EDITORIAL - Engaging the BRICS

As the global addiction to football's World Cup began to ease last week, the tournament's host, Brazil, though less raucously, welcomed a handful of guests who, over a few days, took substantial decisions of potentially great value to countries such as our own., but about which we do not believe Jamaica and other members of the Caribbean Community are being sufficiently attentive.

There is the danger that by the time we are awake, we may be in a difficult process of catch-up.

Our reference is to the summit of the BRICS (Brazil, Russia, India, China and South Africa), countries which account for some of the world's fastest-growing economies and between them represent one-fifth of global economic output.

They are exercising greater leverage over global economic and political affairs and assume positions that are likely to be more attuned to the concerns of developing states than those fashioned in the traditional centres of power.

At last week's meeting in Fortaleza, the BRICS leaders formalised two critical initiatives that have been on the table for sometime: the creation of a new development bank, to be based in Shanghai, which will have an initial capitalisation of US$50 billion to be subscribed equally by its members; and establishment of a US$100-billion continent reserve fund, to which China will be the largest contributor with US$41 billion. South Africa will put up US$5 billion and India and Russia US$18 billion each.

A lender of last resort

Once launched, the New Development Bank, whose capital is eventually to reach US$100 billion, will lend funds for infrastructure projects in the BRICS countries as well as in other emerging economies, while the reserve fund will act as a lender of last resort, not dissimilar to the prescribed role of the International Monetary Fund. Except that in the case of the new institutions, the centres of power and influence will not reside in Washington, London, Paris, Ottawa and Berlin, which have been resistant to reforms to reflect recent reconfigurations in global economic power.

Indeed, in an economic sense, these institutions, if they work, will be important steps away from the unipolar world of the Washington Consensus, and in that regard could weaken the links between economic rationality and geopolitical strategy. In any event, a broader mobilisation of liquidity is good for the global economy, if it lessens financial volatility and contributes to stability.

However, Jamaica and its CARICOM partners should not presume the value of these institutions with a kind of detached assumption of their worth to this region. We ought to robustly engage the BRICS as a group, working, if required, with other emerging economy partners in our region to determine how the institutional arrangements can be of value to us and how we can influence them to our cause.

But it is not only the BRICS multilaterals to which Jamaica should be paying attention and with which it should be seeking to build relations. As we have urged before, Kingston, notwithstanding concerns of Western partners, should be aggressive about expanding relations with the individual states, including Russia and its partners in the Eurasian Economic Union, a group with an economy of US$2.7 trillion and control of 20 per cent of the world's gas reserves and 15 per cent of its oil. Our engagement of China has demonstrated what is possible.

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