Leaders from BRICS nations participate in the 13th annual summit despite diplomatic tensions within the group (image: Alamy)

By Flávia Milhorance
RIO DE JANEIRO, Sep 22 2021 (IPS)

Amid scepticism and a lack of public interest, domestic crises and the backdrop of Covid-19, last week the BRICS countries delivered on their commitment to hold an annual summit without showing the signs of disunity that has beset the group in recent years.

So what still holds the bloc of so-called emerging nations together?

In a virtual event, the heads of state of host country India, Brazil, Russia, China and South Africa renewed the group’s pledge of cooperation for the thirteenth time, in an event that passed without incident, unlike the barbs of last year. It also failed to attract much public interest.

Internet searches for BRICS-related news during the summit fell to one of their lowest points levels in the group’s history, according to Google Trends. Online searches usually peak in popularity during the event but have rarely sparked as much interest as the 2014 summit, when the bloc launched the New Development Bank (NDB).

Today, not even one of the BRICS’ most enthusiastic supporters, the economist Jim O'Neill, who coined the group’s acronym two decades ago, seems impressed with the latest developments

Scepticism towards the progress of the bloc pervades. It launched in 2009 with industrialised nations in the grip of the financial crisis with great – perhaps too great – expectations over its potential to redefine global governance. Today, not even one of the BRICS’ most enthusiastic supporters, the economist Jim O’Neill, who coined the group’s acronym two decades ago, seems impressed with the latest developments.

“The bloc’s ongoing failure to develop substantive policies through its annual summitry has become increasingly glaring,” O’Neill wrote after the event.

BRICS’ first decade of success

O’Neill’s frustration derives from what he recalls the “roaring success” of the four founding BRICS nations first decade. South Africa joined the group in 2010.

In 2009, Russia hosted the first summit, seeking a more active voice on global economic affairs in response to the devastating financial crisis.

In its early years, “countries pushed for reforms of the International Monetary Fund and the World Bank and offered an alternative to the international financial order by creating the NDB,” said Karin Costa Vazquez, of the Center for BRICS Studies at Fudan University.

At that time, and excluding Russia, countries formed the BASIC group, offering an alternative voice in international climate negotiations after the “failure of developed countries to define a climate agenda” and the collapse [of COP15] in Copenhagen”, said Izabella Teixeira, who was Brazil’s environment minister from 2010 to 2016.

“The BRICS were an environment of important political dialogue,” Teixeira told Diálogo Chino. “It was a super interesting moment of confidence building. There was an informality in the conversation among the ministers.” The group’s diplomatic role, Teixeira added, “was absolutely important” in the negotiations that would later culminate in the 2015 Paris Agreement.

From then on, however, experts chart the emptying of the BRICS as a group, as economic and political crises burdened member countries. It witnessed recession in Russia, South Africa and Brazil, tensions between China and India and the belligerent anti-China rhetoric of Jair Bolsonaro, who became president in 2018 and began to deconstruct environmental policies and isolate himself diplomatically.

“The country has gone against the world,” Teixeira said.

BRICS retains relevance

Although the heyday may be behind it, BRICS is still relevant today, according to Costa Vazquez. “The BRICS is the only space that the largest emerging economies in the world have to coordinate positions and propose initiatives of common interest to the five members. This is no small thing when we are talking about more than 30% of world GDP,” she said.

Vazquez argues that in order to keep functioning, the multilateralism of the bloc has given way to more bilateral agreements. As such, it is more flexible, limiting cooperation when interests diverge and resuming and expanding it when they converge.

Since BRICS doesn’t function as an economic bloc, it does not have a formal statute of rules that dictate its behaviour. The cost of membership is low, and the diplomatic benefits are still significant, according to Oliver Stuenkel, from the Getulio Vargas Foundation.

Stronger diplomatic relations can also reflect booming bilateral trade. For example, trade between Brazil and China should hit a new record in 2021. Last year, bilateral trade topped US$100 billion for the first time and as of last month, it had already surpassed US$93 billion.

Unsurprisingly, Bolsonaro adopted a milder tone on China at the recent BRICS summit. Meanwhile, China’s President Xi Jinping said that, regardless of the difficulties, the BRICS will maintain solid and constant cooperation.

NDB offers hope

Despite few new articulations on historic areas of cooperation such as climate, the main product of the BRICS, the NDB, is gaining momentum. Paulo Nogueira Batista Júnior, and economist who was vice-president of the bank between 2015 and 2017, criticised the slowness of the NDB to produce results and fulfil its aspirations of becoming a global development bank.

Today, however, Batista Junior sees advances. “In the last two years, the bank seems to have moved a little more and achieved some results,” he said. “For example, it has approved projects, including support programs to combat Covid-19, continues to hire employees, built its headquarters, developed technically and opened the process of inaugurating new members.”

In early September, the NDB announced the addition of Uruguay, the United Arab Emirates and Bangladesh to its membership. In its six years of operation, the bank has approved some 80 projects, with investments totalling US$30 billion. The bank has also made US$10 billion available to BRICS member countries to combat Covid-19.

“The bank is already part of the landscape,” said Batista Junior. Can the same still be said of the BRICS bloc?

This article was originally published by ChinaDialogue

The on-going drought in the Horn of Africa is widespread, triggering a regional humanitarian crisis with food insecurity skyrocketing, particularly among livestock-owning communities, and devastating livelihoods. Credit: FAO

By IPS World Desk
ROME, Jun 16 2017 (IPS)

With the clock ticking toward the 2030 deadline for meeting the international goals to eradicate hunger and poverty, five of the world’s most important emerging economies are well positioned to take a leading role in helping to achieve these objectives, according to the United Nations.

The five countries, known collectively as the “BRICS” (Brazil, Russia, India, China and South Africa), form an important economic block, the Rome-based UN Food and Agriculture Organization (FAO) on June 16 reported.

They account for more than 40 per cent of the world’s population and over 20 per cent of global Gross Domestic Product (GDP). Together, they produce more than one-third of global cereal production. Last year, Russia became the largest wheat exporter in the world.

“The BRICS countries play an important political role in the international arena. Developing countries around the world look to your successes in economic development over the past few decades as an example to follow,” said Kundhavi Kadiresan, Assistant Director-General and FAO’s Regional Representative for Asia and the Pacific, during the 7th Meeting of the BRICS Ministers of Agriculture, in Nanjing, China.

“Your experiences provide a path that can help us all meet our global collective commitments, namely those of the 2030 Agenda for Sustainable Development – its 17 Sustainable Development Goals (SDGs) – and the Paris climate accord.”

Kadiresan pointed out that, despite trends towards urbanization, poverty in the world today is primarily rural. As a result, accelerating rural development will be key to achieving the SDGs.

“The question is how can we do this? Our experiences in countries in different parts of the world have shown that it can best be done through a combination of agricultural growth and targeted social protection, but also through growth in the rural nonfarm economy,” she said.

“Agriculture can be a driver of sustained and inclusive rural growth. In low-income countries, growth originating from agriculture is twice as effective in reducing poverty as growth originating from other sectors of the economy.”

Equally important is that all the tools, approaches and technologies developed “must be useful and accessible to poor family farmers in developing countries” so that they can increase production and productivity.

Brazil, Russia, India, China and South Africa have strong agricultural research systems. Credit: FAO

BRICS Strong in Agricultural Research

Achieving agricultural growth would also require investments in research and development, and the BRICS countries could play a leading role in this, as all five countries have strong agricultural research systems that are working on many of the challenges faced by developing countries, such as feeding a growing population in a sustainable way, according to FAO.

“Biotechnology would also play a key role in these advances, as would agro-ecological approaches. Climate-smart agriculture will be essential to adapt to the uncertain changes facing our farmers, and it will rely heavily on cutting-edge research.”

Information and Communication Technologies are becoming more widespread by the day, and they offer a promising approach to address many of the challenges smallholders face with regard to information on prices, weather forecasts, vaccines, financial services, and much more.

Agricultural Growth Not Enough

Agricultural growth, as important as it is, cannot eradicate hunger and poverty all by itself – social protection programmes can also play a key role in rural development, the UN specialised body says.

These programmes have important poverty reduction and health benefits, and can also strengthen the confidence of family farmers, encouraging them to become more entrepreneurial, it explains. “Brazil’s Fome Zero and India’s National Rural Employment Guarantee Act are global references in this regard.”

Kadiresan stressed that it is important not to overlook the key role played by the rural non-farm economy in fostering rural development.

“As economies transform, most farm households obtain significant income from activities other than farming. The income from these activities provides not only a higher standard of living, but also a more stable one in many cases. Governments play a key role in encouraging this transformation by investing in rural health and education,” she said.

“While these investments are typically not within the Ministry of Agriculture’s mandate, we must support such investments, as they are in the interest of our rural constituents. Where would any of us be today without the opportunities provided by our former teachers and a strong educational system?”

International trade could also serve as an effective instrument in promoting food security and act as an adaptation tool to climate change. When an inevitable bad harvest occurs, as it does in every country at some stage, timely imports can help to rebalance the domestic food economy.

By Daya Thussu
LONDON, Jul 22 2015 (IPS)

The formal opening of the BRICS Bank in Shanghai on Jul. 21 following the seventh summit of the world’s five leading emerging economies held recently in the Russian city of Ufa, demonstrates the speed with which an alternative global financial architecture is emerging.

The idea of a development-oriented international bank was first floated by India at the 2012 BRICS summit in New Delhi but it is China’s financial muscle which has turned this idea into a reality.

Daya Thussu

The New Development Bank (NDB), as it is formally called, is to use its 50 billion dollar initial capital to fund infrastructure and developmental projects within the five BRICS nations – Brazil, Russia, India, China and South Africa – though it is also likely to support developmental projects in other countries.

According to the 43-page Ufa Declaration, “the NDB shall serve as a powerful instrument for financing infrastructure investment and sustainable development projects in the BRICS and other developing countries and emerging market economies and for enhancing economic cooperation between our countries.”

The NDB is led by Kundapur Vaman Kamath, formerly of Infosys, India’s IT giant, and of ICICI Bank, India’s largest private sector bank. A respected banker, Kamath reportedly said during the launch that “our objective is not to challenge the existing system as it is but to improve and complement the system in our own way.”

The launch of the NDB marks the first tangible institution developed by the BRICS group – set up in 2006 as a major non-Western bloc – whose leaders have been meeting annually since 2009. BRICS countries together constitute 44 percent of the world population, contributing 40 percent to global GDP and 18 percent to world trade.“Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way” – Kundapur Vaman Kamath, head of the New Development Bank (NDB)

In keeping with the summit’s theme of ‘BRICS partnership: A powerful factor for global development’, the setting up of a developmental bank was an important outcome, hailed as a “milestone blueprint for cooperation” by a commentator in The China Daily.

The Chinese imprint on the NDB is unmistakable. The Ufa Declaration is clear about the close connection between the NDB and the newly-created Asian Infrastructure Investment Bank (AIIB), also largely funded by China. It welcomed the proposal for the New Development Bank to “cooperate closely with existing and new financing mechanisms including the Asian Infrastructure Investment Bank.” China is also keen to set up a regional centre of the NDB in South Africa.

If economic cooperation remained the central plank of the Ufa summit, there is also a clear geopolitical agenda.

The Global Times, China’s more nationalistic international voice, pointed out that the establishment of the NDB and the AIIB will “break the monopoly position of the International Money Fund (IMF) and the World Bank (WB) and motivate [them] to function more normatively, democratically, and efficiently, in order to promote reform of the international financial system as well as democratisation of international relations.”

The reality of global finance is such that any alternative financial institution has to function in a system that continues to be shaped by the West and its formidable domination of global financial markets, information networks and intellectual leadership.

However, China, with its nearly four trillion dollars in foreign currency reserves, is well-placed to attempt this, in conjunction with the other BRICS countries. China today is the largest exporting nation in the world, and is constantly looking for new avenues for expanding and consolidating its trade relations across the globe.

China is also central to the establishment of the Shanghai Cooperation Organisation (SCO), a Eurasian political, economic and security grouping whose annual meeting coincided with the seventh BRICS summit. Founded in 2001 and comprising China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, the SCO has agreed to admit India and Pakistan as full members.

Though the BRICS summit and the SCO meeting went largely unnoticed by the international media – preoccupied as they were with the Iranian nuclear negotiations and the ongoing Greek economic crisis – the economic and geopolitical implications of the two meetings are likely to continue for some time to come.

For host Russia, which also convened the first BRICS summit in 2009, the Ufa meeting was held against the background of Western sanctions, continuing conflict in Ukraine and expulsion from the G8. Partly as a reaction to this, camaraderie between Moscow and Beijing is noticeable – having signed a 30-year oil and gas deal worth 400 billion dollars in 2014.

Beijing and Moscow see economic convergence in trade and financial activities, for example, between China’s Silk Road Economic Belt initiative for Central Asia and Russia’s recent endeavours to strengthen the Eurasian Economic Union. The expansion of the SCO should be seen against this backdrop. Moscow has also proposed setting up SCO TV to broadcast economic and financial information and commentary on activities in some of the world’s fastest growing economies.

Whatever the outcome, it is clear that a new international developmental agenda is being created, backed by powerful nations, and to the virtual exclusion of the West.

China is the driving force behind this. Despite its one-party system which limits political pluralism and thwarts debate, China has been able to transform itself from a largely agricultural self-sufficient society to the world’s largest consumer market, without any major social or economic upheavals.

China’s success story has many admirers, especially in other developing countries, prompting talk of replacing the ‘Washington consensus’ with what has been described as the ‘Beijing consensus’. The BRICS bank, it would seem, is a small step in that direction.

Edited by Phil Harris    

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

The heads of state of three of the five BRICS countries - Russia, India and Brazil – pose for a photograph during the 2014 BRICS Summit. Credit: Official Flickr Account for Narendra Modi/CC-BY-SA-2.0

By Kanya D'Almeida
UNITED NATIONS, Jul 7 2015 (IPS)

Just days ahead of a summit of the BRICS group of emerging economies (Brazil, Russia, India, China and South Africa) in which the five countries are expected to formally launch their New Development Bank (NDB), 40 NGOs and civil society groups have penned an open letter to their respective governments urging transparency and accountability in the proposed banking process.

“In terms of the type of development the bank delivers, we don't have signs yet that the NDB will go in a qualitatively different direction than the Washington Consensus institutions." -- Gretchen Gordon, coordinator of Bank on Human Rights
The NDB is expected to finance infrastructure and sustainable development in the global South.

With an initial capital of 100 billion dollars, it was born from a combination of circumstances including emerging economies’ frustration with the largely Western-dominated World Bank Group (WBG) and International Monetary Fund (IMF).

According to a 2014 Oxfam Policy Brief, another factor leading to the creation of the BRICS Bank was a major gap in financing for infrastructure projects, with official development assistance (ODA) and funding from multilateral institutions meeting just two to three percent of developing countries’ needs.

Strained by economic sanctions as a result of the Ukrainian crisis, Moscow has been particularly keen to bring the fledgling lending institution to its feet and has been pushing international rating agencies to rate the bank’s debt, as a necessary first step for it to begin operations.

Even without counting the contributions of its newest member – South Africa – the four BRIC nations represent 25 percent of global gross domestic product (GDP) and 41.4 percent of the world’s population, or roughly three billion people.

In addition, the borders of these countries enclose a quarter of the planet’s land area on three continents.

But even as the five political leaders prepare to take centre stage in the Russian city of Ufa on Jul. 9, citizens of their own countries are already expressing doubts that the nascent financial body will truly represent a break from traditional, Western-led development models.

“The existing development model in force in many emerging and developing countries is one that favors export-oriented, commodity driven strategies and policies that are socially harmful, environmentally unsustainable and have led to greater inequalities between and within countries,” said the statement, released on Jul. 7

“If the New Development Bank is going to break with this history, it must commit itself to the following four principles: 1) Promote development for all; 2) Be transparent and democratic; 3) Set strong standards and make sure they’re followed; 4) Promote sustainable development,” the signatories added.

Gretchen Gordon, coordinator of Bank on Human Rights, a global network of social movements and grassroots organisations working to hold international financial institutions accountable to human rights obligations, told IPS, “[Although] the Bank’s Articles of Agreement have an article on Transparency and Accountability […] thus far we haven’t seen any indication of operational policies on transparency or anything relating to accountability mechanisms.”

“And unfortunately,” she added, “there is no open engagement with civil society on these questions.”

“In terms of the type of development the bank delivers, we don’t have signs yet that the NDB will go in a qualitatively different direction than the Washington Consensus institutions,” Gordon told IPS in an email.

“That is why civil society groups in BRICS countries are calling for a participative and transparent process to identify strategies and policies for the NDB that can set it on a different path and actually deliver development.”

A primary concern among NGOs has been that the BRICS bank will replicate the old “mega-project” model of development, which has proven to be a failure both in terms of poverty eradication and increased access to basic services.

A recent international investigation revealed that in the course of a single decade, an estimated 3.4 million poor people – primarily from Asia, Africa and Latin America – were displaced by mega-projects funded by the World Bank and its private sector lending arm, the International Finance Corporation (IFC).

Though these projects were ostensibly aimed at strengthening transportation networks, expanding electric grids and improving water supply systems, they resulted in a worsening of poverty and inequality for millions of already marginalised people.

Following closely on the heels of this damning expose, a major report by the international watchdog Human Rights Watch (HRW) found that the Bank’s lax safeguards and protocols resulted in a range of rights violations against those who spoke out against the economic, social and environmental fallout of Bank-funded projects.

Behind this track record, rights groups and NGOs are concerned that a new development bank operating on within a broken framework will contribute to the spiral of violence and poverty that has marked the age of mega-projects.

At a time when one billion people lack access to an all-weather road, 783 million people live without clean water supplies and 1.3 billion people are not connected to an electricity grid, there is no doubt that the developing world stands to gain greatly from a Southern-led financial institution.

What remains to be seen is to what extent the new bank will move away from the old model of financing and truly set a standard for inclusive and pro-poor development.

Edited by Kitty Stapp

By Daya Thussu
LONDON, Jul 1 2015 (IPS)

As the leaders of the BRICS five meet in the Russian city of Ufa for their annual summit Jul. 8–10, their agenda is likely to be dominated by economic and security concerns, triggered by the continuing economic crisis in the European Union and the security situation in the Middle East.

The seventh annual summit of the large emerging economies – Brazil, Russia, India, China and South Africa – also takes place with a background of escalating tensions between Russia and the West over Ukraine and the eastward expansion of the North Atlantic Treaty Organisation (NATO), as well as the growing economic power of Asia, in particular, China.

Daya Thussu

Nearly a decade and a half has passed since the BRIC acronym was coined in 2001 by Jim O’Neill, a Goldman Sachs executive, now a minister in David Cameron’s U.K. government, to refer to the four fast-growing emerging markets. South Africa was added in 2011, on China’s request, to expand BRIC to BRICS.

Although in operation as a formal group since 2006, and holding annual summits since 2009, the BRICS countries have escaped much comment in international media, partly because of the different political systems and socio-cultural norms, as well as stages of development, within this group of large and diverse nations.

The emergence of such groupings coincides with the relative economic decline of the West.

This has created the opportunity for emerging powers, such as China and India, to participate in global governance structures hitherto dominated by the United States and its Western allies.

That the centre of economic gravity is shifting away from the West is acknowledged in the view of the U.S. Administration of Barack Obama that the ‘pivot’ of U.S. foreign policy is moving to Asia.“The major countries of the global South have shown impressive economic growth in recent decades … [it is predicted that] by 2020 the combined economic output of China, India and Brazil will surpass the aggregated production of the United States, Britain, Canada, France, Germany and Italy”

And there is evidence of this shift. In the Fortune 500 ranking, the number of transnational corporations based in Brazil, Russia, India and China has grown from 27 in 2005 to more than 100 in 2015. China’s Huawei, a telecommunications equipment firm, is the world’s largest holder of international patents; Brazil’s Petrobras is the fourth largest oil company in the world, while the Tata group became the first Indian conglomerate to reach 100 billion dollars in revenues.

Since 2006, China has been the largest holder of foreign currency reserves, estimated in 2015 to be more than 3.8 trillion dollars. According to the International Monetary Fund (IMF), China’s gross domestic product (GDP) surpassed that of the United States in 2014, making it the world’s largest economy in purchasing-power parity terms.

More broadly, the major countries of the global South have shown impressive economic growth in recent decades, prompting the United Nations Development Programme to proclaim The Rise of the South (the title of its 2013 Human Development Report), which predicts that by 2020 the combined economic output of China, India and Brazil will surpass the aggregated production of the United States, Britain, Canada, France, Germany and Italy.

Though the individual relationships between BRICS countries and the United States differ markedly (Russia and China being generally anti-Washington while Brazil and South Africa relatively close to the United States and India moving from its traditional non-aligned position to a ‘multi-aligned’ one), the group was conceived as an alternative to American power and is the only major group of nations not to include the United States or any other G-7 nation.

Nevertheless, none of the five member nations are eager for confrontation with the United States – with the possible exception of Russia – the country with which they have their most important relationship. Indeed, China is one of the largest investors in the United States, while India, Brazil and South Africa demonstrate democratic affinities with the West: India’s IT industry is particularly dependent on its close ties with the United States and Europe.

Although the idea of BRIC was initiated in Russia, it is China that has emerged as the driving force behind this grouping. British author Martin Jacques has noted in his international bestseller When China Rules the World, that China operates “both within and outside the existing international system while at the same time, in effect, sponsoring a new China-centric international system which will exist alongside the present system and probably slowly begin to usurp it.”

One manifestation of this change is the establishment of a BRICS bank (the ‘New Development Bank’) to fund developmental projects, potentially to rival the Western-dominated Bretton Woods institutions, such as the World Bank and the IMF. Headquartered in Shanghai, China has made the largest contribution to setting it up and is likely that the bank will further enhance China’s domination of the BRICS group.

Beyond BRICS, Beijing has also established the Asian Infrastructure Investment Bank (AIIB), which already has 57 members, including Australia, Germany and Britain, and in which China will hold over 25 percent of voting rights. Two other BRICS nations – India and Russia – are the AIIB’s second and third largest shareholders.

