Henry Meyer Moscow
ADMITTING South Africa was the easy part. The Brics, the emerging markets club that owes its existence to a Goldman Sachs economist who coined the acronym for Brazil, Russia, India and China, is looking at more expansion. Any ideas on renaming it are welcome.
“This might take a year or two, but this is an absolutely unavoidable process,” Vadim Lukov, Russia’s deputy representative to the Brics, said last week.
“There are a whole number of countries that want to join Brics, major developing economies.”
Russia in July will host the sixth annual summit of the organisation, whose importance has increased in Moscow as President Vladimir Putin engages in the biggest confrontation since the Cold War with the US and Europe over the year-long conflict in Ukraine.
The Brics agreed to set up a $50 billion (R588bn) development bank to rival the International Monetary Fund (IMF) and the World Bank at last year’s summit in Brazil, as well as a $100bn currency exchange reserve.
Russia is promoting the creation of a Brics rating network to counterbalance what Lukov calls “openly politicised” credit reports by US-based Standard & Poor’s and Moody’s Investors Service, and an energy association to exert some influence on markets.
Russia is the world’s biggest oil and gas exporter and China the largest energy consumer.
“We want to show leadership through new forms of co-operation, which will be more fairly balanced and reflect today’s multipolar world,” Lukov said.
Putin last year urged fellow leaders of the world’s largest emerging economies to seek a bigger global role, accusing the US and its allies of abusing their dominance of international institutions.
The Brics have evolved from the original four-member term coined in 2001 by then-Goldman Sachs economist Jim O’Neill to describe the growing weight of the largest emerging markets in the global economy.
In 2011, South Africa joined to give the Brics a broader geographic representation.
Still, the group has struggled to make its voice heard. The five countries failed to agree on a candidate to head the World Bank in 2012 and the IMF in 2011.
The Brics nations would co-ordinate to ensure a mutually acceptable candidate was selected as the secretary-general of the UN to replace South Korea’s Ban Ki-moon next year, Lukov said.
While a moratorium currently existed on admitting new members, it would be time to think about expansion once the new financial structures and economic partnership projects were up and running, the Russian diplomat said at the foreign ministry in Moscow.
The development bank also had a spare $50bn capital to allocate and was willing to admit any country that shared Brics’ values, Lukov said.
Greece could be one of them. The EU member’s possible entry into the Brics bank is up for discussion, though not before the July summit, RIA Novosti reported last week, citing Russian Deputy Finance Minister Sergey Storchak.
How would the organisation’s name change with the admission of new members? “I’ll have a think. You have a think too,” Lukov replied.
As for O’Neill, who predicts the Brics will be as big as the Group of Seven major industrialised nations by 2035, he had misunderstood the concept he had invented, Lukov said.
“What did Goldman Sachs teach us? That these four countries are nothing more than a platform for profitable investments; nothing more than an object,” he said. – Bloomberg