The outcome of the 1st BRIC Summit: a derelict zero

24 June 2009 by Sushovan Dhar


The first-ever summit of the BRIC [1] countries took place at Yekaterinburg at Russia on 16th June 2009 calling for a more diversified international monetary system. The core focus of the meeting, attended by President Dmitri Medvedev of Russia, the Indian Prime Minister Manmohan Singh, Chinese president Hu Jintao and Brazilian President Luis Inacio Lula da Silva was to improve the current global financial situation, to discuss how the four countries could collectively work better in the future and to reform the financial institutions. At the end of the summit, the BRIC nations suggested the need for a new global reserve currency that is ‘diversified, stable and predictable’.

Background

BRIC encompass over 25% of the world’s land coverage, 40% of the planetary population and hold a combined GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
(PPP) of $ 15.445 trillion1 which is 22.4% of global GDP. They are among the biggest and fastest growing emerging markets. These countries belong to the middle rung of the development ladder and the meeting ground is essentially their high GDP growth rate, explosion of the financial markets with rapidly rising stock markets, high recipient of Foreign Direct Investment, etc. China and India lead the pack in most of these aspects. The following table [2] provides the BRIC positions vis-à-vis the other nations with a few macro-economic parameters:

The Summit

Held in the midst of this profound global crisis, this Summit was intended to be a space to officially announce the creation of this loose block. The summit was also organised at a critical juncture when the advanced industrial states which also forms the core of the imperialist order or the G8 G8 Group composed of the most powerful countries of the planet: Canada, France, Germany, Italy, Japan, the UK and the USA, with Russia a full member since June 2002. Their heads of state meet annually, usually in June or July. is bereft of legitimacy. The typhoon unleashed by the neo-liberal project has resulted in a total deregulation of the financial markets and is wracking the globe in the form of simultaneous crises from global financial collapse to worsening climate changes. It is plausible that the BRIC leaders decided to intensify their efforts at a time when the foundations of the G8 domination seem to be trembling. Hitherto, their attempts have been all too sporadic, either at the negotiation table of the now derailed World Trade Organisation WTO
World Trade Organisation
The WTO, founded on 1st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.

(WTO) or at the annual jamboree of the big business leaders as well as the rich and elite at the Davos World Economic Forum (WEF). The meeting aimed to face the reforms proposals in circulation or in the pipe-line; largely put forward by the developed countries - mainly represented by the G-7, in the wake of current “crisis”. As evident from the statements and deliberations, the purpose is not really to challenge the “hegemony” or to emerge as the new “hegemons”, at least in the immediate future. But to protect and secure safe places within the current hegemonic order, which is, however, far from absolute.

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Footnotes

[1BRIC refers to the fast growing developing economies of Brazil, Russia, India, and China. The acronym was first coined and prominently used by Goldman Sachs in 2001. Goldman Sachs argued that, since they are developing rapidly, by 2050 the combined economies of the BRICs could eclipse the combined economies of the current richest countries of the world.

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