Such changes have an impact on the media scene as well. As part of China’s ‘going out’ strategy, billions of dollars have been earmarked for external communication, including the expansion of Chinese broadcasting networks such as CCTV News and Xinhua’s English-language TV, CNC World.

Russia has also raised its international profile by entering the English-language news world in 2005 with the launch of the Russia Today (now called RT) network, which, apart from English, also broadcasts 24 hours a day, 7 days a week in Spanish and Arabic.

However, as a new book Mapping BRICS Media – which I co-edited with Kaarle Nordenstreng of the University of Tampere, Finland – shows, there is very little intra-BRICS media exchange and most of the BRICS nations continue to receive international news largely from Anglo-American media.

The growing economic cooperation between Moscow and Beijing – most notably in the 2014 multi-billion dollar gas deal – indicates a new Sino-Russian economic equation outside Western control.

Two key U.S.-led trade agreements being negotiated – the Transatlantic Trade and Investment Partnership (TTIP) and the Trans Pacific Partnership (TPP), and both excluding the BRICS nations – are partly a reaction to the perceived competition from nations such as China.

For its part, China appears to have used the BRICS grouping to allay fears that it is rising ‘with the rest’ and therefore less threatening to Western hegemony.

The BRICS summit takes place jointly with Shanghai Cooperation Organization (SCO) Heads of State Council meeting. The only other time that BRICS and the SCO combined their summits was also in Russia – in Ekaterinburg in 2009.

Apart from two BRICS members, China and Russia, the SCO includes Kazakhstan, Kyrgystan, Tajikistan and Uzbekistan. SCO has not expanded its membership since it was set up in 2001. India has an ‘observer’ status within SCO, though there is talk that it might be granted full membership at the Ufa summit.

Were that to happen, the ‘pivot’ would have moved a few notches further towards Asia.

Edited by Phil Harris    

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

Mechanisation and the incorporation of new technologies in sectors like the construction industry means that men are the preferred candidates for certain jobs. Credit: Neeta Lal/IPS

By Neeta Lal
NEW DELHI, Mar 30 2015 (IPS)

It calls itself the ‘world’s largest democracy’ but the 380 million working-aged women in India might disagree with that assessment.

Recent research shows that only 125 million women of a working age are currently employed, with the number of women in the workforce declining steadily since 2004.

"It is imperative to acknowledge that we have a crisis at hand, and we [must] work towards female empowerment to help India realise its full economic potential." -- Preet Rustagi, joint director of the Institute for Human Development in New Delhi
Experts say these figures should serve as a wake-up call for Asia’s third largest economy, adding that unless this nation of 1.2 billion people begins to provide equal opportunities for women, it will miss out on vital development and poverty-reduction goals.

According to a report released earlier this month by the International Monetary Fund (IMF), India’s female labour force participation (FLFP) rate is amongst the lowest among emerging markets and peer countries.

India’s FLFP – the share of employed women or job seekers among the working-age female population — is 33 percent, almost half of the East Asian average of 63 percent and well below the global average of around 50 percent.

The IMF’s findings amplify what has been already been identified as a disconcerting trend in India lately – the absence of a diverse and inclusive workforce.

A debate is currently raging across the country about the skewed gender balance in Indian corporate boardrooms where women hold barely five percent of seats – lower than all the other countries that comprise the BRICS group of emerging economies (Brazil, Russia, India, China and South Africa).

A progressive new law was passed in 2013 that requires all companies listed on the national stock exchange to have at least one female board member by August 2014. However, the deadline had to be extended to April 2015 as only a few companies came forward to appoint women to these top positions.

The lack of women workers in India is a “huge missed opportunity” for the country’s economic growth, lamented IMF Managing Director Christine Lagarde on a recent trip to this country of 1.2 billion people.

Gender diversity in the workplace isn’t just about political correctness; it is an economic imperative, economists say.

A study undertaken by the IMF in 2013 proves that India’s growth has been stunted by women’s exclusion from the workforce.

“Assuming the gender gap is halved by 2017 and cut to one-fourth of its 2008 value in 2027, India’s per capita income could be 10-13 percent higher than under the baseline scenario of unchanged gender inequality in 2020 and 2030, respectively,” the report stated.

Counting and accounting for women’s labour

Some say the primary explanation for the apparent ‘absence’ of working women is a dearth of national-level data on the informal sector. Since a majority of women perform mostly unpaid, domestic labour on a regular basis, their contribution to the economy does not ‘count’ when the country tallies up its records of the formal labour market.

Because women primarily perform unpaid domestic labour, they do not always ‘count’ in the country’s records of the formal economy. Credit: Neeta Lal/IPS

“A woman’s work in her own household is not counted as an economic activity, and does not get factored into the national income statistics,” explains Preet Rustagi, joint director of the Institute for Human Development in New Delhi.

“This situation is even worse than the case of services by a paid domestic help, which is at least considered an economic activity and is counted in the country’s income.”

Rustagi tells IPS that this is unfortunate, as women’s domestic duties in India cover a range of responsibilities like cooking, caring for the elderly, and rearing children, all work that is crucial to the economy and all of Indian society.

In the villages, women additionally engage in the vital task of animal husbandry, which is also excluded from enumeration, elaborates Rustagi.

Cultural norms also scupper women’s entry into the formal workforce, say analysts.

“The entrenched Indian patriarchal culture idealises women in, and restrict them to, the roles of housewives and mothers. Notions of socio-ritual superiority of a group or family can be directly linked to higher restrictions on women including their physical mobility and work outside homes,” explains Bhim Reddy, associate editor of the Indian Journal of Human Development who has researched extensively on recruitment practices in labour markets.

Reddy adds that a higher school enrolment rate, especially for women between the ages of 14 and 21, has also contributed to an asymmetrical workforce.

“A large section of females in this age group that used to be part of the work force earlier is now in schools and colleges, and this is getting reflected in a drop in the female LFPR,” elaborates Reddy.

But research by Everstone Capital, an investment management company, shows that while the number of women enrolling in college has grown manifold, it has not translated into a proportionate increase of women graduates in the workforce.

At 22 percent, the rate of India’s female graduates entering the workforce is lower than the rate of illiterate women finding jobs.

Worse, participation of Indian women in the workforce plummeted from 33.7 percent in 1991 to 27 percent in 2012, according to United Nations statistics. In 2011-12, less than 20 percent of the total workers in non-agricultural sectors was women.

Surprisingly, female labour participation has been found to be particularly low even among urban, educated women — a demographic typically assumed to experience fewer social barriers.

According to government statistics, in 2009-10, the proportion of those attending to domestic duties (and therefore out of the formal labour force) was 57 percent among urban females with graduate degrees or higher, compared to just 31 percent among rural females with primary or middle school education.

Experts say the advent of mechanisation and incorporation of new technologies in agriculture and the construction industry have led to the ‘masculinisation’ (or preference for males for a certain job profile) of employment patterns.

Exploitation and harassment in the workplace have worsened the situation. India passed a new law against sexual harassment last year, under which organisations with more than 10 workers have to set up grievance committees to investigate all complaints.

However, according to a study by Jawaharlal Nehru University, less than 20 percent of employers in the capital, New Delhi, comply with the rules.

Household surveys show that a more welcoming environment would compel many stay-at-home women to take on regular work. At present, issues of transport, workplace safety and hostile attitudes result in many women opting out of full-time employment.

Apart from sensitisation campaigns, activists advocate greater investments in infrastructure, safe public transportation, better childcare facilities at work and tax breaks to lure Indian women into the workforce.

“It is imperative to acknowledge that we have a crisis at hand, and we then work towards female empowerment to help India realise its full economic potential,” says Rustagi.

Edited by Kanya D’Almeida

India is home to one-fourth of the world’s poor. Credit: Neeta Lal/IPS

By Neeta Lal
NEW DELHI, Feb 14 2015 (IPS)

Despite being one of the world’s fastest expanding economies, projected to clock seven-percent GDP growth in 2017, India – a nation of 1.2 billion – is trailing behind on many vital social development indices while also hosting one-fourth of the world’s poor.

While the United Nations prepares to wrap up a decade-and-a-half of poverty alleviation efforts, framed through the lens of the Millennium Development Goals (MDGs), by the end of this year, the international community has its eyes on the future.

"A focus on accelerating sustainable, inclusive and balanced growth is key to poverty eradication." -- Ranjana Kumari, director of the Delhi-based non-profit Centre for Social Research (CSR)
The coming development era will be centred on sustainability, driven by targets set out in the Sustainable Development Goals (SDGs). Home to one-sixth of the world’s population, India’s actions will determine to a great extent global efforts to lift millions out of destitution in the coming years.

Experts say its patchy progress on the MDGs offers some insights into how the country will both assist and hold back global development efforts in the post-2015 era.

Earlier this month the U.N. released a report lauding India’s efforts to half the number of poor people living within its borders to the current 270 million since the country joined hands with 189 U.N. member states to draft the MDGs 15 years ago.

While making strides in poverty reduction, India is also on track to achieve gender parity at the primary, secondary and tertiary levels on the education front by the year’s end though it lags significantly on the goal of empowering its women.

“The proportion of women working in decent jobs outside agriculture remains low; their participation in the overall labour force is also low and declining in rural areas; women in farming are constrained by lack of land ownership; and women are poorly represented in parliament,” the U.N. report stated.

The report recommends a continued emphasis on increasing both growth and social spending. However, experts point out this will be a significant challenge against the backdrop of India’s new Hindu nationalist government slashing social sector spending by about 30 percent in the supplementary budget.

Wretched poverty persists

The allocation for the National Rural Employment Guarantee Act (NREGA), an initiative to provide employment to all adult members of poor Indian families for five dollars per day, is now the lowest it has been in five years.

Despite robust economic growth, scenes of destitution are visible all throughout India, a nation of 1.2 billion people. Credit: Neeta Lal/IPS

By the end of last year, state governments had reported a drop of 45-percent in funds allocated by the Centre, from 240 billion to 130 billion rupees (3.8 million to 2.1 million dollars) – the sharpest decline since the scheme’s inception in 2005.

India needs to balance its economic growth while tackling poverty as the latter can considerably erode the progress achieved from high GDP numbers, say economists.

“Removing poverty is clearly the most important of the goals as it has clear linkages to the other MDGs,” Delhi-based economist Parvati Singhal, a visiting professor at Jawaharlal Nehru University, told IPS.

“It needs to be central to the post-2015 development agenda. Higher income resulting from growth is the best panacea for poverty […],” Singhal elaborated.

According to Sabyasachi Kar, associate professor at the Institute of Economic Growth, with the University of Delhi, a major reason for continuing poverty in India is the country’s below-par industrial growth, which scuppers job creation.

“Programmes like NREGA and food-for-work programmes are at best safety nets that will keep people from starving. We need robust growth in the industrial and manufacturing sectors to generate employment and alleviate poverty while raising incomes permanently.

“Effective domestic resource mobilisation and incentivising the private sector to invest in sustainable green technologies will also help to tackle poverty,” the economist added.

Though Asia’s third largest economy has shown good progress in achieving its poverty reduction target, the malaise has ironically become more visible.

The sight of homeless construction workers, beggars, rag pickers, child labourers – the ensemble cast of India’s apparently prospering megacities – reflects its harsh underbelly.

According to a report entitled ‘Effects of Poverty in India: Between Injustice and Exclusion’, “The spectacular growth of cities has made poverty in India more visible and palpable through its famous slums.”

U.N. data shows that 93 million people in India live in slums, including 50 percent of the population in its capital, New Delhi.

Meanwhile, the megacity of Mumbai, home to 19 million, hosts nine millions slum-dwellers, up from six million just 10 years ago.

Dharavi, the second largest slum in Asia, is located in central Mumbai and is home to between 800,000 and one million people, crammed into just 2.39 square kilometres of space.

Investing in women and children: crucial for development

Public health in India is also an area of concern, with the country trailing in the realms of infant and child mortality as well as maternal health.

According to the World Bank India accounts for 21 percent of deaths among children below five years of age. Its maternal mortality ratio (MMR) – the number of women who die during pregnancy, delivery or in the first 42 hours of a termination per 100,000 live births – is 190. Countries like Ecuador and Guatemala fare better than India, with MMRs of 87 and 140 respectively.

Addressing these issues will be a considerable challenge as India is home to 472 million children or about 20 percent of the world’s child population, while nearly 50 percent of its population is comprised of women.

Health activists are advocating for greater capital investment in public health. India currently spends an abysmal one percent of its GDP on health, half the sum allocated by neighbouring China.

Even Russia and Brazil, two other nations in the BRICS association of emerging economies of which India is a part, invest 3.5 percent of their respective GDPs on health.

“A focus on accelerating sustainable, inclusive and balanced growth is key to poverty eradication,” Ranjana Kumari, director of the Delhi-based non-profit Centre for Social Research (CSR), told IPS.

The activist feels that growth and development should not only be measured in GDP terms but also in terms of per capita income and per capita spending.

“Right now, there is inequitable distribution of wealth in India. Money is concentrated in the hands of a few while the masses struggle to get two square meals a day. This inequity needs to be addressed as there’s no conflict in the growth of social justice and GDP growth; both ought to work in tandem for success.”

Speaking at the launch of the U.N. report on India last week, Shamshad Akhtar, under-secretary-general of the U.N., advocated for a new sustainable agriculture-based green revolution, which could contribute to ending hunger not only in India but across South Asia at large.

With eight percent of India’s population engaged in agriculture, amounting to some 95.8 million people, sustainable development will be impossible without lifting India’s farmers out of poverty, researchers contend.

Edited by Kanya D’Almeida

By Johan Galtung
PENANG, Malaysia, Feb 9 2015 (IPS)

A theory serves comprehension, prediction and identification of conditions for change. Seven such historical-cultural pointers will be indicated for China – using the West in general, and the United States in particular, for comparison.

Look at a map combining world history and geography, time and space. China shows up through 4,000 years as relatively coherent dynasties with complex transitions and the West as empires-birth-growth-peaking-decline-fall, like the Roman, British and now U.S. empires – duration vs bubbles that burst, China-centric vs hegemonic.

Johan Galtung

China marginalised space peopled by South-West-North-East barbarians – outside the “Chinese pocket” between the Himalayas-Gobi desert-Tundra-Sea, except for the East China-East Africa silk roads, destroyed by Portugal and England from 1500, colonising Macao-Hong Kong.

A goal of current Chinese foreign policy is to restore the silk roads and lanes: high speed trains for Eurasia, cooperating for mutual and equal benefit, harmony.

The United States marginalises time by disregarding past history, and with the idea that creates future New Beginnings for immigrants, and New History for itself, for other countries, for the whole world.

For Daoism, valid knowledge is holistic and dialectic, based on big, complex units of thought (whole humans, China, the world) riveted by forces and counter-forces, yin-yang, good vs bad, themselves yin-yang, with what is suppressed growing and what is dominant declining until the next turn. The holon may jump from one contradiction tapering off to the next.

For the West, valid knowledge is based on subdivision and accumulation of knowledge about elements, woven together in theories.

For Mao Zedong the basic contradiction was foreign imperialism with landowners vs the people, students-peasants-workers. The 1949 revolution started a distribution vs growth dialectic with jumps every nine years (1958-1967-1976): Mao’s death, four chaotic years.“China shows up through 4,000 years as relatively coherent dynasties with complex transitions and the West as empires-birth-growth-peaking-decline-fall, like the Roman, British and now U.S. empires”

For Deng Xiaopeng, it was misery vs lack of growth. The 1980 revolution accumulated capital with farmers near cities and in Shenzen (26 percent annual growth), and re-created merchants. Then nine years distribution vs growth again: from 1989 (Tiananmen!) distribution, 1998, 2007, 2016: new focus on growth.

China draws on Daoist insights, on Confucian ideas of hierarchies with harmony, and Buddhist small community equality: Buddhism for distribution, Confucianism for growth, Daoism for jumps between them.

The West could have drawn upon the positives in Judaism, Christianity and Islam, but focused on negatives for discrimination-prejudice-war-genocide – now as Judeo-Christianity vs Islam – with unused synergies.

Chinese Mandarin rulers combined rule by rules with high culture, over farmers and artisans, and merchants marginalised at the bottom; Western aristocrat rulers combined rule with force, trade and clergy benediction; later to become State, Capital, Intelligentsia. A basic difference was marginalisation vs integration of merchants.

The Chinese Emperors were Sons of the Heaven trading with those who paid tribute to the Emperor; in the West, Heaven was the only God for the whole world at all time, creating and taking life, the monarch being the only person with a Mandate from God-rex gratia dei-by the grace of God, also entitled to take life, delegated to His army.

The English refused to pay tribute, using opium wars, “gunboat diplomacy”, burning (with the French) the imperial palace instead; China was never violent outside the “pocket” (except when provoked by India in 1962).

The Mandate of the Heaven is lost when People shout in the streets, and regained by addressing their grievances and ideas in the ancient petition system – by “idea democracy, not arithmetic democracy”; the West counting votes in multi-party national fair and free elections.

The Cultural Revolution shouted in the streets against Confucian rule by older men with high education from East China, paving the way for the young, the women and West China – also in 80 million educated “communist” Party members, presumably wise enough to understand the yin-yang dialectics. Tiananmen 1989 was not about democracy, “no votes for uneducated”, but – like Hong Kong (?) – about losing their feudal position to wealthy farmers, merchants, private and state capitalists.

China is China-centric, the deep culture is still holistic-dialectic with a Western surface, the three civilisations synergy is there. So is the Chinese inability to handle the “pocket”: Taiwan-Tibet-Uighurs-Mongolians-Vietnamese-Koreans.

But China indeed went global; trading with barbarians; upgrading merchants-traders-money people; accumulating huge wealth. Mao opened up society for huge masses of Chinese, the young, women, and the West; Deng lifted the bottom 300-400 million up 1991-2004, with the communist focus on the needs of the neediest, into capitalism: capi-communism. Beijing 1980: six million bicycles 0 private cars; 2010: 0 vs five million.

The West, out-competed by BRICS (Brazil-Russia-India-China-South Africa), did more killing than learning.

China’s ruling class, steeped in culture, linked dynastic cycles to yin-yang thought, and traders to barbarians. Today’s rulers, deep in money shouting to beget more money, link money to corruption – and speculation? And competition from Latin America+Africa – shouting in the streets may send China packing – and the end of a dynasty is near.

China’s lead is not forever. Nothing ever was. Except, maybe, some China. A more spiritual dynasty, after materialist “communism”? (END/IPS COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

By Demba Moussa Dembele
DAKAR, Aug 29 2014 (IPS)

A few years ago, nobody could have imagined that some 50 Heads of States and Prime Ministers from Africa would meet the President of the United States for a summit. Yet, the first Africa/United States Summit took place in Washington from August 4 to 6, making headlines around the world.

It is obvious that geopolitical considerations were behind this summit, with the shadow of the BRICS (Brazil, Russia, India, China and South Africa) hanging over the meeting.

Demba Moussa Dembele

The United States would have never organised such a summit if the global balance of power had not been gradually shifting towards emerging powers, notably towards China and the BRICS.

Western economic domination is being eroded, as illustrated by the deepening crisis of the Eurozone and the worsening deficits of the United States. Meanwhile, the BRICS are increasing their economic and financial weight in the world economy, and represent about 20 percent of the world’s GDP and 17 percent of world trade, with China now the second economy behind the United States.

For most observers, the BRICS Summit in Fortaleza and Brasilia (Brazil) in mid-July heralds a new world monetary and financial order in the next decades or so. Observers from the South and the West are predicting the gradual shift to a new balance of monetary and financial order, with the BRICS at the centre.“Growing China-Africa ties are a disturbing development for Western countries, the European Union (EU) and the United States. They view these relations as a threat to their “traditional” neo-colonial relationships with Africa”

Indeed, the decision to set up the BRICS bank and the Contingency Reserve Arrangement (CRA) is seen as a serious challenge to the World Bank and the International Monetary Fund (IMF), which have been the tools of Western countries for more than half a century. They will gradually become more and more irrelevant to developing countries, as these increasingly turn to BRICS’ financial institutions.

On the other hand, China and the other members of the BRICS group are challenging the hegemony of the U.S. dollar through several swap arrangements, aimed at boosting their trade by using their own currencies. One of the most significant arrangements is the swap between China and Russia, when one takes into account the 400 billion dollars gas deal signed between Russia’s Gazprom and the China National Petroleum Corp. (CNPC).

The French online newspaper, Mediapart (July 5, 2014), reported that in the oil and gas sector, the top three investors in 2013 were all from the BRICS – PetroChina (50.2 billion dollars), Gazprom (44.5 billion dollars) and Petrobras (41.5 billion dollars). The first Western company was Total, which ranked seventh with 30.8 billion dollars.

It is obvious that these developments are of great concern to the United States, especially in light of the BRICS’ drive to strengthen their economic and financial relations with Africa and South America.

In a 2013 report, the United Nations Economic Commission for Africa (UNECA) indicated that Africa’s trade with the BRICS had doubled since 2007 to 340 billion dollars in 2012. It projected that the trade would reach 500 billion dollars by 2015.

Trade between China and Africa is estimated at about 200 billion dollars in 2013. It has become Africa’s main trading partner. And most African countries are now turning to China for loans while Chinese companies are involved in building roads, bridges, and other infrastructures across Africa.

Growing China-Africa ties are a disturbing development for Western countries, the European Union (EU) and the United States. They view these relations as a threat to their “traditional”, neo-colonial relationships with Africa.

While the European Union has tried to lock African countries into Economic Partnership Agreements (EPAs) – as part of a scheme to create a free trade area (FTA) between the European Union and the African, Caribbean and Pacific (ACP) group of countries – since 2007, the United States seems to be “wakening up” only now to the reality of the fast-changing economic landscape in Africa.

A Paris-based magazine, Jeune Afrique, wrote that with this Summit, Barack Obama was organising a “catch-up meeting”. The reason, said the magazine, was that the United States has lost too much ground to China and to a lesser degree to Europe. It is estimated that trade between Africa and the United States doubled between 2000 and 2010, while trade between Africa and China increased twenty-fold over the same period!

Most observers believe that without China building strong and growing economic and financial ties with Africa, the United States would not have thought about organising such a Summit. Clearly, China’s role in Africa has given a greater “respectability” to the continent and elevated its standing with Western countries, which are now looking at Africa through a new light.

