2050. About two-thirds of the increase in US dollar GDP from the BRICs should come from higher real growth, with the balance through currency appreciation. The BRICs’ real exchange rates could appreciate by up to 300% over the next 50 years (an average of 2.5% a year)… As nearly as 2009, the annual increase in US dollar spending from the BRIC should be greater than that from the G6 and more than twice as much in dollar terms as it is now. By 2025 the annual increase in US dollar spending from the BRICs could be twice that of the G6, and four times higher by 2050. [5]”

Projections such as these make such countries relatively more attractive to investors from developed states. Thus, according to the Cambridge University EFPR Global Research, 13.38 billion dollars have been invested in 18 funds in the BRIC states [6].

The experts with positive projections for the BRICs argue that Brazil, Russia, India and China, which are powerhouses of developing states, make up one third of the world’s economic growth. These states form an effective chain because China and India are the biggest consumers of all kinds of goods and construction materials while Russia is rich in oil and natural gas and Brazil sticks out with its other natural resources [7].

It is therefore obvious that economic cooperation between these states would be beneficial to all parties. The issue that most interests us is whether the economic cooperation between these four states would extend to other areas and develop into an enduring political partnership.

The Restructuring of International Organizations
In the future, Brazil, Russia, India and China can likely cooperate in areas other than economics. The “need” for a common understanding and a common standpoint against the current problems has been established at the meeting of ministers of foreign affairs in Yekaterinburg, Russia, on 16 May 2008. The ministers of foreign affairs of Russia and China acknowledged the significance of India and Brazil in international arena and supported the latter’s desire to become more active in the United Nations. The Representatives of all four states promised to cooperate with each other and with other states on issues such as sustainable international security and stability and provision of equal opportunities for developing states [8].

Experts argue that Western politicians should revise the international organizations, such as G-7 (+Russia) and the IMF, which directs world economy, to make them compatible with the changing conditions of the world. Were such a revision to be done, the BRIC states would support this process rather than oppose it.

Consequently, the BRIC countries have intensified the campaign to increase their effectiveness in various international organizations and have sought the help of other developing states in their lobbying activities.
While the BRIC states are trying to get involved in the international organizations and are aiming to strengthen their respective positions in the international “decision-making mechanism,” the United States, cognizant of this fact, is trying to use the trend to its benefit by incorporating these states in the status quo through appealing to their ambitions [9]. This trend is epitomized in the statement of the head of the World Bank, Robert Zoellick, wherein he opines: “The United States should invite China to become the `interested party` in the international system” [10].

Request for a Democratic International System
Although it is not openly declared, the revision of a damaged unipolar international system appears to be the aim of the BRIC countries. Continuous statements emerge from the BRICs states that underline dialogue, diplomacy and multi-polarity and request the establishment of a more democratic international system to redress injustices done in the current system such as the United States’ disregard of norms of international law, disregard of the UN and pursuit of a unilateral approach in Iraq. Issues such as these and West’s criticism of human rights violation and a push for democratization etc. can be seen as the polemics of this debate.

Parag Khanna argues, “It is time for multi-dependency rather than independency” [11] in his article on “emerging markets” or, as articulated in its renewed meaning, “the second world”. Consequently, he argues, states should abandon isolationist or selective policies and start cooperating with other states of different status for increase in prestige or protection of interests. Such an emphasis naturally contradicts the United States’ policy.

The BRIC states are aware of their strength and status in the world economy. They request a treatment in accordance with their current and prospectively increasing capacities.

In other words, the reason behind their endeavor to construct a more democratic international system (though confined to a rhetorical level for now) is the desire to make the international community recognize their power and to show the hegemonic power their implicit advantages [12].
Consequently, we need to ask if these states’ requests for a more democratic international system, and their coordinated activity in this direction, are the result of each state’s individual quest for more substantial relations with the West.

The BRICs are aware of the necessity to work together in the current international system which is dependent on one hegemonic power. Various actions are undertaken to this end. The BRICs probably realize that acting together could attain equal treatment for each member of the group. They are aware that a group, which is established around a common interest, would make each member individually more powerful. They understand that actors which are seeking a more democratic international system can be empowered this way.

