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Building BRICS

Ludger Schadomsky / sgbMarch 26, 2013

Brazil, Russia, India, China and South Africa want to breathe new life into the BRICS group. Topping the agenda in Durban are the crisis in Syria and a development bank of their own.

BRICS Logo vom kommenden Gipfel in Durban Südafrika März 2013

Will BRICS soon turn into E-BRICS? As if the heterogeneous group of states made up of Brazil, Russia, India, China and South Africa didn't have enough trouble with its search for identity, it now has a new candidate to contend with.

Just in time for the group's annual summit, which begins on Tuesday (26.03.2012) in Durban, South Africa, Egypt's President Mohammed Morsi on a visit to India expressed his country's wish to expand the acronym BRICS with an E.

Soon after the accession of South Africa in 2011, economist Jim O'Neill, who coined the name BRIC, predicted the demise of the club of rapidly developing countries. He said South Africa did not belong in BRIC group, suggesting the country is a drag on the dynamics of the grouping. As an alternative, he recommended Mexico or Turkey.

South Africa the laggard

A recent study from Germany's Bertelsmann Foundation appears to support this claim. Despite promising economic data and significant government investment, South Africa has shown "no positive social development," it said. In particular, it said the health and education systems and the labor market were causes for concern.

"We should be careful with direct comparisons," Bertelsmann BRICS expert Najim Azahaf told DW. But South Africa does appear to be the laggard of the group and - in contrast to Brazil, which also has vast social differences - this appears unlikely to change.

A large-scale 2012 Bertelsmann study showed that alongside the slow pace of political reform, the BRICS members were plagued by serious social inequality. This assessment is a top concern for a club that represents three billion people and wants to act as a counterweight to the structures of the groups of the leading economic nations G7 and G8 - the World Bank, the International Monetary Fund (IMF) and the UN Security Council - which are often considered unjust.

--- DW-Grafik: Peter Steinmetz Redakteurin: Maja Braun --- 2013_03_22 BRICS Staaten.psd

BRICS against the world?

"The BRICS are a shock to the current world order," a Chinese newspaper recently said of the attempt by the group of five countries to stand up to the US and Europe. Frustration still runs deep among BRICS members due to the Libya conflict and NATO's role. At their meeting in China in 2011, they criticized the Western military intervention in harsh terms in the so-called Sanya Declaration (BRICS summit 2011 in Sanya, China - the ed.).

This explains the voting behavior in the Security Council on the Syria resolutions introduced by the Europeans. Russia and China both chose to veto while India, Brazil and South Africa abstained - the resolutions failed despite intense lobbying by France and Germany.

Before the Durban summit, Syria's President Bashar al-Assad appealed to the BRICS states to help resolve the crisis in his country. In addition to Syria, North Korea and Iran managed to make it into the communiqué from Durban.

"BRICS has long been a geopolitical construct," said Peter Draper, an economist and BRICS expert at the Wits Business School in Johannesburg, South Africa. BRICS today serves as a counterweight to the G8, he said, made particularly interesting by Russia's position, who he says are represented in both groups. Ultimately, the closing of ranks on the Syria issue could not hide the deep divisions within the group, such as on the reform of the UN Security Council, Draper said.

Another development bank

That's why many want to turn words into deeds at the South Africa summit. Above all, the group hopes to approve the Indian-led project for a development bank, supported exclusively by BRICS members and associate developing countries.

Symbolbild Brasilien Infrastruktur Bauwirtschaft
The BRICS economies are expanding rapidlyImage: AP

The BRICS Development Bank is intended to offset the institutions of the World Bank and IMF, which Beijing, Delhi and Pretoria see as the long arm of the US government. In contrast, equipped with an investment of 50 billion euros ($64.9 billion), a South Bank could supposedly make autonomous decisions on development and infrastructure projects. And it's no secret that host South Africa hopes the decision on the bank's headquarters will go its way on Wednesday - as do Shanghai and Moscow.

The BRICS group already has the blessing of the World Bank. Its chief economist Kaushik Basu has welcomed the initiative, but at the same time has warned of a "Herculean task." Critics point out that a new southern bank would go against the proposed strengthening of existing regional banks, namely the African Development Bank and the Asian Development Bank.

The Chinese are coming - India is already there

New Chinese President Xi Jinping is being given special attention at his first summit. In Durban, he will not only put in a word for Shanghai but will broadly underscore Beijing's huge interest in Africa, demonstrated by trade worth 166 billion euros in 2011.

If BRICS expert Azahaf is to be believed, the 5,000 delegates at the Durban beach resort will see a repeat of the colonial "Scramble for Africa" - or more specifically, for its resources.

"It's not only China that is interested in Africa's raw materials and minerals," he said. "Brazil discovered the Portuguese-speaking Africa quite some time ago, and India has always had strong links with the continent."

Beyond resource strategies, a number of other issues are on the table. The BRICS group founded a joint think tank in late 2011, and it will be given new impetus in Durban. A common economic council is also on the agenda, as well as a $240-billion anti-crisis fund, which should help members with limited foreign currency reserves like South Africa get over payment shortfalls.

BRICS go online - Africa goes with them

A more concrete plan is the so-called BRICS cable that will be discussed when the five BRICS leaders meet with African leaders on Wednesday. The 34,000-km (21,000-mile) fiber-optic cable with a mammoth capacity of 12.8 terabits per second, connecting the BRICS countries and the United States, now appears likely to get the go-ahead. Investors are said to be lined up for the $1.5-billion IT project.

This means BRICS citizens will soon have something to show for the previously abstract group of countries. If the cable goes online as planned in 2014, Internet access will become easier and cheaper for many people - 21 countries will benefit in Africa alone. Success stories like this are what the first BRICS summit on African soil hopes to achieve.

African man typing on a laptop
A new cable between the BRICS states will bring affordable Internet to millionsImage: picture alliance/Anka Agency I

There have not yet been any official reactions to Egypt's bid to join, and President Morsi will make a new attempt in Durban. But it seems doubtful that the established BRICS countries will want to bring in politically and economically unstable Egypt - and especially not most prominently in the first position of their acronym. According to Jim O'Neill, Mexico, Turkey, South Korea and Indonesia are significantly stronger candidates.