Catching up for will not be an easy exercise for the United States. For one thing, its imports from Africa are essentially composed of crude oil, which accounts for 91 percent of total trade. Second, in its relations with Africa, security concerns have always topped the U.S. agenda.

This is why during the George W. Bush Administration, the United States set up “Africa Command” (AFRICOM) with the view to “helping” African countries fight “terrorism”. And the aim is to move AFRICOM headquarters – now in Germany – to Africa, preferably in the Gulf of Guinea, which is home to the bulk of African oil reserves. U.S. companies, like Chevron and ExxonMobil, have already invested billions of dollars in the area in order to control huge chunks of those reserves.

At the end of the Africa-U.S. Summit, Obama announced that 33 billion dollars will be invested in Africa between 2014 and 2017. But only seven billion dollars will come from public funds in order to boost trade between the United States and Africa, 14 billion dollars will come from the private banking and construction sectors, while 12 billion dollars are part of the “Power Africa” project aimed at bringing electricity to households and the industrial sector. This programme is financed by the World Bank and U.S. private companies such as General Electric.

So, the 33 billion dollars announcement is not really a “gift” made by president Barack Obama to African leaders, as some newspapers erroneously presented it. It will essentially serve the interests of U.S. private companies in their drive to compete against BRICS and European companies in Africa.

But, beyond “catching up” with China and the European Union, the Africa-U.S. Summit should be viewed in the context of the discourse on “Africa Rising”. Indeed, for neoliberal ideologues, Africa seems to hold the solution to the crisis of global capitalism.

In January 2014, Japanese Prime Minister Shinzo Abe toured Africa. In a speech at the headquarters of the African Union, in Addis Ababa, he was quoting as saying that “with its immense resources, Africa is holding the hopes of the world.” This was an echo to a report by the French Senate, released in December 2013, with the incredible title ‘Africa is our Future’.

This may explain French military adventures in Africa over the last several years, from Cote d’Ivoire to Libya, from Mali to the Central African Republic, among others.

Several forums are being organised to advise Western corporations to invest in Africa and tap into its resources. Apparently, Africa has become the “new frontier” of global capitalism, at the expense of its own people. As the renowned Egyptian economist Samir Amin used to say: “the West cares about Africa’s resources, not about its people.” (END/IPS COLUMNIST SERVICE)

(Edited by Phil Harris)

Excerpt:

By Shyam Saran
NEW DELHI, Jul 23 2014 (IPS)

The sixth BRICS Summit which has just ended in Brazil marks the transition of a grouping based hitherto on shared concerns to one based on shared interests.

Since the inception of BRICS (bringing together Brazil, Russia, India, China and South Africa) in 2009, it has been seen as a mainly flag waving exercise by a group of influential emerging economies, with little in terms of convergent interest other than signalling their strong dissatisfaction over persistent Western dominance of the world economic, financial as well as security order, but unable to fashion credible alternative governance structures themselves.

However, with the Fortaleza Summit finally announcing the much awaited establishment of the New Development Bank (NDB) with a 50 billion dollar subscribed capital and a Contingency Reserve Arrangement (CRA) of 100 billion dollars, the monopoly status and role of the Bretton Woods institutions – the World Bank and the International Monetary Fund (IMF) – stand broken.

Shyam Saran

True, it may take the NDB and the CRA considerable time and experience to evolve into credible international financial institutions but that clearly is the intent.

BRICS leaders have kept the door open for other stakeholders, but will retain at least a 55 percent equity share. They have also been careful to declare that these new institutions will supplement the activities of the World Bank and the IMF, and this has also been the initial response from the latter.

Nevertheless, the emergence of an alternative source of financing with norms different from those followed by the established institutions will alter the global financial landscape irreversibly.

It may be noted for the future that the one component of the global financial infrastructure where Western companies still remain supreme is the insurance and reinsurance sector. Global trade flows, in particular energy flows are almost invariably insured by a handful of Western companies which also determine risk factors and premiums.

In Brazil, the BRICS countries have given notice that they will examine the prospect of pooling their capacities in this sector. A more competitive situation in this sector can only be a positive development for developing countries.“The emergence of an alternative source of financing [BRICS Bank] with norms different from those followed by the established institutions will alter the global financial landscape irreversibly”

The BRICS initiatives were born out of mounting frustration among emerging countries that even a modest restructuring of the governing structures of the Bretton Woods institutions, to reflect their growing economic profile, was being resisted. The commitment made in 2010 at the G20 to enlarge their stake in the IMF remains unfulfilled while the restructuring of the World Bank is yet to be taken up.

The longer the delay in such restructuring, the more rapid the consolidation of the new BRICS institutions is likely to be. It is this factor which played a role in helping resolve some of the differences among the BRICS countries over the structure and governance of these proposed institutions.

The setting up of the BRICS institutions owed a great deal to the energy and push displayed by China. It is doubtful that the proposals would have been actualised had China not put its full weight behind them and showed a readiness to accommodate other member countries, in particular India. Russia became more enthusiastic after being drummed out of the G8 and subjected to Western sanctions.

Chinese activism on this score must be seen in the context of other parallel developments in which China has also been the prime mover and sometimes the initiator. These are:

1. The proposal for setting up an Asian Infrastructure Investment Bank (AIIB) to fund infrastructure and connectivity projects in Asia, in particular, those which would help revive the maritime and land “Silk Routes” linking China with both its eastern and western flanks. The parallel with the NDB is hard to miss.

2. The consolidation of the Chiang Mai Initiative Multilateralisation (CMIM) and the associated Asian Multilateral Research Organisation (AMRO) among the Association of Southeast Asian Nations (ASEAN) + 3 (China, Japan and the Republic of Korea). The CMIM is now a 240 billion dollar financing facility to help member countries deal with balance of payments difficulties. This is similar to the 100 billion dollar CRA set up by BRICS.

AMRO has evolved into a mechanism for macro-economic surveillance of member countries and provides a benchmark for their economic health and performance. This would enable sound lending policies and may very well be linked in future to the AIIB. The CMIM and the AMRO thus provide building blocks which could serve as the template for the NDB, the CRA and the AIIB.

3. In addition to the CMIM and the AMRO, there are ongoing initiatives within ASEAN + 3 to develop a truly Asian Bond Market which could mobilise regional savings into regional investments through local currency bonds. To support this initiative, a regional Credit Guarantee and Investment Facility has been established. A Regional Settlement Intermediary is proposed to facilitate cross-border multi-currency transfers.

These developments are taking place just when there is a rapidly growing Chinese yuan-denominated bond market, the so-called dim-sum bonds, which have become an important source of corporate financing. This reduces the dependence on euro and U.S. dollar-denominated bonds. The NDB could tap into this market to build up its own finances.

It is important to keep in mind this broader picture in assessing the significance of the decisions taken at the Fortaleza Summit. In systematically pursuing a number of parallel initiatives, China is attempting to create an alternative financial infrastructure which would have it in the lead role. The dilemma for other emerging countries is that there appear to be no credible alternatives, especially since the Western countries are unwilling to cede any enhanced role to them.

The Fortaleza Summit marks the beginning of the end of the post-Second World War Western dominance of the global economic and financial order. The existing institutions will now have to share space with the new entrants and may be compelled to adjust their norms to compete with the latter.

The prime mover behind the establishment of a rival network of financial institutions is China, whose global profile and influence is likely to increase as the various building blocks it has put in place come together to shape a new global financial architecture. This is still in the future but the trend is unmistakable. (END/IPS COLUMNIST SERVICE)

Excerpt:

Secretary-General Ban Ki-moon (centre right) briefs the Security Council on Jul. 10 on the crisis in Israel and the Gaza Strip. Credit: UN Photo/Evan Schneider

By Thalif Deen
UNITED NATIONS, Jul 18 2014 (IPS)

As the civil war in Syria continues into its fourth year, the Western nations sitting on the U.N. Security Council (UNSC) have unsuccessfully tried to condemn the killings of civilians, impose punitive sanctions and accuse the Syrian government of war crimes – in four vetoed and failed resolutions.

The United States, France and Britain forced a vote on all four resolutions despite implicit threats by China and Russia, allies of beleaguered Syrian President Bashar al-Assad, to exercise their vetoes. And they did.The question looming large over the United Nations is why China and Russia aren't initiating a new draft resolution condemning the aerial bombardments of civilians in Gaza, demanding a no-fly zone and accusing Israelis of war crimes.

All five countries are veto-wielding permanent members of the UNSC.

The vetoes drew strong condemnations from human rights groups, including a coalition of eight non-governmental organisations (NGOs) which described the last veto by Russia and China as “a shameful illustration of why voluntary restraint on the use of the veto in mass atrocity situations is essential to the Council’s ability to live up to the U.N. charter’s expectations.”

But the question now looming large over the United Nations is why China and Russia aren’t initiating a new draft resolution condemning the aerial bombardments of civilians in Gaza, demanding a no-fly zone and accusing Israelis of war crimes.

Such a resolution is certain to be vetoed by one, or all three, of the Western powers in the UNSC, as China and Russia did on the resolutions against Syria. But this time around, it will be the Western powers on the defensive, trying to protect the interests of a country accused of civilian killings and war crimes.

Still, an Asian diplomat told IPS that even if a draft resolution is doomed to be shot down during closed-door informals for lack of nine votes, an attempt could have been made to expose the mood of the UNSC  – just as Western nations keep piling up resolutions against Syria even when they are conscious of the fact they will be vetoed by Russia and China, embarrassing both countries.

Stephen Zunes, professor of politics and coordinator of Middle Eastern Studies at the University of San Francisco, told IPS just as the Russians and Chinese have blocked Security Council action regarding Syria’s attacks on civilians in crowded urban areas, the United States has successfully blocked Security Council action regarding Israeli attacks on civilians in crowded urban areas.

Though both involve serious violations of international humanitarian law, precedent would dictate that U.N. action on Israel’s assault on Gaza would be even more appropriate because it is an international conflict rather than a civil war, said Zunes, who has written extensively on the politics of the Security Council.

“What is hard to explain is why the Security Council has not been willing to force the United States to take the embarrassing step of actually vetoing the measure, as it has on four occasions with Russia and China in regard to Syria,” he asked.

Ian Williams, a longstanding U.N. correspondent and senior analyst at Foreign Policy in Focus, told IPS the UNSC is determined to prove that governments do not have principles, only interests.

Since the end of the Cold War, the Palestinians have had no sponsors or patrons.

He said even the Russians and the Chinese weigh the strength of the Israel Lobby in the U.S., and increasingly in Europe, and calculate whether it is in their interests to alienate Washington even more.

Since they see few tangible diplomatic, economic or political benefits from backing the Palestinians, let alone Hamas, they allow atrocities to go unchecked in Gaza while raising their hands in horror about lesser, and less calculated, crimes elsewhere, said Williams.

“And the Russians would have to explain why they defend Assad for similar behaviour against his own people,” he added.

Only popular indignation will force the hand of governments – and the French government knows that, which is why they have banned pro-Palestinian demonstrations, he noted.

Addressing an emergency meeting of the UNSC Friday, Dr Riyad Mansour, the permanent observer of the State of Palestine, told delegates the 10-day death toll from heavy F-16 air strikes has been estimated at 274, mostly civilians, including 24 women and 62 children, and over 2,076 wounded and more thatn 38,000 displaced.

These are figures, he said, that could be corroborated by U.N. agencies on the ground.

Mansour accused Israel of war crimes, crimes against humanity, state terrorism and systematic violation of human rights.

But as of Friday, there were no indications of a hard-hitting resolution focusing on the plight of the 1.7 million residents under heavy fire and who are being defended by the militant group Hamas, accused of firing hundreds of rockets into Israel, with just one Israeli casualty.

Vijay Prashad, George and Martha Kellner Chair of South Asian History and Professor of International Studies at Trinity College, told IPS that a declaration – adopted at a summit meeting of leaders of Brazil, Russia, India, China and South Africa (BRICS) in Brazil last week – mentions Palestine and Israel in terms of the Middle East peace process, but it does not take a direct position on the ongoing war on Gaza.

“It would have been an apposite place to have crafted a separate and pointed resolution in solidarity with the Palestinians alongside the stated claim to the celebration of the U.N. Year of Solidarity with the Palestinian People,” he said.

He added that it also says something about the lack of confidence by the BRICS members on the Security Council who felt betrayed by Resolution 1973 (on Libya) and did not draft a resolution to call for a No Fly Zone over Gaza based on the principles of Responsibility to Protect (R2P).

The West has drafted resolutions on Syria, knowing that Russia and China would veto them as a way to deliberately put their rivals in a poor light, he added.

He asked why the BRICS states on the Security Council (currently Russia and China) did not produce a resolution to show the world that the West (or at least the U.S.) is willing to allow the calculated slaughter of the Palestinians at the same time as they want to be the ones to arbiter who is a civilian and what it means to responsibly protect them.

This only shows the BRICS states are not willing to directly challenge the West not in a defensive way (by vetoing a Western resolution), but in an aggressive way (by making the West veto a resolution for ending the slaughter in Gaza), he added.

Brazil, the current chair of BRICS, said in a statement released Friday the Brazilian government rejects the current Israeli ground incursion into Gaza, which represents a serious setback to peace efforts.

“Such an offensive could have serious repercussions for the increased instability in the Middle East and exacerbate the already dramatic humanitarian situation in the Occupied Palestinian Territory,” the statement said.

“We urge the Israeli forces to strictly respect their obligations under the International Humanitarian Law. Furthermore, we consider it necessary that Israel put an end to the blockade on Gaza immediately.”

Russian President Vladimir Putin, Prime Minister of India Narendra Modi, President of Brazil Dilma Rousseff, President of China Xi Jinping and South African President Jacob Zuma take a family photograph at the 6th BRICS Summit held at Centro de Eventos do Ceara' in Fortaleza, Brazil. Credit: GCIS

By Diana Cariboni
MONTEVIDEO, Jul 18 2014 (IPS)

While this week’s BRICS summit might have been off the radar of Western powers, the leaders of its five member countries launched a financial system to rival Bretton Woods institutions and held an unprecedented meeting with the governments of South America.

The New Development Bank (NDB) and the Contingent Reserve Arrangement signal the will of BRICS countries (Brazil, Russia, India, China and South Africa) to reconcile global governance instruments with a world where the United States no longer wields the influence that it once did.“The U.S. government clearly doesn't like this, although it will not say much publicly.” -- Mark Weisbrot

More striking for Washington could be the fact that the 6th BRICS summit, held in Brazil, set the stage to display how delighted the heads of state and government of South America – long-regarded as the United States’ “backyard”— were to meet Russia’s president Vladimir Putin.

At odds with Washington and just expelled from the Group of Eight (G8) following Russia’s intervention in the Ukrainian crisis, Putin was warmly received in the region, where he also visited Cuba and Argentina.

In Buenos Aires, Putin and the president of Argentina, Cristina Fernández, signed agreements on energy, judicial cooperation, communications and nuclear development.

Argentina, troubled by an impending default, is hoping Russian energy giant Gazprom will expand investments in the rich and almost unexploited shale oil and gas fields of Vaca Muerta.

Although Argentina ranks fourth among the Russia’s main trade partners in the region, Putin stressed the country is “a key strategic partner” not only in Latin America, but also within the G20 and the United Nations.

Buenos Aires and Moscow have recently reached greater understanding on a number of international issues, like the conflicts in Syria and Crimea, Argentina sovereignty claim over the Malvinas/Falkland islands and its strategy against the bond holdouts.

Meanwhile, the relationship between Washington and Buenos Aires remains cool, as it has been with Brasilia since last year’s revelations of massive surveillance carried out by the National Security Agency against Brazil.

Some leftist governments –namely Bolivia, Venezuela and Ecuador— frequently accuse Washington of pursuing an imperialist agenda in the region.

But it was the president of Uruguay, José Mujica –whose government has warm and close ties with the Barack Obama administration— who better explained the shifting balance experienced by Latin America in its relationships with the rest of the world.

After a dinner in Buenos Aires and a meeting in Brasilia with Putin, Mujica said the current presence of Russia and China in South America opens “new roads” and shows “that this region is important somehow, so the rest of the world perhaps begins to value us a little more.”

Furthermore, he reflected, “pitting one bloc against another… is not good for the world’s future. It is better to share [ties and relationships, in order to] keep alternatives available.”

Almost at the same time, Washington announced it was ready to transfer six Guantanamo Bay detainees to Uruguay, one of the subjects Obama and Mujica agreed on when the Uruguayan visited the U.S. president in May.

Mujica has invited companies from United States, China and now Russia to take part in an international tender to build a deepwater port on the Atlantic ocean which, Uruguay expects, could be a logistic hub for the region.

But beyond Russia, which has relevant commercial agreements with Venezuela, the real centre of gravity in the region is China, the first trade partner of Brazil, Chile and Perú, and the second one of a growing number of Latin American countries.

China’s president Xi Jiping travels on Friday to Argentina, and then to Venezuela and Cuba.

“The U.S. government clearly doesn’t like this, although it will not say much publicly,” said Mark Weisbrot, co-director of the Center for Economic and Policy Research.

“With a handful of rich allies, they have controlled the most important economic decision-making institutions for 70 years, including the IMF [International Monetary Fund], the World Bank, and more recently the G8 and the G20, and they wrote the rules for the WTO [World Trade Organisation],” Weisbrot told IPS.

The BRICS bank “is the first alternative where the rest of the world can have a voice.  Washington does not like competition,” he added.

However, the United States’ foreign priorities are elsewhere: Eastern Europe, Asia and the Middle East.

And with the exception of the migration crisis on its southern border and evergreen concerns about security and defence, Washington seems to have little in common with its Latin American neighbours.

“I wish they were really indifferent. But the truth is, they would like to get rid of all of the left governments in Latin America, and will take advantage of opportunities where they arise,” said Weisbrot.

Nevertheless, new actors and interests are operating in the region.

The Mercosur bloc (Argentina, Brazil, Paraguay and Uruguay) and the European Union are currently negotiating a trade agreement.

Colombia, Chile, México and Perú have joined forces in the Pacific Alliance, while the last three also joined negotiations to establish the Trans-Pacific Partnership.

In this scenario, the BRICS and their new financial institutions pose further questions about the ability of Latin America to overcome its traditional role of commodities supplier and to achieve real development.

“I don’t think that the BRICS alliance is going to get in the way of that,” said Weisbrot.

According to María José Romero, policy and advocacy manager with the European Network on Debt and Development (Eurodad), the need to “moderate extractive industries” could lead to “changes in the relationship with countries like China, which looks at this region largely as a grain basket.”

Romero, who attended civil society meetings held on the sidelines of the BRICS summit, is the author of “A private affair”, which analyses the growing influence of private interests in the development financial institutions and raises key warnings for the new BRICS banking system.

BRICS nations should be able “to promote a sustainable and inclusive development,” she told IPS, “one which takes into account the impacts and benefits for all within their societies and within the countries where they operate.”

Chandrasekhar Chalapurath, an economist at Jawaharlal Nehru University in New Delhi, talks about development banks in India, at the International Seminar on the BRICS Bank. Credit: Mario Osava/IPS

By Mario Osava
FORTALEZA, Brazil, Jul 17 2014 (IPS)

The creation of BRICS’ (Brazil, Russia, India, China and South Africa) own financial institutions was “a disappointment” for activists from the five countries, meeting in this northeastern Brazilian city after the group’s leaders concluded their sixth annual summit here.

The New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA), launched Tuesday Jul. 15 at the summit in the northeastern Brazilian city of Fortaleza, represent progress “from United States unilateralism to multilateralism,” said Graciela Rodriguez, of the Brazilian Network for the Integration of Peoples (REBRIP).

But “the opportunity for real reform was lost,” she complained to IPS at the International Seminar on the BRICS Bank, held in this city Wednesday and Thursday Jul. 16-17 as a forum for civil society organisations in parallel to the sixth summit.

The format announced for the NDB “does not meet our needs,” she said.

The NDB will promote “a new kind of development" only if its loans are made conditional on the adoption of low-polluting technologies and are guided by the Millennium Development Goals and their successors, the Sustainable Development Goals. -- Carlos Cosendey, international relations secretary at the Brazilian foreign ministry
The bank’s goal is to finance infrastructure and sustainable development in the BRICS and other countries of the developing South, with an initial capital investment of 50 billion dollars, to be expanded through the acquisition of additional resources.

“We want an international system that serves the majority, not just the seven most powerful countries (the Group of Seven),” that does not depend on the dollar and that has an international arbitration tribunal for financial controversies, said Oscar Ugarteche, an economics researcher at the National Autonomous University of Mexico.

“It is unacceptable that a district court judge in New York should put a country at risk,” he told IPS, referring to the June ruling of the U.S. justice system in favour of holdouts (“vulture funds”) in their dispute with Argentina, which could force another suspension of payments.

“We need international financial law,” similar to existing trade law, and an end to the dominance of the dollar in exchange transactions, which enables serious injustice against nations and persons, like embargoes on payments and income in the United States, he said.

“Existing international institutions do not work,” and the proof of this is that they have still not overcome the effects of the 2008 financial crisis, said the Mexican researcher.

Major powers like the United States and Japan have unsustainable debt and fiscal deficits, yet are not harassed by the International Monetary Fund (IMF), in contrast to the treatment meted out to less powerful nations, particularly in the developing South.

During the seminar, organised by REBRIP and Germany’s Heinrich Böll Foundation, oft-repeated demands were for civil society participation, transparency, environmental standards and consultation with the populations affected by projects financed by the NDB.

These demands have not yet been included in the NDB but may be discussed during its operational design over the next few years, while the group’s parliaments ratify its approval, said Carlos Cosendey, international relations secretary at the Brazilian foreign ministry, in a dialogue with activists.

Participants at one of several panels at the International Seminar on the BRICS Bank, held Jul. 16-17 in Fortaleza, Brazil. Credit: Mario Osava/IPS

Cosendey said that a disadvantage of the multilateral bank was the need for its regulations not to be confused with infringement of national sovereignty of member states. The political, cultural, legal and ethnic differences between the five countries could pose a major obstacle to the adoption of common criteria, he said.