According to a Russian expert, the BRIC states have different priorities and differing relationships with the West’s big powers, hence incompatible agendas. However, the common goal that unites them is their desire to strengthen their-own position in the 21st century’s fragmented world, where international organizations are weakened and legal norms are in crisis [13].

Forcing the West to Cooperate
If there is a transformation in the international system leading to an inevitable shift of power, forcing the West to cooperate, rather than continuing previous knee-jerk foreign policies, would demonstrate the strength of the BRIC states’ bid for a more democratic international system.

Although the BRIC states have started to give signals about their desire to act together, the West is nevertheless an important factor. The investment in BRIC states originates from the West and Western markets are important for the BRICs economies. Consequently, confrontation with the West could derail stable growth within the BRIC countries.

Furthermore, the BRIC states seem to be waiting for the West’s response to the international development embodied in their rise before formalizing any joint stance. Hence there is a symbiotic relationship between the evolving standpoint of these states and West’s response to their rise. It would be premature to attempt the formation of a political block at this point.

Towards a New World Order
It would be wrong to assume that global economic crisis negatively affected all states. According to various experts, the BRIC countries benefited from the crisis [14].

The crisis can also be viewed as the weakening of the current international order. The current order failed to respond to the “avant-garde trends.” Consequently, the emerging world order is a challenge for the dominant political system (democracy) and the dominant economic model (economic liberalism). The increasing strength of Russia’s and China’s political system and the mixed economy model characterize this challenge. After the Cold War ended, these two states opened up their economies to the world and implemented their respective versions of free market economy.
Russia and China, while asserting the contribution of their sui generis structures to the world economy, represent the most salient features of the request for a democratic international system, i.e. tolerance for the different characteristics of each state and respect for their national sovereignty.

[1] Researcher-Writer kosnazar©gmail.com
[2] “World Economy Shows New Strain”, Wall Street Journal, 15 August 2008
[3] “Emerging Markets: Reshaping the Global Economy” International Business Report 2008, Grant Thornton,http://www.grantthornton.com.au/files/ibr_2008_-_emerging_markets_report_final_72.pdf
[4] Adam Wolfe, “The Building BRICs of a New International System?”, World Politics Review Exclusive, 21 May 2008
[5] For details see: “Dreaming with BRICs: The Path to 2050”, Global Economics Paper No: 99, Goldman Sachs, October 2003.
[6] Lauren Foster, “BRICs: Acronym or Coherent Strategy?”, Financial Times, September 2007
[7] See: John Hawksworth and Gordon Cookson, “The World in 2050. Beyond the BRICs: A Broader Look at Emerging Market Growth Prospects, Price Water House Coopers Report, March 2008. For Goldman Sachs BRIC Reports see: http://www2.goldmansachs.com/ideas/brics/index.html
[8] “Glavı MİD stran BRİC prinyali sovmestnoe kommyunike v Yekaterinburge”, Regnum.ru, 16 May 2008,http://www.regnum.ru/news/1001330.html
[9] Henry M. Paulson, “A Strategic Economic Engagement: Strengthening US-Chinese Ties, Foreign Affairs, September-October 2008, http://www.foreignaffairs.org/20080901faessay87504/henry-m-paulson-jr/a-strategic-economic-engagement.html, C. Fred Bergsten, “A Partnership of Equals: How Washington Should Respond to China’s Economic Challenge”, Foreign Affairs, July-August 2008.
[10] Joseph S. Nye, “Balancing Asia’s Rivals”, Project-syndicate.org, August 2008, http://www.project-syndicate.org/commentary/nye58/English
[11] Parag Khanna, “Here Comes the Second World”, Prospect, May 2008.
[12] Adam Wolfe, “The Building BRICs of a New International System?”, World Politics Review Exclusive, 21 May 2008
[13] Fedor Lukyanov, “Diversifikatsiya Klubov”, Rossiya v Globalnoy Politike, 22 Haziran 2008,http://www.globalaffairs.ru/redcol/0/9646.html Emphasis added by the author.
[14] “Goldman Sachs: Strany BRİC vyigrali ot finansovogo krizisa”, K2Kapital, August 2008,http://www.k2kapital.com/analytics/reviews/427188.html

“Eurasia Critic” Magazine, November 2008

01 Aralık 2008

Yazar: Daniyar Kosnazarov

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