The NDB can be constructive “if it integrates human rights” into its principles and presents solutions for the social impacts of the projects it finances, said Nondumiso Nsibande, of ActionAid South Africa, an NGO.

“We need roads, other infrastructure and jobs, as well as education, health and housing,” but big projects tend to harm poor communities in the places where they are carried out, she told IPS. It is still not known what levels of transparency and social concern the bank will have, she said.

In the view of Chankrasekhar Chalapurath, an economist at Jawaharlal Nehru University in New Delhi, the NDB will alleviate India’s great needs for infrastructure, energy, long distance transport and ports. However, he does not expect it to make large investments in one key service for Indians: sanitation.

Having an Indian as the bank’s first president, as the five leaders have decided, will help attract more investments, but he said people’s access to water must remain a priority.

Cosenday said the NDB will promote “a new kind of development.”

But Chalapurath told IPS that this will only happen if its loans are made conditional on the adoption of low-polluting technologies and are guided by the Millennium Development Goals and their successors, the Sustainable Development Goals, as well as human rights and other best practices.

Adopting democratic processes within the bank will facilitate dialogue with social movements, parliaments and society in general, he said.

Incorporating environmental issues and gender parity is also essential, said Ugarteche and Rodriguez, who regards this as necessary in order to make progress towards “environmental justice.”

Not only roads and ports need to be built; even more important is the “social infrastructure” that includes sanitation, water, health and education, said Rodriguez, the coordinator of the REBRIP working group on International Economic Architecture.

Mobilising resistance to large projects that affect local populations in the places they are constructed will be part of the response to the probable priority placed by the NDB on financing physical infrastructure projects, she announced.

The social organisations gathered in Fortaleza, with representatives from Brazil, India, China, South Africa and other countries that are not members of the group, are preparing to coordinate actions to influence the way the bank and its policies are designed, and to monitor its operations and the actions of the BRICS group itself.

Brazilian economist Ademar Mineiro, also of REBRIP, said there was potential for national societies to influence the format and policies of the NDB, and time for them to organise and mobilise. “It is an unprecedented opportunity,” he told IPS.

Russia did not originally support the BRICS bank, preferring private funding. But Mineiro said its position changed after the United States and the European Union involved multilateral financial institutions like the World Bank in sanctions against Moscow for its annexation of Crimea, a part of Ukraine.

BRICS evolved “from the economic to the political,” with its members demanding more power in the international system. The alliance is one of the pillars of the Chinese strategy to conquer greater influence, including in the West, said Cui Shoujun, a professor at the School of International Studies of Renmin University in China.

“The BRICS need China more than the other way round,” he told IPS, adding that the Chinese economy is 20 times larger than South Africa’s and four times larger than those of India and Russia.

As well as seeking natural resources from other countries, among the reasons why China has joined and supports BRICS is strengthening the legitimacy in power of the Communist Party through internal stability and prosperity, the academic said.

(END)

The Sixth BRICS Summit which ended Wednesday in Fortaleza, Brazil, attracted more attention than any other such gathering in the alliance’s short history, and not just from its own members – Brazil, Russia, India, China and South Africa.

Two external groups defined by divergent interests closely watched proceedings: on the one hand, emerging economies and developing countries, and on the other, a group comprising the United States, Japan and other Western countries thriving on the Washington Consensus and the Bretton Woods twins (the World Bank and the International Monetary Fund).

The first group wanted BRICS to succeed in taking its first big steps towards a more democratic global order where international institutions can be reshaped to become more equitable and representative of the world’s majority. The second group has routinely inspired obituaries of BRICS and gambled on the hope that India-China rivalry would stall the BRICS alliance from turning words into deeds.The stature, power, force and credibility of BRICS depend on its internal cohesion and harmony and this, in turn, revolves almost wholly on the state of relations between India and China. If India and China join hands, speak in one voice and march together, then BRICS has a greater chance of its agenda succeeding in the international system.

In the event, the outcome of the three-day BRICS Summit must be a disappointment to the latter group. First, the obituaries were belied as being premature, if not unwarranted. Second, as its more sophisticated opponents have been “advising”, BRICS did not stick to an economic agenda; instead, there emerged a ringing political declaration that would resonate in the world’s trouble spots from Gaza and Syria to Iraq and Afghanistan.

Third, and importantly, far from so-called Indian-China rivalry stalling decisions on the New Development Bank (NDB) and the emergency fund, the Contingency Reserve Arrangement (CRA), the Asian giants grasped the nettle to add a strategic dimension to BRICS.

With a shift in the global economic balance of power towards Asia, the failure of the Washington Consensus and the Bretton Woods twins in spite of conditionalities, structural adjustment programmes and “reforms”, financial meltdown and the collapse of leading banks and financial institutions in the West, there had been an urgent need for new thinking and new instruments for the building of a new order.

Despite the felt need and multilateral meetings that involved developing countries, including China and India which bucked the financial downturn, there had been no sign of alternatives being formed.

It is against this backdrop – of the compelling case for firm and feasible steps towards a new global architecture of financial institutions – that BRICS, after much deliberation, succeeded in agreeing on a bank and an emergency fund.

From India’s viewpoint, this summit of BRICS – which represents one-quarter of the world’s land mass across four continents and 40 percent of the world population with a combined GDP of 24 trillion dollars – was an unqualified success. The success is sweeter for the National Democratic Alliance (NDA) government led by the Bharatiya Janata Party (BJP) because the BRICS summit was new Prime Minister Narendra Modi’s first multilateral engagement.

For a debutant, Modi acquitted himself creditably by steering clear of pitfalls in the multilateral forum as well as in bilateral exchanges – particularly in his talks with Chinese President Xi Jiping, with Russian President Vladimir Putin and with Brazilian President Dilma Rousseff – and by delivering a strong political statement calling for reform of the U.N. Security Council and the IMF.

In fact, the intensification and scaling up of India-China relations by their respective powerful leaders is an important outcome of the meeting in Brazil, even though the dialogue between the Asian giants was on the summit’s side-lines. Nevertheless, Modi and Xi spoke in almost in one voice on global politics and conflict, and on the case for reform of international institutions.

The new leaders of India and China, with the power of their recently-acquired mandates, sent out an unmistakable signal that they have more interests in common that unite them than differences that separate them.

Against this backdrop, Indian Prime Minister Modi’s outing was significant for other reasons, not least because of the rapport he was able to strike up, in his first meeting, with Chinese President Xi. The stature, power, force and credibility of BRICS depend on its internal cohesion and harmony and this, in turn, revolves almost wholly on the state of relations between India and China. If India and China join hands, speak in one voice and march together, then BRICS has a greater chance of its agenda succeeding in the international system.

As it happened, Modi and Xi hit it off, much to the consternation of both the United States and Japan. They spoke of shared interests and common concerns, their resolve to press ahead with the agenda of BRICS and the two went so far as to agree on the need for an early resolution of their boundary issue. They invited each other for a state visit, and Xi went one better by inviting Modi to the Asia-Pacific Economic Cooperation meeting in China in November and asking India to deepen its involvement in the Shanghai Cooperation Organisation (SCO).

Modi’s “fruitful” 80-minute meeting with Xi highlights that the two are inclined to seize the opportunities for mutually beneficial partnerships towards larger economic, political and strategic objectives. This meeting has set the tone for Xi’s visit to India in September.

Although strengthening India-China relationship, opening up new tracks and widening and deepening engagement had been one of former Indian Prime Minister Manmohan Singh’s biggest achievements in 10 years of government (2004-2014), after a certain point there was no new trigger or momentum to the ties. Now Xi and Modi are investing effort to infuse new vitality into the relationship which will have an impact in the region and beyond.

As is the wont when it comes to foreign affairs and national security, Modi’s new government has not deviated from the path charted out by the previous government. BRICS as a foreign policy priority represents both continuity and consistency. Even so, the BJP deserves full marks because it did not treat BRICS and the Brazil summit as something it had to go through with for the sake of form or as a chore handed down by the previous government of Manmohan Singh.

Before leaving for Brazil, Modi stressed the “high importance” he attached to BRICS and left no one in doubt that global politics would be high on its agenda.

He pointed attention to the political dimension of the BRICS Summit as a highly political event taking place “at a time of political turmoil, conflict and humanitarian crises in several parts of the world.”

“I look at the BRICS Summit as an opportunity to discuss with my BRICS partners how we can contribute to international efforts to address regional crises, address security threats and restore a climate of peace and stability in the world,” Modi had said on eve of the summit.

Having struck the right notes that would endear him to the Chinese leadership, Modi hailed Russia as “India’s greatest friend” after he met President Vladimir Putin on the side-lines of the summit.

India belongs to BRICS, and if BRICS is the way to move forward in the world, then BRICS can look to India, along with China, for leading the way, regardless of political change at home. That would appear to be the point made by Modi in his first multilateral appearance.

The five BRICS leaders pose for the cameras at the sixth annual summit in the Brazilian city of Fortaleza. Credit: Agência Brasil/EBC

By Mario Osava
FORTALEZA, Brazil, Jul 16 2014 (IPS)

The BRICS alliance (Brazil, Russia, India, China and South Africa) launched the New Development Bank (NDB) and Contingency Reserve Arrangement (CRA) during its sixth summit, institutionalising a new financial architecture for the emerging powers.

Two other agreements, one for Cooperation among Export Credit and Guarantees Agencies and another on Cooperation for Innovation among national development banks, complete the structure established Tuesday Jul. 15 by the five heads of state in the northeastern Brazilian city of Fortaleza.

The BRICS Summit concludes Wednesday with a meeting between the five leaders and the presidents of the Union of South American Nations (UNASUR) held in Brasilia, as well as several bilateral meetings.

The NDB and CRA are not being created “against anyone,” but as a “response to our needs,” said the summit host, Brazilian President Dilma Rousseff, at a press conference after the meeting with Vladimir Putin (Russia), Narendra Modi (India), Xi Jinping (China) and Jacob Zuma (South Africa).

BRICS leaders reject interpretations that the mechanisms have been created in opposition to or as alternatives to the World Bank and the International Monetary Fund (IMF), part of the Bretton Woods global financial system established in the 1940s.

The NDB will complement existing multilateral and regional financial institutions, whose lack of resources constrain financing of infrastructure projects in developing countries, according to the summit’s final declaration, signed by the participating heads of state.

The CRA, a mechanism through which the five countries make available a total of 100 billion dollars from their reserves, is a currency pool that provides financial security for its members, without departing from the IMF, summit speakers said.

If one of the BRICS countries wishes to borrow more than 30 percent of the sum it is entitled to, in order to overcome threats to its balance of payments, it will have to face questions from the IMF about conditions of payment, said the Brazilian finance minister, Guido Mántega.

Brazil, Russia and India can withdraw up to the value of their contributions of 18 billion dollars each. South Africa may take out twice the five billion dollars it will contribute to the mechanism, and China up to half its 41 billion dollar commitment.

The new institutions “consolidate” the BRICS alliance, Mántega said. Before they become operational, they must be ratified by the countries’ parliaments, he said.

The bank and the reserve fund are so constituted as to prevent aspirations of dominance, Rousseff said. The countries will have equal shares in the NDB, of 10 billion dollars each, and equal voting rights. The capital may later be doubled.

Bank presidents and its governing councils will be appointed on a rotating basis.

China will contribute 41 percent of CRA funds but decisions will be taken by a broader majority, reaching consensus for the negotiation of larger loans, Mántega said.

But the NBD headquarters will be located in the Chinese city of Shanghai, and it will be difficult to avoid the economic and monetary weight of the Asian power from translating into greater decision-making power for Beijing.

The NDB’s composition avoids inequalities at the outset, but equal participation is only a formality as “in practice the future trend will be towards greater Chinese influence,” according to Carlos Langoni, former president of the Brazilian Central Bank.

To be effective, the bank will have to increase its initial capital of 50 billion dollars, recruiting new financing resources, and in this as well as in crises the “dominant role” of the country offering most capital and guarantees is an influential factor, added Langoni, who is the present director of the World Economics Centre at the Getulio Vargas Foundation.

China is interested in diversifying its investments, in multilateral and regional institutions as well as bilaterally. In recent years it has become the largest investor in Latin America.

It already participates in several regional financial mechanisms, such as the Chiang Mai Initiative, similar to the CRA and involving countries of the Association of Southeast Asian Nations, and it is seeking to establish the Asian Infrastructure Investment Bank, as an alternative to the Asian Development Bank in which Japan has decisive influence.

Langoni believes that the BRICS, with the CRA resting on “mega-economies” with their enormous currency reserves, will in the long term be able to “grow faster and have more weight than the IMF, which is already facing difficulties raising funds because of its rules.”

However, the IMF will remain the most powerful multilateral financial body over the next decade, he said.

The rise of the BRICS reflects a multipolar world, as the alliance includes military powers like Russia and China, nuclear powers like both these countries and India, and “moderators” without military ambitions like Brazil and South Africa.

Progress in strengthening and institutionalising the group at its Fortaleza summit could help reduce border tensions existing between China and India, or between Russia and the West, Langoni said.

In his view, what cements the group is its “frustration over the action of multilateral bodies, particularly the IMF,” in the face of the financial crises. These institutions are very complex and made up of a large number of countries.

The BRICS countries can operate with greater ease with their own financial instruments, which can also supply their urgent needs for investment in infrastructure, especially in Brazil and India, he argued.

The BRICS “found their identity” by working with the Group of Twenty (G20) industrial and emerging countries to defend the stimulation of growth, rather than recession-inducing austerity, after the 2008 global financial crisis, Mántega pointed out. Later they came to demand reform of the IMF, which spearheaded response to the crisis.

Some reforms to grant emerging countries greater participation in IMF decision-making were approved by the G20, but then stalled because they were rejected in the U.S. Congress.

The IMF is regarded as extremely undemocratic, because the United States has power of veto and some countries of the industrial North have a majority of votes, in contradiction with the present correlation of economic forces and the weight of emerging powers.

The absence of reforms “negatively impacts on the IMF’s legitimacy, credibility and effectiveness.” The reforms must lead to the “modernisation of its governance structure so as to better reflect the increasing weight of emerging markets and developing countries (EMDCs),” says the Fortaleza Declaration, signed by the five BRICS leaders.

Brazilian officials at an information meeting prior to the Sixth BRICS Summit. Credit: Agência Brasil/EBC

By Mario Osava
FORTALEZA, Brazil, Jul 15 2014 (IPS)

The growing vitality of the group of countries made up of Brazil, Russia, India, China and South Africa (BRICS), which is beginning to formalise its institutions even as it tries to bridge very disparate realities, seems to be partly cemented by increasing links between its companies.

The complementary nature of their economies was highlighted at the BRICS Business Forum on Monday Jul. 14, one of the meetings prior to the sixth annual summit of the five leaders, inaugurated Tuesday Jul. 15 in the northeastern city of Fortaleza and closing on Wednesday in Brasilia.Trade between the five countries has multiplied 10-fold between 2002 and 2012, reaching 276 billion dollars.

More than 700 members of the business community participated in the entrepreneurial debates, designed to promote 3.9 billion dollars worth of contracts in the sectors of agriculture, infrastructure, logistics, information technology, health and energy.

The Business Forum of the BRICS group of emerging powers began its work five years ago.

There is “an immense complementarity” among BRICS members, which can be appropriately used to greatly benefit all its countries, said Marcos Jank, head of corporate affairs at BRF, a Brazilian transnational and leading meats exporter.

“China has an enormous market and Brazil has vast reserves of natural resources,” with a lot of productive land to supply large populations, he said.

This is one way of looking at what many criticise as unbalanced trade, in which Brazil exports virtually exclusively commodities, especially soya and iron ore, and imports mainly manufactured goods from China.

But integration of production chains and higher added value in exports can happen even in the agriculture and livestock business, Jank said. Instead of importing soya to feed its meat production, China could import the meat from Brazil, he said.

A major hurdle to the growth of trade and productive integration between the BRICS countries are barriers of all kinds, tariff and non-tariff, technical, subsidies and other protectionist measures that affect trade, particularly in agricultural products, Jank complained.

India has prohibitive tariffs of up to 100 percent on Brazilian chicken, while South Africa “is closed” and Russia is a “volatile” market, opening and closing in rapid succession for Brazilian meats, he said.

Nevertheless, trade between the five countries has multiplied 10-fold between 2002 and 2012, reaching 276 billion dollars, according to the World Trade Organisation. The share of the BRICS group in global trade has doubled from eight to 16 percent between 2001 and 2011.

Two new instruments that will be formally created at the Summit contradict views that the group had little chance of integration because of its political and historical differences, disparate levels of development and even commercial strategies.

These are the New Development Bank (NDB) and the Contingency Reserve Arrangement (CRA), a common fund to combat financial crises.

The progress seen in only a few years, since the BRIC acronym was coined in an analysis of emerging economies by an economist at a U.S. bank, contrasts with the stagnation of other coalitions, like the IBSA Dialogue Forum involving India, Brazil and South Africa, which interrupted its summit meetings in 2011.

“What unites the emerging BRICS countries is power,” according to Narinder Wadhwa, executive director of SKI Capital Services, in India.

Jointly, the BRICS have 46 percent of the world’s population and 26 percent of its land mass. The BRICS countries’ combined gross domestic product, based on purchaing power parity (PPP), is greater than that of the U.S. or the European Union, “so it is natural that they should demand greater participation in decision-making bodies,” he told IPS.

This seems to have fuelled the group’s high rate of progress since its first summit was held in 2009.

Another factor accelerating integration is the potential for exchange of trade and investments in these large countries with a combined population of nearly three billion people, where numbers of middle class consumers have grown rapidly in recent decades.

For this reason, Wadhwa says he is “optimistic” about the future of what many people are already calling a “bloc,” although no treaties have been signed that would justify the term and its governments are reluctant to be considered as such.

But realising this potential calls for pragmatism, said Sergy Katyrin, president of the BRICS Business Council in Russia, and Rubens de La Rosa, of Brazil’s BRICS Business Council and executive director of Marco Polo, a Brazilian transnational company that produces large vehicles, especially buses.

Africa is a new frontier for global trade and investment, with consumption growing rapidly in the middle population sectors, the president of the African Business Council, Patrice Motsepe, told IPS.

Motsepe, a mining magnate regarded as the first black South African billionaire, chaired a report on the business potential of the five countries that underscored Africa’s high potential.

According to the African Development Bank, trade between the continent and BRICS reached 340 billion dollars in 2012 and is expected to rise to 500 billion dollars in 2015. Sixty percent of this trade is with China.

Each national chapter of the Business Council is made up of 25 business people, who have set up five working groups to study potential joint business enterprises in infrastructure, financial services, manufacturing, energy and capacity development.

Much still remains to be done to increase economic integration between the BRICS countries, which were formerly practically unknown to each other, these business leaders said.

De la Rosa said that among the proposals to be made to heads of government in Fortaleza was promoting trade in national currencies, because this would “reduce the cost of transactions” and could favour trade and investments.

Facilitating visas for business trips, harmonising technical standards, intensifying communication between companies in the different countries and overcoming barriers, including red tape, will be some of the other recommendations made by Robson Andrade, the president of the Brazilian National Confederation of Industry (CNI) which organised the Business Forum in Brazil.

The main concern of Brazilian industrialists is the trade deficit of Brazil with its partners, which amounted to 101 billion dollars in 2013, equivalent to 21 percent of Brazilian trade.

More than 70 percent of Brazilian exports to China, India, Russia and South Africa are soya, iron ore and oil, while in the opposite direction 95 percent of what Brazil imports from these countries are manufactured goods, according to CNI.

Mega-projects like the Itaipú hydropower station shared by Brazil and Paraguay could in future be financed by the new fund and new bank to be launched by BRICS leaders in the Brazilian city of Fortaleza. Credit: Mario Osava/IPS

By Mario Osava
FORTALEZA, Brazil, Jul 12 2014 (IPS)

The first common institutions to be set up by Brazil, Russia, India, China and South Africa – the BRICS – are financial, and have arisen as a result of reforms to an international system that continues to largely ignore the growing influence of emerging countries.

But the Contingency Reserve Arrangement (CRA), the BRICS countries’ monetary fund, will also be unbalanced in the composition of its resources, leading to the possible reproduction of these inequalities. The cement that binds the BRICS together is their aspiration to wield more power in international economic bodies.

The CRA and a development bank will be formally established at the Sixth BRICS Summit, to be held in Brazil on Tuesday Jul. 15 in the northeastern city of Fortaleza and on Wednesday Jul. 16 in Brasilia. On Monday, preparatory meetings will take place between ministers, members of the business community and the group’s central banks.

The reserve fund will have 100 billion dollars to come to the rescue of any of its members suffering an exchange crisis. China would contribute 41 percent of the total, South Africa – the smallest partner – five percent, and the other countries 18 percent each.

These percentages reflect the size of each country’s economy. However, participation in the New Development Bank (NDB), the other instrument that will be established at the summit, will be on the basis of equal shares: 10 billion dollars each and equal voting rights for each member.

This is the big difference between the NDB and the World Bank, of which it is a reflection. “The NDB is democratic,” Christopher Wood, a researcher for the South African Institute of International Affairs in Johannesburg, told IPS.

This aspect of the NDB is also very different from the CRA, where China, as the largest country, “will probably have a disproportionate influence,” but it is hoped that the design of the institution will prevent it from being overly one-sided, Wood said.

Negotiations have been under way to create the development bank and the monetary mechanism since 2012, and now only a legal review is required before they are signed by the five BRICS leaders in Fortaleza, announced José Alfredo Graça Lima, the undersecretary- general for political affairs at the Brazilian foreign ministry.

BRIC, an acronym coined in 2001 by U.S. economist Jim O’Neill for the four emerging powers that are changing the shape of the world, began to hold meetings of heads of state and government in 2009, forming “a coalition” that was joined by South Africa in 2011.

“It is not a bloc” that adopts common policies for trade and other sectors, Brazilian diplomats said in response to critical observations about the discrepancies between the countries in different economic or political international forums.

The huge countries, or “whale-economies,” are getting to know each other and have expanded their dialogue. They have “a positive role in democratising international relations,” Graça Lima said.

Cooperation between the five countries is already ongoing in more than 30 areas, and their societies are also interacting through business and academic forums and other means, said Flavio Damico, the head of the Brazilian foreign ministry’s department of inter-regional mechanisms.

But the cement that binds the BRICS together is their aspiration to wield more power in international economic bodies. “The structure of power and privileges” of the global financial and political system “has remained set in stone” since 1945, and will have to change “to adjust to present reality,” he said.

The blocking of a proposed reform of the International Monetary Fund (IMF) in the U.S. Congress spurred the BRICS countries to make headway with their own solutions. The CRA will probably “not substantially change the world economic order in the short term, but it certainly could erode the centrality of the IMF in the long run,” said Wood.

The CRA is being formed in the context of persistent after-effects of the 2008 financial crisis and the “systemic imbalances in the global economy, perpetuated by the monetary policies of advanced economies, such as the United States and the European Union,” Vivan Sharan, an expert on BRICS with the Observer Research Foundation in India, told IPS.

With the “monetary safety net,” BRICS will be signalling “lesser levels of dependence on Bretton Woods institutions such as the IMF, which urgently requires structural and governance reform,” he said. But the group is not aiming at “a recalibration of the global economic order,” he said.

Brazilian economist Fernando Cardim, professor emeritus of economics at the Federal University of Rio de Janeiro, doubts the CRA will be successful. Its resources will be too few, as its entire funds would not even be able to protect Brazil alone from mass capital flight, he argued.

Moreover, it will not necessarily prevent potential intra-BRICS strife, as China will have decisive powers “similar to or even greater than those of the United States over the IMF,” and is likely to wield power with less subtlety, he said.

But the BRICS institutions are not seeking to substitute for or confront the IMF or the World Bank. The CRA’s goal is to “complement” them, as “an additional line of defence” for the five countries, which are not facing balance of payment difficulties, according to Graça Lima.

The IMF’s resources total 937 billion dollars, more than nine times the value of CRA funds, and it will continue to play a key role for the CRA itself and other monetary mechanisms created to combat financial crises, Wood said.

In the Chiang Mai Initiative, a similar mechanism adopted by the Association of Southeast Asian Nations after the region’s 1997-1998 crisis, and which is backed by China, South Korea and Japan, countries must first request IMF assistance if they wish to draw a large loan from the funding pool, said Wood.

The NDB, already known as the BRICS Development Bank, is less controversial, although it has drawn criticism from social and environmental activists. The plan is for it to begin financing infrastructure and sustainable development projects in two years’ time, after obtaining parliamentary approval from member countries.

Its starting capital of 50 billion dollars is limited in comparison with the needs of BRICS members and other developing countries that could benefit from loans and even join the bank. It is less than the amount loaned annually by Brazil’s National Bank for Economic and Social Development (BNDES).

The Indian government, for instance, estimates that one trillion dollars are needed for financing domestic infrastructure projects over the next five years, around half of which is to come from the private sector.

However, new sources of funding are important because Indian infrastructure projects are facing serious liquidity challenges, as they are over-dependent on banking sector finance due to “the non-existence of a robust corporate bond market,” said Sharan in New Delhi.

“South Africa has a lot to gain,” as the NDB will focus on large infrastructure projects, a common problem amongst all the BRICS, and can offer long-term financing which is often difficult to obtain, particularly from the private sector, Wood said.It will also support project preparation, like surveying work, which often needs to be done before financing for the project can be accessed.

The NDB is authorised to double its funds, but its key importance is that co-financing projects acts as a catalyst, by reducing the risk and cost burden for other lenders and so attracting resources from private investors and national and multilateral development banks around the world, according to Wood and the Brazilian diplomats.

With additional reporting from Ranjit Devraj in New Delhi and Brendon Bosworth in Johannesburg.

“Family photo” at the fifth BRICS Summit, held in 2013 in Durban, South Africa. Credit: Government of South Africa

By Fabiana Frayssinet
BUENOS AIRES, Jun 18 2014 (IPS)

As Argentina starts to mend fences with the international financial markets, the emerging powers that make up the BRICS bloc invited it to their next summit. This could be a step towards this country’s reinsertion in the global map, after its ostracism from the credit markets since the late 2001 debt default.

For now, there is no letter “A” in the BRICS acronym, which stands for Brazil, Russia, India, China and South Africa. But in Buenos Aires speculation is rife about whether it should be called BRICSA, ABRICS or BRICAS, if Argentina is admitted.

The invitation for President Cristina Fernández to participate in the group’s sixth summit, scheduled for Jul. 15 in the northeast Brazilian city of Fortaleza, is seen as another sign that Latin America’s third-largest economy may be incorporated, after India, Brazil and South Africa indicated their interest.

“This is very significant for Argentina,” Fernanda Vallejos, an economist at the University of Buenos Aires (UBA), told IPS.

“It not only points to the recognition by the rest of the members of Argentina’s importance and potential, but also opens a door for our country to gain greater political and economic clout on the international stage.”

Vallejos stressed the key role played by BRICS over the last decade in the growth of the global economy at a time of financial crisis in the industrialised North.

The term BRICS was coined for the world’s major emerging markets in 2001 by economist Jim O’Neill of investment bank Goldman Sachs. Together, these countries represent around one-quarter of global GDP, 43 percent of the planet’s population, and 20 percent of global investment.

In addition, as Argentina’s foreign ministry stressed, the five countries account for 45 percent of the world’s labour force, hold over three trillion dollars in combined foreign reserves, and produce two billion tonnes a year of agricultural products.

Vallejos said that in a world where blocs are playing a bigger and bigger role, BRICS has a growing voice in international forums, where the members are “demanding participation in accordance with the weight of their economies.”

“The proposal set forth by India – with which bilateral trade expanded 30 percent in 2013 – and backed by Brazil and South Africa also puts paid to the opposition’s tired complaint about our country supposedly being isolated from the world,” said Vallejos, who is also a researcher at the Energy, Technology and Infrastructure Observatory for Development (OETEC).

The formal invitation to Fernández was issued by Russia, which also thus confirmed its support.

“I think this shows that Argentina is fully inserted in international relations, not ‘isolated from the world’,” Nicolás Tereschuk, a political scientist at UBA, told IPS. “It simply doesn’t toe the line with the policies of the central countries at just any cost or in any circumstances, as it used to do at other times in its history.”

Argentina’s invitation from BRICS came almost simultaneously with the May 28 announcement of an agreement reached by the Fernández administration and the Paris Club, which this country owed 9.7 billion dollars since the default 13 years ago.

Some political sectors here see the public debt contracted by the 1976-1983 military dictatorship as illegitimate. But the centre-left Fernández administration hopes the agreement with the Paris Club will facilitate the renewed flow of international credit and investment.

Economist Diego Coatz said the agreement and other measures adopted by the government such as “improving” its economic data, whose reliability was questioned by the International Monetary Fund (IMF), point to a “shift” by the authorities aimed at “reintegration in the world in financial terms…and at positioning the country better on the international front.”

Coatz, with the research centre of the Argentine Industrial Union – the country’s leading industrial employer federation – said that if Argentina is admitted to the BRICS bloc, “it will once more be seen as an emerging developing country with great potential.”

In addition, incorporation in the bloc would open a new window for external financing, when Argentina is in need of foreign exchange and investment, he said.

At the Fortaleza summit a formal decision could be reached on creating a regional development bank as an alternative to international financial institutions like the IMF, World Bank or Interamerican Development Bank.

The new bank would have a 50 billion dollar fund for financing infrastructure in the bloc’s member countries. It would also establish a joint foreign exchange reserves pool of 100 billion dollars, “which would serve as insurance against the volatility of the markets,” Vallejos said.

“Argentina could access financing at very beneficial rates compared to the heavy interest rates of other international institutions” in order to finance infrastructure for development, she underscored.

“The strengthening of international trade by the possible admission to BRICS means important possibilities for Argentina to make significant progress towards a more developed industrial sector, with insertion in global production chains, the development of strategic sectors and the industrialisation of the countryside,” Vallejos said.

The interest would appear to be mutual.

“The invitation came after the turmoil in emerging markets early this year, after which the ‘establishment’ international financial press talked about a ‘decline’ of BRICS,” Tereschuk said.

In addition, “growth in China is slowing down, India is at a decisive moment, with the dilemma of faster growth or stagnation, and the Brazilian economy is not really flourishing at this time,” the economist said.

So for them and the rest of the members of the bloc, “joining together with a periphery country that makes up the G20 [Group of 20] would seem to be a decision of interest to the BRICS countries,” he said.

The G20 block of leading industrialised and emerging economies “is in somewhat of a crisis itself, because of the crisis that the central countries are still immersed in.”

For that reason, according to Tereschuk, Argentina would be useful to the BRICS so that the voice of their two South American leaders, Argentina and Brazil, “would be heard in unison in the greatest number of places possible.”

The political scientist said Brazil and Argentina have led a “shift to the left with growth, reduction of poverty and inequality in a framework of democracy and greater political, civilian and social rights for their citizens.

“The other members of BRICS cannot offer all of these characteristics combined,” he said.

Vallejos, for her part, stressed Argentina’s role as a supplier of raw materials. “We are an agricultural powerhouse,” she pointed out.

In addition, “Argentina has the world’s second-largest reserves of lithium, one of the biggest reserves of gold – nearly 10,000 tonnes – 500 million tonnes of copper, and 300,000 tonnes of silver, while we are becoming the third-largest global exporter of potassium,” she said.
“We are sitting on the world’s third- largest platform of unconventional fossil fuels. And to that you have to add our technological development, and the development of nuclear energy for peaceful purposes,” she added.
So would it be “BRICAS”, “ABRICS” or “BRICSA”? At any rate, what is at stake is a bit more than deciding on a new acronym.

By Fernando J. Cardim de Carvalho
RIO DE JANEIRO, May 20 2014 (IPS)

Brazil’s real gross domestic product (GDP) in 2013 grew by 2.3 percent, following rates of 2.7 percent and 1 percent in 2012 and 2011 respectively. Perspectives for 2014 on this front are not optimistic.

Meanwhile, annual inflation has remained stubbornly high, at around 6 percent, and the balance of payments position has been less than comfortable, with increasing deficits being recorded in its current account (exports of goods and services less imports).

The silver lining comes in the labour market, where not only practically full employment has been maintained, but the quality of jobs seems to be holding up, with workers shifting from the informal to the formal markets, where they qualify for benefits such as unemployment compensation and pensions.

Fernando Cardim de Carvalho

Only a few years ago, together with its BRICS partners (Russia, India, China and South Africa), the Brazilian economy was hailed as the new frontier of growth in the international arena. Today, gloomy projections are routinely issued by international institutions and domestic expectations seem to remain subdued. What could possibly have happened to change the picture so dramatically in such a short time?

The roots of the present economic situation seem to be a complex combination of international difficulties, not-so-competent policy-making and random misfortunes. In addition, recent political evolution has contributed to complicate matters even more.

Taking each factor at a time, the most visible difference with the performance of the Brazilian economy during current president Dilma Rousseff’s first term of office relates to the international environment. During President Lula Da Silva’s second term (2007-2011), the Brazilian economy benefited from tail winds represented mostly by strong Chinese demand for raw materials and agricultural goods, which not only helped the country to maintain a comfortable position in its balance of payments but also pushed its domestic economy strongly upwards.

This era seems to be over, given the publicly expressed concerns of the current Chinese government to cool and reform its own economy. The cooling of exports growth has helped to highlight one “structural” problem of the Brazilian economy, particularly strong after high inflation was defeated in 1994.

"The inability to define strategies to insert the Brazilian economy in a world economy going through deep changes has been a permanent feature of post-democratisation governments..."
Since that time, with short intervals in which the trend was temporarily broken, an overvalued domestic currency has been perhaps the most powerful tool to keep inflation under control. The possibility of importing goods at prices made low by a strong domestic currency not only provided domestic markets with cheap goods but also scared local producers into avoiding raising their prices and losing their markets to imports, a force particularly strong in the manufacturing sector.

This means that since the Real Plan in 1994, Brazil has been captured by a well-known dilemma: inflation can be kept low by overvaluing the domestic currency or manufacturing growth can be sped up by devaluing the currency, but one does not know how to achieve both. As a result, the Brazilian economy has been plagued by periods of intense “deindustrialisation” (when the currency is overvalued) or by inflationary pressures (when the currency is devalued).

While the Chinese economy was growing fast enough to carry raw materials exporters like Brazil, overall growth could be kept by substituting growth of exports for growth of manufacturing. But the recent deceleration of Chinese growth has made the dilemma faced by the Brazilian economy explicit.

The strong dependence of the international economy has been a major feature of the last twenty years and the weakening of international trade has made the limitations that define current policy-making more dramatic than ever. Unable to change the terms of the trade-off opposing a higher inflation rate (by allowing steeper currency devaluations) to higher growth rates, particularly of the manufacturing sector (by allowing the real to get stronger), Rousseff’s government has appealed to ad hoc policies that not only have not had the expected effect but, on the contrary, have created new problems.

As an example, unable to implement a coherent exchange rate policy to stimulate domestic manufacture, the government has conceded targeted fiscal relief to selected sectors. This strategy, if one can call it that, is of very limited efficiency. Benefits are temporary, generally given to help sectors to go through difficult periods. They do not signal market priorities, they just help some firms to get by. They cause state revenues to fall but do not stimulate investments or expansion of production, let alone technical progress or increase of productivity. Businessmen learn that it may be more profitable to lobby for favours than to invest and increase productivity. The fall in revenues leads to increased political pressure from believers in “austerity”, often forcing the government to cut other expenditures, which could be more effective but would require a longer period to mature. Necessary public investments are always the adjustment variable.

The inability to define strategies to insert the Brazilian economy in a world economy going through deep changes has been a permanent feature of post-democratisation governments (that is, since the mid-1980s) and it may be partly due to the realities created by the way the political system, and particularly the party system, was reconstructed after the military went back to the barracks.

Finally, one has also to acknowledge that bad luck has also had a hand. Bad weather, in the form of a particularly nasty drought, has affected the production of food and the generation of electric power, in a country where hydropower is by far the most important source of electricity. This has not only kept inflation pressures up but has also clouded the future, making firms even warier of investing.

In sum, it is not a comfortable time for the Brazilian economy. That important elections are also coming up in October this year does not help because the political debate tends to polarise, so that nobody expects important decisions to be made this year. This means that things should not improve significantly before 2015 at the earliest. (END/COPYRIGHT IPS)

Excerpt:

Crowds waving Crimean and Russian flags in Simferopol in Crimea after the referendum. Credit: Alexey Yakushechkin/IPS

By Jim Lobe
WASHINGTON, Apr 5 2014 (IPS)

Last month’s annexation by Russia of Crimea and the West’s reaction have placed emerging regional powers, which have generally supported Moscow’s position on key geopolitical developments, in a difficult position, according to U.S. analysts.

Moscow’s move, which followed its de facto military takeover of the peninsula and a snap referendum on joining Russia of the mainly Russian-speaking population there, has also underlined differences within the so-called BRICS bloc, which includes Brazil, India, China, and South Africa, as well as Russia.“They don’t want to be pulled into a fight between the big dogs." -- Rajan Menon

Rather than vote with Moscow, the four non-Russian BRICS members all abstained on last week’s vote at the U.N. General Assembly, which affirmed the world body’s commitment to recognise Crimea as part of Ukraine and declared the snap referendum, which took place in mid-March, invalid.

China abstained on a similar resolution in the U.N. Security Council on the eve of the referendum. Russia cast the lone veto.

“I think the Chinese decision to abstain, rather than back Russia, was a very significant decision,” said Bruce Jones, who directs the Brookings Institution’s International Order and Strategy project.

“The Chinese and the Russians have long paired up in their willingness to back each other in vetoes, and, for an issue as important as this, with the Russians putting as much emphasis on this as they did, for the Chinese to abstain was a really significant signal that they were not willing to simply close their eyes to Moscow’s action,” he told IPS.

“Overall this is an event that will sow discord within the BRICS’ grouping and will make the Chinese, Indians, Brazilians, and others think more carefully about their support for and partnership with Russia,” according to Charles Kupchan, a senior fellow at the Council on Foreign Relations (CFR).

Moscow’s annexation, which has been countered by a series of still-escalating economic and diplomatic sanctions imposed by U.S.-led Western nations, has provoked considerable division among both the non-Russian BRICS, as well as other members of the Non-Aligned Nations.

While only 11 countries – all of them either closely allied to Russia or reflexively anti-U.S. in foreign policy orientation – voted against the resolution, 58 countries, including the four BRICS members, as well as other politically significant countries such as Argentina, Egypt, Ethiopia, Iraq, Kenya, Pakistan, Uganda, and Vietnam, abstained.

One hundred countries voted in favour, including all European Union (EU) members, Turkey, Nigeria, Indonesia, and most of Latin America and the Gulf Arab states.

Two dozen countries didn’t show up, including several important countries with strong interests in alienating neither Russia nor the West, including several Central Asian nations with large Russian-speaking minorities.

Israel, which habitually aligns itself with Washington, and Iran, which normally opposes it but is now engaged in critical negotiations with the West over its nuclear programme, were both no-shows.

While Western leaders appear resigned to the irreversibility of Russian control of Crimea, they are hoping that what they see as the steadily rising economic and political costs incurred by Moscow – including capital flight and NATO commitments to move military assets further east toward the Russian border — will dissuade President Vladimir Putin from further adventurism either against Ukraine or in Russian-speaking areas of Romania and Moldova. Whether that works remains to be seen.

But the precedent-creating nature of Russia’s takeover – its use of military force (albeit without bloodshed), the violation of territorial integrity of a nation with internationally recognised borders, and its justification that Ukraine’s Russian-speaking population faced persecution and discrimination from what Moscow considers a regime that had illegally seized power against an elected president – has clearly troubled many nations, especially those with significant disaffected minorities.

“What is most threatening is that most states in the world are not homogenous,” said Rajan Menon, who teaches international relations at City University of New York (CUNY).

“India is a highly diverse nation, as is China and, in a way, South Africa, too. So the idea of holding a referendum to become separate states is naturally very troubling to them.”

“I think the other BRICS were all in their way quite uncomfortable with Russia’s moves in Crimea, but they’re also quite uncomfortable with the West using sanctions because they’re all quite vulnerable to that political weapon,” noted Jones, author of a just released book on the global order, ‘Still Ours to Lead: America, Rising Powers, and the Tension Between Rivalry and Restraint’.

The latter was demonstrated in the approval by the BRICS foreign ministers March 24 of a statement in which they rejected the reported suggestion by the foreign minister of Australia, which will host the next G20 summit in Brisbane in November, that Russia should be suspended or expelled form the group.

“The escalation of hostile language, sanctions and counter-sanctions, and force does not contribute to a sustainable and peaceful solution, according to international law, including the principles and purposes of the United Nations Charter,” the statement said.

While some commentators interpreted the statement as backing Moscow, Jones noted that the foreign ministers rejected language in support of the annexation that had been sought by Russia.

“That goes to the core issue of the BRICS,” he said. “They’re strategically divided at the same time that they are unified in wanting to resist the West’s using its economic leverage to pressure them.”

Moreover, he added, the idea that Russia is leading anti-Western bloc – a theme raised by more right-wing voices here since the Crimea invasion – is “nonsense.”

Indeed, Kupchan, author of a 2012 book on world order, ‘No One’s World: The West, the Rising Rest, and the Coming Global Turn’, told IPS he thinks the Western powers have gained in the international arena as a result of the Crimea crisis.

“Even though emerging powers are reluctant to align themselves clear with the West on this front, I think that they are for the most part on board with the Western response,” he said. “And the fact that so few countries have recognised Russia’s annexation of Crimes speak for itself.”

According to Menon, the BRICS want above all “a world with multiple centres of power,” a point that applies in particular to the less powerful BRICS members, namely India, Brazil, and South Africa, as well as other emerging powers.

“They don’t want to be pulled into a fight between the big dogs,” he told IPS. “They want maximum flexibility, a kind of strategic ambiguity, if you will.”

Jim Lobe’s blog on U.S. foreign policy can be read at Lobelog.com.

The Group of 20 (G20) industrialised and emerging economies on Sunday formally expressed frustration with the ongoing inability of the United States to approve a major reform package that would see governance at the International Monetary Fund (IMF) shift more towards developing countries.

The reforms were approved by the IMF in 2010 and have since been ratified by more than three-quarters of the fund’s member governments. Yet while the administration of President Barack Obama has been a key proponent of the reforms, the U.S. Congress has thus far been unwilling to approve the changes."The BRICS are wondering why they put up their money when nothing is happening." -- Jo Marie Griesgraber

Because the United States, with around 17 percent of voting rights (or “quota” shares) has an effective veto within the IMF, the reforms cannot go forward without the U.S. vote. The process has now missed a January deadline, while a second deadline for a subsequent round of changes is looming.

“Given that the U.S. is a big part of the G20, it is no small victory that emerging market and developing countries were able to get IMF reform so formally prioritised,” Kevin P. Gallagher, co-director of the Global Economic Governance Initiative at Boston University, told IPS. “Such pressure is basically the US administration and the rest of the world against the U.S. Congress.”

On Sunday, the G20, which has been a key organiser of the international financial response in recent years, strongly criticised the deadlocked reforms process. It also offered a new deadline for U.S. action.

“We deeply regret that the IMF quota and governance reforms agreed to in 2010 have not yet become effective,” the G20 stated in a communiqué on Sunday, following a ministerial meeting in Australia, which is hosting the grouping this year.

IMF chief Christine Lagarde. The quota changes would significantly increase the currently underweighted influence of fast-rising economies such as Brazil, China, India and Turkey. Credit: World Economic Forum/cc by 2.0

“Our highest priority remains ratifying the 2010 reforms, and we urge the US to do so before our next meeting in April. In April, we will take stock of progress towards meeting this priority.”

IMF Managing Director Christine Lagarde echoed this concern, saying Sunday that the fund “share[s] this view and urge[s] rapid progress on implementation.” The Washington-based institution is considered the world’s “lender of last resort”.

The quota changes would significantly increase the currently underweighted influence of fast-rising economies such as Brazil, China, India and Turkey. It would do so largely by decreasing the cumulative share of European members, considered outsized in terms of gross domestic product.

The Netherlands and Spain, for instance, both have voting shares similar in size to Brazil’s, despite the fact that the Spanish economy is less than two-thirds the size of the Brazilian. Given the problems in the eurozone, the European countries have also been prime beneficiaries of IMF support in recent years.

Under the quota reforms, the so-called BRICS countries – middle-income countries including Brazil, India and China – would see their vote shares expand the most significantly. The 2010 reforms would shift around nine percent of these shares towards developing countries, while also doubling the size of the fund’s overall lending capacity.

“The Europeans love it – they’re gloating. They have excessive power, are significantly overrepresented, and they love that [the United States] is not moving the reforms process forward,” Jo Marie Griesgraber, the executive director of the New Rules for Global Finance Coalition, a Washington-based international network, told IPS.

“On the other hand, the BRICS are wondering why they put up their money when nothing is happening. They’re most unhappy. In the long term, the BRICS countries could say this doesn’t work for them and move more seriously away from the IMF.”

On Sunday, a top Indian finance official warned that the failure to move forward on quota reform was threatening to undermine both IMF and G20 legitimacy.

“This is perhaps the first visible failure of G20. This has reduced the credibility of G20,” India’s economic affairs secretary, Arvind Mayaram, said in Sydney, calling implementation of the 2010 reforms “vital for the credibility, legitimacy and effectiveness of the IMF”.

Alternative institutions

Although an esoteric topic, the IMF governance reforms have received widespread approval from important constituencies in the United States, including major business and financial lobby groups as well as a long list of Republican luminaries.

In fact, President Obama bears some blame for the current situation, having decided in 2012 for political reasons not to request approval from the U.S. Congress. Yet since then, his administration has tried to do so repeatedly.

Each time, however, the Republican-controlled House of Representatives has rebuffed these requests, though apparently less for ideological than for political reasons. The last such attempt took place last month, when Republicans agreed to include the IMF reforms proposal in a major appropriations bill – but only if the Democrats would agree to stop the U.S. Treasury from imposing proposed restrictions on political “dark money”.

President Obama reportedly refused the trade, and there are few legislative options left for moving related legislation through Congress in coming months, particularly as national elections loom at the end of the year. (On Sunday, U.S. Treasury Secretary Jacob Lew told the G20 his office “will continue to work with Congress to pass legislation as soon as possible to secure the 2010 reforms, which are vital to our economic and national security interests.”)

Some observers say that such a situation should only strengthen an ongoing process under which developing countries are building multilateral structures outside the IMF.

“Upcoming Congressional elections may lead to further entrenchment by the U.S. on this issue. Thus it is imperative that the developing world continue to build alternative institutions such as the BRICS bank and the BRICS exchange reserve pool,” BostonUniversity’s Gallagher says.

“Just as important is for these bodies to have more equitable and transparent processes, so they can be held up as models against the arcane structures in the international financial institutions.”

The BRICS countries announced their intention to create a new multilateral development bank last year. Yet since then, progress has reportedly been slow, particularly as ongoing economic roiling is being felt particularly strongly in emerging economies.

“There is good talk about these projects, but most countries remain very reluctant to walk away from the [IMF]. Nonetheless, we are already seeing a gradual erosion in the use of the institution,” New Rules’s Griesgraber says.

“From our perspective, we need to get through this current reform process so we can move on to the larger governance issues that need to be addressed at the fund. Let’s equalise the power, introduce greater transparency around the board, and ensure that likely consequences for poor people are assessed before the IMF acts.”

By Johan Galtung
WASHINGTON, Dec 4 2013 (IPS)

In a passage in Charles Darwin’s The Voyage of the Beagle, he condemns an egalitarian native people at the tip of South America to remain primitive.

Development presupposes inequality, having chiefs – whether human, animals, races – to look up to and learn from. And the evolution theory emerging from a mind thus pre-programmed is obvious: competition, struggle for survival, not mutual aid, like the substitute narrative for Genesis 1:20-28, 4th to 6th day – but without God.

However, a man of God, Pope Francis – if anyone is saving Western civilisation from itself it is him, not economic growth presidents-prime ministers – has come out and decried inequality and “trickle-down economics” as a “crude and naive trust in the goodness of those wielding economic power”.

Or maybe “those wielding intellectual power” – the civil servants, the economists, instead?

Look at BRICS (Brazil, Russia, India, China, South Africa), accounting for 45 percent of the world population and 25 percent of the global world product. No to inequality and trickle-down: Brazil under Luiz Inácio Lula da Silva-Dilma Rousseff, Russia with revolution, China lifting the bottom up, South Africa breaking down apartheid. India has some trickle-down, but social walls are too strong to break.

The Asian Development Bank’s Social Protection Index score is three times higher for China than India (Japan’s is almost three times that of China – having started distribution already in the 1870s).

But in the U.S. and European Union, inequality is growing. This matters: more people are suffering, and may threaten the social “order”; even a minimal level of social protection costs; people at the very bottom have very low productivity; people at the very bottom consume with very low “consumptivity” (value consumed per person-hour); they are hungry, on the brink of starving.

Johan Galtung

Lift the bottom up and consumption and production follow. People with adequate food, health and education work better. The cuts in U.S. social protection are pathetic. Obamacare is a failure, Medicare-Medicaid-food stamps are shrinking, pensions are suffering from speculation, Congress has failed to increase the minimum wage. But states and local authorities may do so, lifting up the bottom in rich states (with the U.S. Southeast – Tea Party territory – lagging behind).

The four costs above add up to the U.S. committing economic suicide. Lift the bottom up so that they buy from the lower-middle classes who will buy more from the middle- middle classes. Wheels turning. Stimulus of cooperatives at the bottom will give better returns than stimulus for small existing businesses.

How about debt? The problem is not debt, but servicing debt at the cost of servicing people, and servicing by printing money. A debt is investment in a productive future managed by competent actors, not by stupid incompetence. The new debt ceiling day is approaching, with no new ideas floating in the air.

How about the EU debt relative to GDP? Five countries are – like the U.S. – above 100 percent: Greece (close to 170!), Italy, Portugal, Ireland; Belgium and France are in-between. Spain is doing slightly better, France worse

But then comes the private debt, by households and companies. Eight of the 17 eurozone countries have private debt above twice GDP: companies do not invest, and households consume less – like in the U.S.

There was the idea of cutting the numbers of people risking misery and exclusion by 20 million from 2008 to 2020. Instead, 24 million were added. Gone are great visions, in its struggle for survival to fill an EU niche in the world and to keep a Union between key creditor Germany and indebted EU members to the West and the South, with old enmities lurking beneath the surface.

For the world the key creditor is China. When the U.S. government had an 18-day shutdown President Barack Obama could not travel to ASEAN-APEC meetings to launch a Trans-Pacific Partnership (TPP) excluding China. Chinese president Xi Jinping did go, reviving a China-Asia maritime Silk Route that operated from 500 to 1500 AD, to which was added the Silk Railroad. Chinese inter-governmental diplomacy: equal footing, mutual benefit, compromise, non-interference.

By 2020 China-ASEAN trade may reach one trillion dollars, with China-Malaysia trade set to reach 160 billion dollars by 2017. Malaysia’s militarily pro-U.S. Prime Minister Najib Razak says he may pull out of the TPP to preserve sovereignty.

Deals come more easily for the world’s biggest creditor than for the biggest debtor. The U.S. is now better at breeding enemies than friends: with NSA-Edward Snowden the Transatlantic Partnership (TAP) may never be what the U.S. envisaged. The TPP and TAP make Big Business the winners through protectionism and increased inequality. Follow the leader! – while China is playing the mutual aid card.

Add the speculation that Wall Street – with JP Morgan Chase-Citibank-Bank of America-Goldman Sachs accounting for more than 90 percent of the known derivative trade – is perpetrating on the world.

Glen Ford, the editor of the Black Agenda Report, wrote that “Wall Street bets a quadrillion dollars of everybody else’s money”; 1.2 quadrillion equals 16.7 times the gross world product. Derivatives are valued at six times the world wealth. Sheer madness.

Add to this the contradictions in the U.S. economy between serving debts and serving people, between money in circulation and U.S. worth, and between the growth of the financial economy and the real economy. Which bubble will burst first is hard to tell.

But with 80 percent of U.S. workers seeing no real wage raise in the last three decades, and 400 individuals owning more than the bottom 180 million, the situation is worse than before the French and Russian revolutions.

Friends of the U.S.: give sound advice, but de-Americanise, keep your distance. The global economy is heading East and South: BRICS+ with a stagnant EU. Growth with distribution, not stagnation with inequality.
(END/COPYRIGHT IPS)

Excerpt:

Poorer countries will find it hard to gain access to bilateral trade agreements unless the WTO helps them do so. Credit: Amantha Perera/IPS

By Amantha Perera
TOKYO, Nov 29 2013 (IPS)

For years, it was the power chamber at the headquarters of the World Trade Organisation (WTO) in Geneva – the Director General’s Conference Room, more popularly known as the Green Room, where a handful of delegates would gather for important discussions and meetings.

The traditional power quad – the U.S., EU, Japan and Canada – would gather in the Green Room to “decide on global trade deals,” according to Masahiro Kawai, the head of the Tokyo-based Asian Development Bank Institute (ADBI), a think tank. That, however, was in the past.

“They sat in the Green Room and came up with agreements, but not any more,” Kawai said.

The erosion of power within the Green Room discussions, and more specifically that held by rich nations like the U.S. or Japan, is primarily linked to the rise of emerging nations such as India and China, and of newer, leaner and meaner trade groups like BRICS (Brazil, Russia, India, China and South Africa), as well as the change in traditional global supply chains.

A quarter of a century ago the share of global GDP held by emerging and developing economies was below 20 percent, according to World Bank and International Monetary Fund statistics.

As of 2012, they had almost caught up with the G7 powerful industrialised nations (Canada, France, Germany, Italy, Japan, UK and U.S.). The G7 share was around 48 percent while the emerging nations’ share was just below 40 percent.

They have already overtaken the G7 as the largest trading bloc in the world, accounting for just over 40 percent of all global trade. The G7 share of global trade has fallen from a peak of above 50 percent in the first half of the 1990s to around 35 percent.

“No wonder the voices of the emerging and developing nations have risen at the WTO,” Kawai said.

Another reason for the erosion of power held by the G7 is the change in global supply chains. Whereas decades back global trade would be dominated by end-products, now it is predominantly a market for intermediary products.

“Today, nearly 60 percent of the world merchandise trade is trade in intermediary products,” Kawai said.

When he researched the supply chain of the iPhone, ADBI Director of Capacity Building and Training Yuquing Xing came up with a starling statistic. Of a production cost of 178.96 dollars (2010 values), China’s manufacturing cost was a mere 6.50 dollars. The remaining costs came from over a dozen companies in five countries. The most expensive component, according to Xing’s research, was the flash memory, at 24 dollars, which came from Toshiba Co in Japan.

This new trading pattern allows China to export over 11 million iPhones a year to the U.S., the country where it was developed and where the company that markets the product is located, Xing said.

But this reinvention of global trade negotiations does not bode all that well for poorer nations and lower-middle-income nations, according to ADBI experts and others. Why? Because the emerging nations and G7 members are now eagerly negotiating and entering into regional and bilateral free trade agreements, mostly with equally powerful trading partners.

According to ADBI, there are 379 such trade agreements in force globally, with more being negotiated. There are ongoing discussions for the Trans-Pacific Partnership, which would bring together 10 countries on either side of the Pacific: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S., and Vietnam.

Equally closely watched are the discussions on the jumbo Association of Southeast Asian Nations (ASEAN) Plus Three partnership that would bring together the ASEAN nations and Japan, South Korea and China.

“The non-tariff trading regimes are the current weapons of choice,” said Rodolfo Certeza Severino, the former secretary general of ASEAN between 1998 and 2002 and currently the head of the ASEAN Studies Centre at the Institute of Southeast Asian Studies in Singapore.

What these jumbo and super powerful trading agreements do is leave middle-income and poorer countries in an unenviable position of being left on the sidelines, unable to get in.

For example, none of the eight countries in the South Asian Association for Regional Cooperation (SAARC), a political association, feature among India’s fifteen largest trading partners.

India’s largest South Asian trading partner is Sri Lanka, with which it did four billion dollars worth of trade last year. But here too the trade has been lopsided, with Indian exports amounting to over 3.4 billion dollars in 2012.

“These free trade agreements are setting the new realities,” Kawai said.

These new realities dictate that while the richer nations negotiate, argue and cajole for more preferential trade, the world’s poor are being left further adrift.

A recent report by the U.N. Conference on Trade and Development said that the 49 least developed nations recorded job growth of just over two percent in the last few decades, barely above population growth levels.

ADBI’s Kawai however sees a role for the WTO to break the trading cycle that favours the rich. The organisation should act as a catalyst for trade negotiations and as an effective arbitrator of disputes, he said. More multilateral and regional trade agreements should be promoted, with the WTO playing a critical central role, he added.

“A revamped WTO process could achieve global trade and investment liberalisation through consolidation of regional agreements, creation of cross-regional agreements, and harmonisation of rules across agreements,” he said.

Former ASEAN Secretary General Severino agreed. “In fact most of the provisions in these [free trade] agreements have to be WTO-consistent,” he said.

But with the WTO hobbled, still unable to conclude the Doha round of negotiations that started in 2001, the chances of it playing a decisive role in trade negotiations remain low, at least in the short term, both experts agreed.

By Shyam Saran
NEW DELHI, Sep 17 2013 (Columnist Service)

The eighth G20 Summit convened in St. Petersburg on Sept. 5-6, 2013 was dominated by the Syrian crisis, deflecting attention from the mandate of the gathering to serve as the premier forum for international economic coordination.

When leaders of the most influential countries meet it is inevitable that the pressing political issues of the day take centre stage.

Shyam Saran

The G7 too began as a forum for economic consultation and coordination among the world’s advanced market economies in 1975, to cope with the fallout of the 1973 oil crisis.

Just three years later, in 1978, the G7 issued its first Political Declaration and became, thereafter, the political, security and economic steering committee of the most powerful nations.

The G20 has taken its first steps in the same direction and it is likely that its role as a political and security forum will evolve steadily though informally at first. This trend will be reinforced if the United Nations Security Council remains a relic of a bygone international order.

That the G20 provided a platform on which the U.S. and Russia initiated steps leading to an eventual understanding on Syria’s chemical weapons is an indication of the potential political utility of the forum. These steps were taken against a strong prevailing sentiment at the summit against a military strike against Syria, favoured by the U.S. and some, but not all, of its allies.

The emerging economies were able to reflect some of their key concerns in the Summit declaration. The unconventional monetary policies pursued by reserve currency countries such as the U.S. and lately Japan, involving significant injections of liquidity into the system and keeping interest rates at zero or near zero, have confronted emerging economies like Brazil and India with volatile capital flows and exchange rate instability.

The declaration acknowledged for the first time that monetary policies pursued by advanced economies should be “calibrated and clearly communicated”. This falls short of a coordinated approach of the G20 but will help calm markets by promising greater predictability.

Developing countries would also take satisfaction over the G20 consensus, reflected in the declaration that the profits of transnational corporations should be taxed in the country where they are generated. African countries, in particular, have been victims of the tax avoidance practices of such companies.

An Indian proposal to create an infrastructure financing facility at the World Bank to extend funding for infrastructure projects in developing countries will be the subject of a study. However, in a situation of financial stringency in most developed economies, it is doubtful whether any significant financing window for this purpose will see the light of day soon.

The leaders of BRICS (Brazil, Russia, India, China and South Africa) met on the sidelines of the G8 summit. Their deliberations focused on two landmark initiatives which were announced at their fifth regular summit in Durban on Mar. 27.

On the New Development Bank (NDB) it has been agreed that its initial capital will be 50 billion dollars, a somewhat modest amount given the expectations aroused when the proposal was first made. India had wanted a figure closer to 100 billion dollars.

It is still not clear how the equity will be distributed among the five partners. China has been willing to contribute a larger share but it is reported that Russia wanted each to have an equal share. South Africa is unable to contribute a significant amount given the smaller size of its economy.

On the Contingency Reserve Arrangement (CRA), the leaders announced a figure of 100 billion dollars, with China contributing 41 billion, Brazil, India and Russia 18 billion each, and South Africa five billion.

The CRA will serve as a multi-country currency swap mechanism which will help the BRICS deal with balance of payments problems. It is similar to the Chiang Mai initiative among ASEAN, China, Japan and South Korea, but which is currently 240 billion dollars and partially linked to a parallel though partial International Monetary Fund aid programme.

Whether the CRA will follow a similar pattern is not yet clear. Nevertheless China’s role as a leading partner among the BRICS is now amply apparent. It is possible that the equity distribution in the NDB may follow a similar pattern.

It may be noted that none of the BRICS members forms part of the U.S.-sponsored Trans Pacific Partnership (TPP) or the Trans-Atlantic Trade and Investment Partnership (TTIP) – regional trade arrangements which will fragment the global trading system and marginalise the emerging economies. It is surprising, therefore, that this challenge did not figure in the deliberations of the BRICS nor at the G-20 either.

China’s pre-eminence in the BRICS is a trend likely to be reinforced with the current economic slowdown and economic difficulties being faced by most emerging economies, in particular Brazil, India and South Africa.

Russia is a special case, not an emerging economy in the same category as the other BRICS members. It has escaped economic distress thanks to rising energy prices in the wake of spreading turmoil in the Middle East.

China’s economy is likely to decelerate in the coming months. Its growing debt, now over 200 percent of GDP, is causing concern. If the Chinese economy undergoes a major crisis as some analysts predict, its role as the prime mover in BRICS would certainly diminish.

For the present, however, China, with its seven percent growth and its three trillion dollars of foreign exchange reserves, is likely to be acknowledged as the most emerged of the emerging countries.

(END/COPYRIGHT IPS)

Excerpt:

The New York Stock Exchange, as seen from the boot of George Washington’s statue at Federal Hall. Credit: Dan Nguyen/CC-BY-2.0

By Shyam Saran
NEW DELHI, Jun 5 2013 (IPS)

The global economy is awash with successive waves of liquidity generated over the past few years by the four most advanced economies, viz., the United States, the European Union, (EU), Japan and the United Kingdom, known as the G4. This liquidity has taken the form of “quantitative easing” (QE).

When zero rates of interest have failed to stimulate their economies, these countries have resorted to large-scale asset purchases by their central banks, such as corporate bonds or mortgage backed securities, to pump more money into the banking system.

The aim is to extend credit to business and industry and encourage consumption.

In the immediate aftermath of the global financial and economic crisis in 2008, when there was a danger of financial collapse, both advanced as well as emerging economies adopted stimulus packages, to revive demand, maintain trade flows and avoid large-scale unemployment. During the crisis phase of 2008/09, QE played an important role in crisis management, helping advanced and emerging economies alike.

However, while emerging economies have weathered the crisis and seen a revival of growth, the G4 continue to experience economic stagnation, depressed markets and large-scale unemployment.

Their response has been to persist with even larger doses of QE as a means of propping up demand,encouraging banks to expand and boosting stock valuations.

Before the crisis, the U.S. held 700 to 800 billion dollars of Treasury notes. The current level is 2.054 trillion dollars. In the latest round, QE-3, the U.S. Federal Bank is committed to the purchase of 40 billion dollars of mortgage-backed securities per month as long as unemployment remains above 6.5 percent.

The European Central Bank (ECB) has pumped 489 billion euros of liquidity into the eurozone since the crisis, while in the United Kingdom QE has reached the level of 375 billion pounds.

Most recently, the Bank of Japan has decided to pump 1.4 trillion dollars in the next two years into its economy, aiming at a two-percent inflation rate by doubling the money supply.

The assets of the G4 central banks have expanded from a figure of 11-12 percent of their gross domestic product (GDP) to the current unprecedented level of 23 percent. These assets were 3.5 trillion dollars in 2007 before the crisis. They are now nine trillion dollars and rising. This is the scale of liquidity expansion we are dealing with.

Since interest rates in the G4 remain at zero and their economies remain stagnant, it is inevitable that there will be significant capital outflows to emerging and other developing economies, in quest of higher risk-adjusted returns.

According to one estimate, about 40 percent of the increase in the U.S. monetary base in the QE-1 phase leaked out in the form of increased gross capital outflows, while in the QE-2 phase, it may have been about one-third.

This massive and continuing surge of capital outflows to emerging and other developing economies is having a major impact. Corporations, which have a sound credit rating, are taking on more debt, and increasing their foreign exchange exposure, attracted by low borrowing costs.

Their vulnerability to future interest rate changes in the developed world and exchange rate volatility will increase. Such inflows put upward pressure on exchange rates, stimulate credit expansion, and cause inflationary pressures, which pose a major challenge to policy-makers in the developing world.

Most of the capital inflows are in the nature of portfolio investments, which are prone to sudden and volatile movement and puts emerging economies at greater risk. The volatility one has witnessed in the Indian stock market is a case in point. In general, we may conclude that the overall impact of these capital flows is expansionary and distortionary.

There has been considerable criticism of the G4’s unconventional monetary policies from the emerging economies, including the BRICS (Brazil, Russia, India, China and South Africa).

The magnitude of QE has had unintended consequences beyond the borders of the G4, especially because their currencies are not only fully convertible but, together, constitute the pillars of the global financial system.

The U.S. dollar is the world’s leading reserve currency, and the euro, the British pound and the Japanese yen together constitute the basket of currencies the International Monetary Fund (IMF) uses to value its Special Drawing Rights. Thus, the nature of the G4 currencies and their significant role in the global financial market ensures that QE undertaken by them has a global impact on economies across our globalised and interconnected world.

It is necessary, therefore, for the G4 to act with great responsibility and to work together with the emerging economies, to minimise the adverse effects of their QE policies. It would be particularly important to forge a consensus on how to handle the potential financial turmoil and disruption that may afflict developing economies once the QE is sought to be retired and interest rates once again become positive in the G4. The sudden and large-scale reversal of capital flows is a likely scenario that would need to be anticipated and managed.

The Asian financial crisis of 1997/98 was, in part, triggered by an earlier version of QE pursued by Japan in the aftermath of the bursting of its property and asset bubble in the early 1990s. Then, too, the large inflow of low-cost yen loans led to the asset price bubbles, inflationary pressures and currency instability in the Asian economies. They paid a heavy price in the bargain.

A larger, more pervasive crisis may await the emerging and developing economies unless there is a much more coordinated and careful handling of the risks that are already building up. The G20 should have this issue at the top of its agenda.

(END/COPYRIGHT IPS)

Excerpt:

Cyprus is finalising capital control measures to prevent a run on the banks by depositors anxious about their savings after the country agreed a painful rescue package with international lenders.

With banks due to reopen on Thursday, Finance Minister Michael Sarris said he expected the control measures to be ready by noon (1000 GMT) on Wednesday.

“I think they will be within the realms of reason,” Sarris said in a Cyprus television interview, without going into details.

Cypriots have taken to the streets of Nicosia in their thousands to protest against the bailout deal they fear will push their country into an economic slump and cost many their jobs.

European leaders said the deal averted a chaotic national bankruptcy that might have forced Cyprus out of the euro.

A banking official said on Wednesday that new controls will include restrictions on large-scale transfers from Bank of Cyprus and Laiki, two of the country’s largest and troubled lenders, which are both being restructured.

Authorities are looking to increase the daily withdrawal limit from 100 euros to 300 euros, for at least a week until the situation stabilises, according to the official who spoke to AP news agency.

Banks will have heightened security across the island nation for the “comfort of both bank staff and clients, with the police also present”, according to John Argyrou, the Cyprus managing director of private security firm G4S, which will deploy 180 of its staff to all bank branches.

“There may be some isolated incidents, but it’s in our culture to be civil and patient, so I don’t expect anything serious,” said Argyrou.

Run on banks

“Banks will open on Thursday … We will look at the best way to limit the possibility of large sums of money leaving, and not imposing punitive conditions on the economy, businesses and individuals,” Sarris said in the interview.

The central bank governor said earlier that “loose” controls would apply temporarily to all banks.

Earlier, the finance minister said they could be in place for weeks. Banks have been shut since final bailout talks got under way in mid-March.

Russia, whose citizens have billions of euros in Cypriot banks, cautioned Nicosia against imposing onerous controls on healthy banks.

“If there are such measures, this will not foster trust but only provoke additional problems for participants, depositors,” Russian Finance Minister Anton Siluanov, in South Africa for a summit of the BRICS emerging powers group, told reporters late on Tuesday.

State-controlled Russian bank VTB has a subsidiary in Cyprus, Russian Commercial Bank, which has not been affected by the bailout deal.

Siluanov cautioned that Russian willingness to restructure and extend a 2.5-billion euro loan to Cyprus in 2011 would depend on the island’s decision on capital controls.

“We will discuss (restructuring of the loan) in the context of the decisions the parliament adopts,” he said. “We are prepared to discuss within these parameters.”

Bank executive sacked

Meanwhile, the chief executive of the Bank of Cyprus, the island’s biggest lender, was sacked by the central bank governor as part of the bailout deal, state media said.

Yiannis Kypri was fired on the instructions of the so-called troika of the European Union, European Central Bank and International Monetary Fund, the Cyprus News Agency reported.

The terms of the 10-billion euro (13-billion-dollar) rescue have stirred popular anger within Cyprus at the country’s partners in the EU, notably Germany, the bloc’s main paymaster and fiercest advocate of austerity.

On Tuesday, up to 3,000 high school students protested at parliament, in the first major expression of popular anger since the bailout was agreed in the early hours of Monday morning in Brussels.

The deal largely side-stepped parliament, and has triggered opposition calls for a referendum.

“They’ve just got rid of all our dreams,” one student, named Thomas, said.

Outside the central bank, about 200 employees of the country’s biggest commercial lender, the Bank of Cyprus, demanded the resignation of central bank governor Panicos Demetriades, chanting “Hands off Cyprus” and “Disgrace”.

*Published under an agreement with Al Jazeera.

By Helen Clark
UNITED NATIONS, Mar 25 2013 (IPS)

On Tuesday, leaders of five large emerging economies – Brazil, Russia, India, China, and South Africa, known as the BRICS – will gather in Durban, South Africa to discuss harnessing their formidable resources on behalf of faster development progress in Africa and elsewhere.

UNDP Administrator Helen Clark. Credit: UNDP (CC BY-NC-ND 2.0)

The summit’s intent is to promote global policy reforms, and to draw on their own national experiences and comparative advantages to help solve global problems.

The gathering is important: it is another sign that the world as we knew it is quickly changing.

High on the BRICS agenda is a commitment to kick-start the stalled Doha round of world trade talks and to push for fairer rules governing commerce in agriculture and other critical areas. The BRICS bloc will also be exploring ways to boost growth and overall development progress in Africa through expanded trade, investment, technology transfer, and financial support.

In one especially bold initiative under consideration, the five countries will examine proposals to create their own BRICS development bank.

The readiness of the BRICS countries to offer their own new international development initiatives and policy ideas is a clear manifestation of the changing global development landscape examined in UNDP’s newly released 2013 Human Development Report, “The Rise of the South: Human Progress in a Diverse World”. 

This dramatic change in global dynamics, however, goes well beyond the BRICS. More than forty developing countries are estimated to have made unusually rapid human development strides in recent decades, according to the Report. Together, they represent most of the world’s population and a growing proportion of its trade and economic output.

The progress of these fast mover countries measured in human development terms has accelerated markedly in the past decade. These geographically, culturally, and politically varied countries share a keen sense of pragmatism and a commitment to people, as seen through investments in education, health care, and social protection, and their engagement with the global economy. Neither rigid command economies nor laissez-faire free marketeers, they are guided by what works in their own national circumstances.

The BRICS countries themselves, while not alone, are key movers behind the rise of the South. As the 2013 global Human Development Report documents, they are contributing to development elsewhere in the South through trade, investment, and bilateral assistance. There are now many opportunities to harness the collective experiences of the rising South for the benefit of those countries not developing as fast.

The 2013 Report proposes convening a new “South Commission”, drawing on the pioneering example of the South Commission led in the late 1980s by Julius Nyerere, then president of Tanzania, and Manmohan Singh, now prime minister of India.

Through such a commission, leaders of the South could put forward their own recommendations for more inclusive and effective global governance in the 21st century.

As the BRICS summit demonstrates, the nations of the South are not standing still, waiting for reforms to happen in global governance. They are putting increasing energy and resources into newer instruments of political and economic co-operation, including regional institutions from Southeast Asia, southern Africa, and South America, to the Gulf States, the Caribbean, and West Africa’s ECOWAS group.

They have good reason to do so. If better coordinated, through what the 2013 Report terms “coherent pluralism,” with a clear consensus on shared goals, this evolving ecosystem of bilateral, regional, and international groupings can help advance sustainable human development in decades to come.

Multilateral action remains crucial for problems requiring global solutions – climate change is perhaps the most urgent example.

Yet the system of global governance devised in the mid-20th century is increasingly distanced from 21st century realities. China, for example, is the world’s second biggest economy, and holds more than 3 trillion dollars in foreign exchange reserves – more than all of Europe combined. Yet it has a smaller voting share in the World Bank than do France or the United Kingdom. Africa and Latin America also have issues of under-representation in important world fora.

The rise of the South does not imply an eclipse of the North. Human development is not a zero-sum game. People everywhere benefit from a healthier, better educated, more prosperous, and more stable world. A better-balanced North-South partnership can help achieve those goals.

A greater voice for the South also means greater responsibility, with shared accountability for solving problems and sustaining progress. A more engaged, successful South, meanwhile, helps the North, through its economic dynamism and collaboration on global challenges. As the 2013 Human Development Report says, the South still needs the North, but, increasingly, the North also needs the South.

Excerpt:

South Africa is determined to promote its tourists destinations to the emerging nations of Brazil, Russia, India, and China. Pictured here, a giraffe in the Madikwe Game Reserve in South Africa’s North West Province. Credit: Nalisha Adams/IPS

By John Fraser
JOHANNESBURG , Feb 26 2013 (IPS)

As tourism between the emerging nations of Brazil, Russia, India, China and South Africa starts to increase, South Africa is determined to weld the iron while it is hot.

“Given that tourism was identified and committed to by our government as a key driver for job creation, South Africa needs to secure every opportunity to promote higher levels of tourism to our country,” head of the South African Chamber of Commerce and Industry, Neren Rau, told IPS.

“The BRIC nations hold substantial potential for encouraging tourism to South Africa, given that our conventional tourism markets were substantially impacted by the global economic crisis.”

Head of the South African Chamber of Commerce and Industry, Neren Rau, says South Africa needs to secure every opportunity to promote higher levels of tourism to the country. Credit: John Fraser/IPS

But since 2012, South Africa has seen successful growth in the industry, with rates at twice the global average, according to Rau.

As the industry expands, India, China and Brazil are important tourism targets, chief executive of South African Tourism, Thulani Nzima, told IPS.

“The organisation invests significantly in growing awareness of destination South Africa in those markets, and in implementing marketing campaigns there,” he said.

Fellow BRICS member Russia, meanwhile, remains somewhat sidelined in South Africa’s ambitions, largely because of the long distance and the lack of no direct air links between the two countries.

The upcoming BRICS summit hosted in Durban, South Africa, in March will provide an opportunity to showcase the country as a tourist destination, while also bringing immediate benefits to the tourism industry, Nzima suggested.

“It will enjoy significant editorial coverage in the BRICS nations, raising awareness about South Africa’s capability, beauty, accessibility and warm, welcoming, friendly culture towards tourists.”

The latest figures for tourism arrivals in South Africa show healthy growth from the other BRICS nations for the first nine months of 2012.

Tourist arrivals in that period showed a 51.7-percent increase of travellers hailing from Brazil, and a 62.8-percent rise in Chinese tourist. Indians and Russians, meanwhile, increased their travel to South Africa by 16.8 percent and 34.6 percent, respectively.

However, the combined BRICS travel into South Africa still does not surpass that of United Kingdom, which highlights the growth potential still to be realised in the emerging markets.

The Zimbali Lodge, a popular international tourist destination in KwaZulu-Natal Province, South Africa. Credit: Nalisha Adams/IPS

Michael Tatalias, the chief executive officer of the Southern Africa Tourism Services Association, SATSA, told IPS that the first step to boosting tourism between BRICS partners is by increasing air links – which will be good not just for tourism, but for trade as well.

“An initial key goal for South Africa would be to become an airline hub between South America and Asia,” he said.

He added that currently about one million people a year travel from South America to Asia via the Middle East and Europe and that South Africa could divert some of that air traffic.

“Where air links open up, business travellers follow, deals are made, and cargo and sea trade follows,” he said. “With increased air access, business and trade increases. But crucially, tourism gets economy class seats to use for leisure travel.”

“The tourism ministry has spoken strongly about the importance of opening the skies into Africa,” agreed Nzima. He added that making the visa application processes as easy as possible, and removing as many impediments as possible to visiting South Africa are crucial additional steps that are “receiving considerable Government priority”.

South Africa’s Tourism Minister Marthinus van Schalkwyk visited China in January to see how recent growth in tourism can be sustained, while emphasising the importance of this BRICS partner for tourism development.

“We are confident of continuing our exciting growth in a market set to become one of the world’s most important tourism markets in the future,” he said.

Van Schalkwyk has worked for a number of years to create a tourism component of the G20, called the Tourism-20 or T-20, a working group of the tourism ministers of the G20 nations.

“Similarly, we should work towards a T-5 grouping, to reflect the five partners in the BRICS,” suggested Tatalias. “This would focus on resolving bottlenecks and hindrances.”

Rau, meanwhile, warned that promoting tourism in South Africa faces some of the challenges as the promotion of the country itself.

“If tourism growth is to be sustained, it must be supported by strong redress of the inhibitors to tourism growth in South Africa, such as perceptions of rampant crime and widespread violent protest activity, as well as insufficient promotion of the facilities that South Africa has to offer,” he warned.

Now the challenge for the BRICS leaders is to move beyond the exchange of pleasantries – to a far greater exchange of tourists.

Maite Nkoana-Mashabane, South Africa’s Minister of International Relations and Cooperation has praised the Chinese for their decisive role in gaining South Africa membership to the BRICS club. Credit: John Fraser/IPS

By John Fraser
JOHANNESBURG , Feb 15 2013 (IPS)

African nations and other emerging countries are expected to soon outperform the developed world, and South Africa wants to take advantage.

South Africa is planning to improve business dynamics within the Brazil, Russia, India, China and South Africa (BRICS) club of emerging national economies, and also with other African nations, at the BRICS’ first African summit in Durban next month.

“Emerging and developing economies are already playing an important role in the global economy,” the chief executive officer of South Africa’s First National Bank (FNB), Michael Jordaan, told IPS.

“The Chinese economy is already the second largest in the world, with a nominal GDP above seven trillion dollars, (and) growing at between seven and eight percent,” he said. “There are also several emerging market economies that have GDP levels above one trillion dollars, including Brazil, Russia, India and Mexico.”

He added, “The outlook for advanced economies, in contrast, is mediocre, given that they are largely encumbered by high debt burdens.”

Jordaan said that there are opportunities at the summit for promoting some of the innovative banking products that South Africa has developed.

“For example, mobile cash and banking facilities, such as cell phone banking, have great potential in Africa and other developing countries – as this technology is most applicable in emerging markets,” he explained.

Preliminary meetings

Preparations for the summit are accelerating: Russian Foreign Minister Sergey Lavrov travelled to Pretoria earlier this week and met with Maite Nkoana-Mashabane, South Africa’s Minister of International Relations and Cooperation.

The two agreed that there are a number of important global issues in which the BRICS should co-operate, such as pushing for reforms in the United Nations, the International Monetary Fund and other global institutions.

Their Chinese counterpart, Foreign Minister Yang Jiechi, is slated to make a pre-summit trip to South Africa next week.

Nkoana-Mashabane has praised the Chinese for their decisive role in gaining South Africa membership to the BRICS club.

“I do believe that China’s key role in securing South Africa’s membership of the BRICS was the correct initiative to create a nexus between Africa and the BRICS,” she said.

“South Africa is deeply grateful for the role that China has played in this regard,” she added.

Taking Care of Business

When they attend the Durban summit, each of the BRICS leaders will be accompanied by a sizeable business delegation – and a lot of work is taking place behind the scenes to ensure that there will be productive business dialogues.

A big challenge for South African President Jacob Zuma and the other leaders will be to make it easier for business leaders, like Jordaan, to further shift their focus toward working with emerging nations.

Trade ministers from the five-nation club will hold a special joint session with business delegations from the member nations on the eve of the summit, and a permanent BRICS Business Council is due to launch after the summit.

“This business council will be a more permanent mechanism for business interaction,” Xavier Carim, deputy director general at the South African Department of Trade and Industry, told IPS.

But there has been concern in South Africa that many members of business delegations, who have in the past accompanied Zuma to BRICS gatherings, have been chosen because they are his close supporters, and not necessarily because their presence would help forge new business links.

Beijing-based South African business consultant and CEO of the Beijing Axis, Kobus van der Wath, has been part of the business delegations at two BRICS summits. However, he is not convinced that there has been enough value for the business delegates.

Business events staged on the fringes of past BRICS summits have not always been well prepared.

“I hope we can organise it well, to allow proper networking with a digital database of who is there, and then it could be very worthwhile,” he told IPS.

Jordaan said his bank and its parent Rand Merchant Bank (RMB) are already involved in India and China, but South Africa’s membership to the BRICS may help to strengthen these links. He welcomed efforts to give the BRICS a business backbone.

“We do believe that South Africa’s membership is important and will benefit our growing operations in these countries,” he said. “We support our government’s initiatives to create new avenues for growth via BRICS-related partnerships.”

However, Jordaan emphasised that while the BRICS relationship is important, Africa will remain his main external growth priority.

“We are strongly focused on growth opportunities across Africa as a primary strategy for the expansion of our banking services,” he stated.

Van der Wath suggested that China’s activities in Africa would be happening anyway – with or without the BRICS.

“China has certain objectives in global markets in terms of investment, trade and alliances – and the investments I have seen so far in Africa are not BRICS-related,” Van der Wath said.

“However, BRICS is helpful in networking, in government-to-government linkages,” he added.

According to experts, the Durban summit will be judged on its success in strengthening ties between the BRICS club and Africa.

However, the politicians will not be able to fully capitalise on these closer political ties unless they can also add a practical dimension to the relationship, by bringing BRICS business on board – something the South African hosts are working hard to achieve.

By John Fraser
JOHANNESBURG, Jan 19 2013 (IPS)

A leading South African economist and investment strategist has warned that national priorities may be a more compelling factor influencing business decisions in the BRICS group of countries – Brazil, Russia, India, China and South Africa – than the prospects of increased market access through the alliance.

Chris Hart, economist and chief strategist of the Johannesburg-based asset manager, Investment Solutions. Credit: John Fraser/IPS

IPS correspondent John Fraser sat down with Chris Hart, economist and chief strategist of the Johannesburg-based asset manager Investment Solutions, to discuss his visits to two of South Africa’s four BRICS partners – Brazil and India.

Hart, together with his colleague and Investment Solution’s chief investment officer, Glen Silverman, is planning to visit China and Russia to better assess possibilities for South Africa’s membership in this club of the world’s leading developing economies.

The experts also plan to gather data on what drives investment among and between the BRICS members.

Excerpts from the interview follow:

Q:  What are you trying to achieve from these visits?

A:  We are trying to understand the emerging market investment landscape, and we are also trying to understand the relevance of the BRICS in the investment world. Clearly, the investment conditions in each of the BRICS countries needs to be understood, and we want to see what we can learn that is relevant to South Africa.

You won’t gain a full insight through desktop research, so our starting point is to explore conditions on the ground.  I won’t pretend that a single visit can give you a complete insight into a country, but it does give you a glimpse. We talk to business leaders, a number of specific companies, as well as economists, investment strategists and social analysts. And since our trip to India we are also seeing academics and policy makers, with plans to talk to geo-strategists on our visits to China and Russia.  We also look at conditions on the ground through slum tours – we don’t want a sugarcoated view. We plan to visit China in May, and Russia within a year after that.

Q.   What do you do with the information you gather?

A: We advise and feed back into our investment processes – on how to allocate assets. We have already increased our weighting towards emerging markets, from the developed countries. We also share our findings in formal presentations to our client base and to the asset management community in South Africa.

Q:  What have you discovered about business attitudes towards the BRICS group?

A:   If you ask a Brazilian company, the response is that it is absolutely irrelevant. In Brazil, language is a huge issue. Brazil is self-contained as a country; it’s huge. If you live there, you have little reason to speak anything other than Portuguese.  Your average Brazilian corporate still doesn’t have a full footprint within Brazil, so the complete focus is on (internal issues) – it’s very introspective.

It is very difficult for outside companies to compete because of the language and legislative complexity – there are a lot of barriers to entry.  BRICS is not relevant from a corporate point of view, with the one exception of the government, because they are involved in the establishment of a BRICS development bank.  The key question is: will business follow the political lead?

Q:  What about India?

A:  India’s policy is to move away from development banks, which are not as effective there. India is similar to Brazil with few companies having a full national footprint. An internal focus will keep Brazilian companies busy for decades, whereas in India they are quite open and accessible to global opportunities.  They will go where they can leverage their corporate strength in other countries, and in that sense they are much more entrepreneurial. They are more globally aware and focused than the Brazilians.

But when Indian companies look at global opportunities, BRICS is not relevant.  They are not trying to follow the political lead. Indian companies are not trying to enter Brazil because of BRICS – they would rather go to Kenya or Ghana, or even the UK.  Unlike companies in Brazil, Indian ones are diversified conglomerates, and will go into any business when they see an opportunity.

Q:   You talk of the concept of a “national scar”. What do you mean by that, and how is it relevant to BRICS?

A:   In South Africa, apartheid is our scar, and the redress of apartheid becomes relevant. Brazil’s national scar is inflation, and in a way it’s parallel to the German experience. Inflation is a fear because of the hyperinflation of the late 1980s and early 1990s.

In India it’s more complex. A businessperson’s scar is red tape and corruption.  However, your older civil servants cite colonialism as the national scar, and blame that for corruption. Academic types would cite poverty and inequality.  When it comes to policy makers, you can’t just site a business in an urban area without thinking of doing something in a rural area. National scars distort best practice and have an impact on policy making. They may be a more important deterrent to involvement with a BRICS partner than any political (consideration).

(END)

Excerpt:

South African Trade and Industry Minister Rob Davies speaking at the World Economic Forum. Credit: World Economic Forum/CC-BY-SA-2.0

By John Fraser
JOHANNESBURG, Jan 12 2013 (IPS)

As the five members of the BRICS group of emerging economies – Brazil, Russia, India, China and South Africa – tighten ranks and seek to expand their global influence, the inevitable trade spats have begun.

A decision last month by South African Trade and Industry Minister Rob Davies to pursue a general tariff increase on chicken imports in response to concerns that Brazil is “dumping” the product could also hit Argentina, a leading trade expert here has warned.

Duane Newman, director of the Johannesburg-based Cova Advisory, explained that Argentina and Brazil, both of which export significant quantities of chicken to South Africa, are the main countries without free trade agreements with Pretoria to protect them from the planned tariff hike.

“There could be some unintended consequences from Minister Davies’ decision not to target just Brazil with anti-dumping duties, but to raise the tariffs,” explained Newman.

Report reveals systematic ‘dumping’

An investigation of the chicken trade between the two countries from 2008 to 2010, conducted by the International Trade Administration Commission (ITAC), confirmed allegations that Brazil was dumping whole chickens and boneless cuts of chicken on the South African market.

The ITAC’s findings made a strong case for Pretoria to slap ‘anti-dumping’ duties on the South American nation.

According to the ITAC’s report, anti-dumping duties can be imposed when there is a price difference between sales in a producer’s own market and prices charged on exports, when there is material injury to producers in the importing country and when there is a causal link between the imports and the damage.

Duane Newman, director of the Johannesburg-based Cova Advisory. Credit: John Fraser/IPS

The report found that with regard to whole chickens, price undercutting by Brazil caused material injury to South African producers, a loss of market share and a loss of potential growth.

Similarly for boneless chicken cuts, the report found evidence of price undercutting, suppression of South African producers’ ability to increase their prices, and a drop in sales volume, output, market share and growth.

The investigtion found that between 2008 and 2010 whole chickens from Brazil accounted for 36 percent to 44 percent of South African imports, while boneless cuts took between 94 percent and 97 percent of the South African import market.

According to Francois Dubbelman of the specialist trade consultancy F.C Dubbelman & Associates, who acts as advisor to the South African Poultry Association, “At that stage Brazil was the largest exporter to the Southern African Customs Union (SACU) of these chicken products, causing SACU producers injury.”

“Thus the industry received no relief against the unfair trade from Brazil for at least five years – although ITAC found there had been dumping and material injury,” he added.

South Africa’s response

In January 2012, South Africa slapped provisional payments of between six and 62 percent on chicken imports from Brazil but failed to take the next step of imposing targeted anti-dumping duties on Brazil, shifting instead to a general imposition of higher tariffs on all chicken imports.

Newman called the decision a “rare” one, adding, “It will be interesting to understand the detailed reasons for the minister’s decision as it seems as if he is disagreeing with ITAC.”

Newman noted that the increase in general duties on chicken to up to 82 percent from the current 27 percent “will impact all imports of chicken, apart from (trading partners) with which South Africa has a preferential trade agreement like the European Union (EU), the European Free Trade Association (EFTA) and the Southern African Development Community (SADC).”

He said the countries that would be caught by the tariff increases include Brazil, Argentina and some Asian nations. There are existing anti-dumping duties against chicken imports from the United States into South Africa.

Some experts believe that Davies’ decision came in response to Brazil’s June 2012 complaint to the World Trade Organisation (WTO) about the provisional payments imposed by South Africa.

Had Davies opted to convert those provisional payments into anti-dumping duties, experts say, Brazil would have pursued its challenge through the WTO.

But Dubbelman dismissed this theory, arguing, “Countries go on a regular basis to the WTO with disputes. Brazil is known to follow that avenue on a regular basis, whether it has a foot to stand on or not.”

A more likley explanation, he said, is that Davies’ decision to spare Brazil from individual anti-dumping duties – announced in a letter to the ITAC on Dec. 21 –  was a strategic one, in keeping with the two countries’ joint membership in BRICS.

According to Dubbelman, Davies justified his actions on the basis of increased chicken imports from several countries, claiming that South African producers require a comprehensive response to deal with the intensified competition.

But South Africa’s shadow Trade and Industry Minister Wilmot James told the Business Day newspaper of Johannesburg that Minister Davies’ chosen strategy will not do enough to support South African chicken farmers.

“Instead of fighting the Brazilians for dumping chicken in our local and highly competitive market, Mr. Davies chose the soft and blunt option of hiding behind general tariffs without providing compelling factual reasons for his actions,” according to James.

Dubbelman warned that the real challenges facing South African poultry producers will remain unless some action can be taken against the EU.

He predicted that Davies will not impose as high a duty as the 82 percent that is currently allowed under international trade rules.

While some options cannot be pursued because of the trade agreement between Brussels and Pretoria, he added, there are provisions for so-called safeguard measures to be imposed on chicken imports from Europe, and he urged the minister to explore this possibility.

(END)

Xavier Carim, deputy director general at the Department of Trade and Industry, said that ways must also be explored to get a better balance in trade with South Africa’s BRICS partners. Credit: John Fraser/IPS

By John Fraser
JOHANNESBURG, Dec 27 2012 (IPS)

South Africa plans to boost links between Africa and its partners in the Brazil, Russia, India and China alliance at a landmark summit, which will be held in this country in March, Xavier Carim, deputy director general at the Department of Trade and Industry, told IPS.

“The summit theme is BRICS and Africa – a partnership for development, integration and industrialisation,” explained Carim of the meeting to be held in Durban, South Africa.

“We want to align our interests to support the integration agenda in Africa, not just to focus on access to resources.”

There have been suggestions that because South Africa is the smallest of the BRICS nations in terms of population and GDP, it therefore may not deserve a place in this club of leading developing nations.

However, one answer to this criticism is that South Africa can offer its BRICS partners better access to the mineral-rich African continent and hence plays not just a national role, but a regional one, in the BRICS.

The heads of government who will be attending the BRICS summit will be invited to a meeting immediately after the main event with the New Partnership for Africa’s Development (NEPAD) Steering Committee.

“This will be at presidential level and will help to link the BRICS with Africa,” explained Carim.

Pretoria-based international affairs consultant John Maré welcomed the plan to boost relations between Africa and the BRICS grouping at the Durban summit.

“This is important. In particular, it means South Africa is facilitating an Africa-China business dialogue.

“It is important that business deals ensure there is no exploitation of Africa by the Chinese,” he told IPS.

He emphasised the importance of China in particular for Africa, suggesting that the Asian giant is the key member of the original BRIC grouping from Africa’s perspective.

“The BRIC grouping invited South Africa to join, making it the BRICS, as we are seen as the most suitable gateway to Africa,” he said.

“If there is this emphasis on Africa at the Durban summit, it will mean South Africa is playing the role everyone assumed we would play when we were invited to join.”

Maré suggested that the BRICS should seek a new dialogue with Africa along the lines of this continent’s existing one with the European Union (EU).

“The EU has a specific dialogue with Africa, through the African Union Secretariat,” he noted.

“This linkage between NEPAD and the BRICS could be a mirror image of that – and would give the BRICS a relationship with Africa which neither the United States nor Japan has.

“I am sure this Durban meeting will be the first of a regular dialogue.”

Johannesburg-based independent analyst Ian Cruickshanks also welcomed the prospect of South Africa facilitating a closer link between Africa and the BRICS.

“I welcome any extension of South African influence in global economic and political groupings,” he told IPS.

“The BRICS is seen as a new vibrant group with political and growing economic clout, access to capital, able to influence new fixed investment in Africa – which is the last frontier in exploitable energy and industrial commodity reserves.”

Cruickshanks noted that Africa presently only contributes about three percent of global GDP, with South Africa accounting for around one percent.

“But Africa has the potential to advance faster than the developed world, provided that there is better access to capital, and this could be tapped through the BRICS industrial powerhouses,” he predicted.

He noted that South African resources are already significantly exploited, but questioned whether shale oil might provide new energy reserves, with the possibility of these reserves being developed through partnerships with BRICS partners, with export potential to the rest of Africa.

“South Africa’s advanced financial sector could provide the basis of a gateway to Africa for the BRICS, bringing a huge economic boost, and contributing to funding President Jacob Zuma’s promised 900-billion Rands in infrastructure development plans,” said Cruickshanks.

In another development, Carim said that there was work underway to try to anticipate and defuse trade friction within the BRICS.

He gave examples of applications for South African anti-dumping duties against chicken imports from Brazil and against paper imports from China.

“These things do come up, and it’s inevitable when you see how our trade is growing,” he explained.

“The more you trade, the more frictions – it’s a normal part of the relationship.”

However, he said that in dealing with BRICS partners “we are looking at ways of taking the sting out of these matters, before they happen.”

Carim insisted that companies which believe they are the victims of dumped goods – goods sold in a foreign market at lower prices than they are sold domestically, and which do damage to foreign rivals – do have the right to apply to their governments for protective measures.

He said that ways must also be explored to get a better balance in trade with South Africa’s BRICS partners.

“When South Africa’s imports go up, there is an impact on our domestic industries,” he argued.

“There has to be some way to alleviate the pressures, to find outlets for our exports and to find ways to support our exports – such as wine to Brazil.”

However, Carim said that the conditions are not yet ripe for a Free Trade Area among the BRICS nations.

“No one is talking of a Free Trade Area (FTA), because with an FTA you open your markets, and you can lose sectors,” he explained.

“India is vulnerable with its agriculture, and if you look at manufactured goods, the Chinese are extremely competitive. Meanwhile, Brazil is extremely competitive in agriculture.

“You run risks from a free-trade perspective.”

He emphasised that there is a lot of scope for the BRICS nations to learn from one another, and gave the example of the ways in which Brazil has an effective development finance institution – from which South Africa’s Industrial Development Corporation can learn lessons.

Meanwhile, the Chinese and Indians are good at developing Industrial Development Zones – an area in which South Africa has yet to excel.

“We should look at sharing experiences, rather than destructive competition,” Carim concluded.

Peter Draper, one of South Africa’s leading experts on international relations and trade, says that since the BRICS emerged IBSA has slipped below the radar. Credit: John Fraser/IPS

By John Fraser
JOHANNESBURG, Dec 24 2012 (IPS)

China’s presence in the leading developing nations alliance of Brazil, Russia, India and China has given the bloc an advantage that another developing nations club, India, Brazil and South Africa, has hitherto been lacking, according to Peter Draper, one of South Africa’s leading experts on international relations and trade.

“There seems to be substantial business interest in the BRICS, which has perhaps ironically become a marketing label for each member state government to use to propel trade and economic ties among their respective business communities,” Draper, a senior research fellow at the South African Institute of International Affairs, who just returned home from a series of G20-related meetings in Moscow, told IPS.

Excerpts of the interview with IPS follow:

Q: Is it commerce and economics, or mainly politics, which was behind the creation of IBSA and the BRICS?

A: Politics is the primary driver of both. IBSA was established with the express purpose of lobbying for United Nations Security Council seats for each member. Along the way it has morphed into broader foreign policy and, of course, economic realms. The fact that each of its members is a significant democratic developing country power gives it an extra “glue”, but it is not obvious to me that this can sustain the grouping.

Indeed, there is a view that one of China’s principle aims in supporting South Africa’s BRICS membership was to undermine IBSA, thus bringing each country closer to its authoritarian/state capitalist mode of governance. Having said that, I think that the principle driver of the BRICS is geo-economic, particularly the reform of the international financial and trade systems.

Q: Do we need both IBSA and the BRICS, and are they sustainable?

A: From a South African point of view I think we do. The discussion among democratic developing states is important; otherwise we risk being too influenced by the big Eurasian authoritarian powers of China and Russia.

Geographically we are also closer to these two countries – India and Brazil – and we are in some currently small measure well placed to facilitate trade and economic links between ourselves. In other words, we have more in common with India and Brazil than with Russia or China.

But leveraging China’s weight in particular, in international geo-economic discussions, is a good goal to aim for even if it is challenging to deliver in practice. Hence that is where I would push the BRICS discussion.

Q: What is the next step in the evolution of either or both blocs? A move to a Free Trade Area, or the establishment of a full-time secretariat?

A: Neither. I think they will both remain informal groupings for the foreseeable future, coordinated by member state governments. In this light I wouldn’t call them “blocs” per se, rather “clubs” or “groupings” – to convey their informal and non-binding nature. More like the G7 or G8 in design.

Q: Do you foresee greater coordination of policy, and thus negotiation clout by these developing nations, in global fora on economics, the environment and so on?

A: There is already quite a lot of coordination on the international stage, with varying degrees of success. I expect this to continue, to the extent that key targeted organisations, such as the UNFCCC (United Nations Framework Convention on Climate Change) and the WTO (World Trade Organization), or groupings, and especially the G20, are actually advancing.

Q: Do you think there is any conflict between South Africa’s relationships with other leading emerging markets and its ambitions in Africa?

A: If the primary focus is external economic diplomacy, as I described earlier, then not really. In fact, SA can leverage its relationships with these powers – especially China – to support African development and even moderate its partners’ behaviour at the margins. At the business level there is obviously substantial competition, but also an emerging set of partnerships oriented towards African markets, such as the relationship between South Africa’s Standard Bank and China’s ICBC (Industrial and Commercial Bank of China).

Q: Is much notice being taken in Brussels, Washington and Tokyo of the BRICS and IBSA?

A: The BRICS have attracted a lot of attention, much of it deeply sceptical. IBSA attracted considerable attention when it was formed, but since the BRICS emerged it has slipped below the radar, in my view. Obviously any formation that includes China will be closely scrutinised in the West.

Q: You have just returned from Moscow. What is your current assessment of Russian backing for the BRICS? 

A: I get the sense that they take the BRICS seriously, and they see value in the BRICS for coordinating policy in international negotiations and as a way to support efforts to replace the dollar in global transactions. However, I don’t see them supporting a BRICS Development Bank, which has been suggested, as they have already set up a Eurasian Development Bank, and their reserves are being dedicated to that. When it comes to big, grand projects, BRICS has its limitations.

South African trade lawyer Emile Myburgh, of Johannesburg law firm Bowman Gilfillan, has not detected much response from the Brazilian and South African companies with which he deals. Credit: John Fraser/IPS

By John Fraser
JOHNNESBURG, Dec 17 2012 (IPS)

Politicians in the leading developing nations have been active in boosting mutual ties, as one way of counterbalancing the influence of the developed world. But the economic success of the Brazil, Russia, India, China, and South Africa and the India, Brazil, and South Africa groupings will depend on the extent to which businesses take advantage of the new opportunities which are being created.

South African trade lawyer Emile Myburgh, of Johannesburg law firm Bowman Gilfillan, has not detected much response from the Brazilian and South African companies with which he deals.

“I have not seen any evidence or heard any of my clients say that business among BRICS countries is any easier than with non-BRICS countries,” he told IPS.

“Philosophically one might think the countries might promote business or attempt to attract more investments from fellow BRICS countries, but so far the practice does not show that.” 

Myburgh noted that the challenges of conducting business between Brazil and South Africa are numerous, “but fortunately they are not insurmountable.

“The language issue is always important, but it is becoming less of an issue as a new generation of (Portuguese-speaking) Brazilians, who are fluent in English, enter the market.

“Brazilian tax and compliance are still major issues for South African investors, just as for any other foreign investor, but with business opportunities abounding many companies face up to the challenge and do their best to adapt.”

He has observed that South Africa presents its own problems to Brazilians.

“The first one is unnecessary hurdles put in place when Brazilians apply for work permits to work in South Africa,” he complained.

“The South African Department of Home Affairs has an unfortunate tendency to impose internal requirements for work permits which are not published and not based on law, and then to turn down valid applications for work permits.

“This is a political issue because the Department of Home Affairs seems to be under the impression that, by being unduly difficult with work permits, they protect South African jobs.”

However, he warned that the reality is that these practices destroy South African jobs “as the disgruntled investors would rather not hire a South African, invariably citing the same reason each time: the lack of capability and of suitable South African candidates.”

Two of South Africa’s regional neighbours – Angola and Mozambique – share the Portuguese language with Brazil, and Myburgh suggested that it is not surprising that “Brazilians do more business with Angola and Mozambique – not only because of the language, but because there are more opportunities there.

“Brazilians have traditionally invested strongly in infrastructure projects in those countries, and there are fewer infrastructure opportunities in South Africa than in Angola and Mozambique.

“However, Brazilian companies do invest heavily in other non-Portuguese speaking African countries, like Ghana, the DRC, Nigeria, and Tanzania, so language is definitely not the only factor,” he said.

Myburgh concluded that in future a county’s membership of the BRICS or IBSA clubs may affect where businessmen choose to form partnerships. “This may change in the future, but it is regrettably not the case today.”

Johannesburg-based consultant on developing nations Martyn Davies agreed with Myburgh that to date the business element of South-South partnerships has yet to reflect the more advanced political relationships.

“I believe these loose associations may offer benefit but most often – and due to the disconnect between business and the state – these opportunities are insufficiently exploited,” Davies, the CEO of the Frontier Advisory consultancy, told IPS.

“IBSA is primarily designed as a south-south developing grouping focused on trade liberalisation. With the prominence of the G20 and BRICS, it has lost its lustre somewhat.

“Also, without China being part of the grouping, IBSA does not have the necessary clout to drive through its policy proposals.”

Davies reported that the BRICS grouping is “undoubtedly generating the most interest and excitement amongst our clients.

“They are aware and interested, but while the macro-economic enabling environment of these emerging-market associations is obvious, the practical benefits to business are not always that apparent.

“There has been a great deal of hype around BRICS, which is generating excitement, but beyond the realm of the state and state-owned enterprises, private business is not easily able to leverage the geopolitics for commercial advantage,” he said.

Davies called for far greater and closer connections to be made between the business communities of each BRICS member state.

Johannesburg-based business leader Neren Rau, who is the CEO of the South African Chamber of Commerce and Industry, agreed on the need for more work in exploiting the opportunities presented by the BRICS and IBSA alliances, and he complained that there has not been enough strategising to date.

“The chamber’s concern is that South Africa did not have a defined strategy going into these relationships,” he told IPS.

“The securing of South Africa’s standing within these arrangements was considered as an end, or victory, in itself. For South African Business to leverage real value, an established strategy to support South African business within these arrangements would be required.

“That being said, membership of these arrangements does create a platform, which would have otherwise not existed, for businesses which seek to pursue opportunities with other member countries.”

Davies suggested that as the BRICS grouping becomes more institutionalised, more opportunities will emerge for private companies.

South Africa is hosting a BRICS summit meeting in Durban next year, and Davies said there will be a business forum for approximately 250 companies from the BRICS nations, with 50 firms from each of the BRICS members.

“There will be a great deal of media interest in the outcomes of these business discussions and the sizeable deals that will be announced by the attending heads of state of each BRICS country,” he predicted.

“I notice a great deal of interest amongst the Chinese business community in the BRICS meeting, buoyant interest from India and Brazil and perhaps less interest coming out of from Russia.

“Arguably, South Africa is embracing the BRICS meeting with the most enthusiasm.”

By Julia Kallas
UNITED NATIONS, Dec 11 2012 (IPS)

Today, approximately 125 countries have laws that penalise domestic violence – a great advance from a decade ago. Yet 603 million women around the world still live in countries where domestic violence is not a crime, and up to seven in ten women are targeted for physical or sexual violence, or both.

One organisation that has worked for the past two years to protect and empower women is U.N. Women, the United Nations Entity for Gender Equality and the Empowerment of Women. Lakshmi Puri, deputy executive director of the organisation, described what it has achieved so far.

Lakshmi Puri, assistant secretary-general of the United Nations and deputy executive director of U.N. Women. Credit: Ryan Brown/U.N. Women

”U.N. Women is today a coherent, unified organisation that has achieved concrete results that go from…enhancing women’s voices in decision-making in communities, to leveraging and influencing national and international planning processes,” Puri told IPS.

But as the statistics indicate, much more remains to be done before women’s rights are fully realised. Puri spoke to IPS correspondent Julia Kallas about the achievements, challenges, expectations and future of U.N. Women. Excerpts from the interview follow.

Q: U.N. Women turns two in January. What have been some high points since the founding of U.N. Women?

A: U.N. Women has heavily emphasised increasing women’s political participation. Women must have a say in the decisions that affect their lives and their communities. Our efforts in 14 countries contributed directly to five countries’ increasing the number of women elected to office. And in one year the number of countries with women comprising at least 30 percent of parliament has risen from 27 to 33.

We are also actively supporting women’s representation at the local level. In India, for example, U.N. Women is training 65,000 elected women representatives in village councils to become more effective leaders.

To enhance women’s participation in peacebuilding and post-conflict recovery, U.N. Women has successfully advocated for an agreement to earmark at least 15 percent of all U.N.-managed peacekeeping funds for programmes on gender equality.

Women’s economic empowerment is another key area of our work. Financial security gives women the independence they need to take informed decisions for themselves and their families. So our interventions try to enhance governments’ abilities to improve women’s access to assets, markets, services and decent work.

Ending violence against women remains a top priority. It is a scourge of pandemic proportions, affecting up to 70 percent of women and girls. U.N. Women is working in 85 countries to prevent violence in the first place, to end impunity for these crimes, and to expand essential services to survivors.

Gender equality and women’s empowerment remains a universal challenge and requires actions by all. We know there is still a long road ahead, but we are on the right track. We are working with and in all countries to carry out our universal mandate and we are constantly making progress.

Q: What do you consider the greatest challenges for U.N. Women and women around the world next year and beyond?

A: Many obvious gaps remain in protecting women’s human rights and in advancing their rightful role in development, peace and security. In 2012, our priorities were to make a renewed push for women’s economic empowerment and political participation.

In the months ahead, we will focus on ending violence against women. Next March, the focus of the U.N. Commission on the Status of Women will be to tackle violence against women and girls. Expectations are high for governments to agree on strengthened international frameworks to end violence against women and girls.

In this context, U.N. Women launched COMMIT, an initiative that encourages governments to implement international agreements on ending violence against women and commit to new, concrete steps to end it.

Funding is another challenge we face. Women still constitute a majority of the world’s poor. They are directly and indirectly affected by the financial and economic crisis, as is funding for U.N. Women and women’s organisations around the world. We need all donors to prioritise funding for gender equality and women’s empowerment at this critical time.

In addition to being the right thing to do, it is also the smart thing to do, as evidence shows that investing in women’s empowerment will have an exponential impact on social and economic development.

Q: As emerging economies such as the BRICS (Brazil, Russia, India, China and South Africa) countries grow in political and economic influence, how well have women’s rights kept pace with this development?

A: Some countries have shown deep commitment to gender equality and women’s empowerment and have adopted special policies and measures to rectify deep rooted poverty, customs- and tradition-related biases and gender stereotyping.

Yet we have seen that economic growth does not necessarily translate to greater gender equality. In middle income countries – including the BRICS – remain large numbers of poor people. A disproportionate majority of them are women. As a result, governments, including the BRICS, continue to proactively address this issue.

Q: What are your expectations for getting a comprehensive gender perspective into a post-2015 development framework and the Sustainable Development Goals that are currently being negotiated?

A: What we need is a truly transformative development agenda that can drive change on systemic issues and structural causes of discrimination, including unequal power relations, social exclusion and multiple forms of discrimination.

The framework should therefore focus on women’s rights, eliminating gender-based violence, promoting sexual and reproductive health and rights, access to essential infrastructure and services and political and economic empowerment – all in the broader context of poverty eradication.

The framework should also recognise that gender inequality is the mother of all inequalities. It is not yet clear what the format of the post-2015 development framework will be, but in any case, U.N. Women advocates for a strong focus on gender equality and women’s empowerment.

If we are about to turn a new leaf in terms of a more sustainable, equitable and people-centred development model and framework, we need to empower and fully tap the talent and potential of half of humanity.

Excerpt: