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Building a BRIC Foundation

Author: Roya Wolverson
April 15, 2010


The April 15 and 16 meeting (MercoPress) of leaders from Brazil, Russia, India, and China aimed to deepen ties between the emerging-market powers leading the global economic recovery. Collectively known as the BRICs, these countries--which represent 40 percent of the world's population and 20 percent of the global economy--command a growing slice of the global economic pie.

Just how deep the ties can be between the BRICs is a matter of debate. Many analysts have noted the roadblocks to the group establishing the "common goals, common actions" touted this week by Russian President Dmitry Medvedev in Russia's Vedomosti. Anders Aslund of the Peterson Institute said (FT) the BRICs have "made sense for a decade as an investment theme," but that differences between Russia's foreign policy and that of other BRICs could make consensus unlikely.

Still, following last year's first BRIC summit, the group together criticized continued use of the U.S. dollar as a global currency reserve, a major concern for China even though roughly half of Russia's reserves are in euros. This year the group is striking a milder note, as the United States and China attempt to quell tensions over China's currency value. Chinese Vice Foreign Minister Cui Tiankai said (Reuters) this year's summit would not seek "confrontation with other third-parties or countries" but would focus on international financial regulation and global governance reforms. But differences between the group remain. China has rebuffed Brazil's push for a permanent seat on the UN Security Council, while Russia's economy, unlike that of its BRIC brethren, is suffering from a declining population and heavy dependence on oil and gas.

Jim O'Neill of Goldman Sachs, who coined the term "BRIC" in 2001, remains optimistic about the group's efforts to unify. He notes (Reuters), for example, that China and Brazil are working on a bilateral agreement to allow their countries' trade deals to be tended in local currency, rather than U.S. dollars. Chinese President Hu Jintao also penned (Reuters) several trade and energy deals with Brazil before leaving the summit early because of China's deadly earthquake.

Chen Fengying of the China Institute of Contemporary International Relations agrees on the benefits of BRIC collaboration. Regardless of the summit's outcome, she says (WSJ) the gathering establishes a "good foundation for the voices of emerging markets against Western, developed countries," which the group can leverage at the G20 summit in Toronto this June. CFR Senior Fellow Julia Sweig notes, however, that the BRICs do not want to aggressively oppose the West. She also thinks the group's internal rivalries are manageable. "I don't see any of the tensions being adequate to pull the grouping apart. They've only just started to pull together," she says.

Other experts are more skeptical that the BRICs can resolve their differences. The Carnegie Endowment's Uri Dadush says (DeutscheWelle) intransigence over China and India's ongoing border dispute and a history of competition between China and Russia could be insurmountable obstacles. "I don't see it as a cohesive group that will be there pushing issues together fifteen to twenty years from now," he told Dadush thinks the group will eventually merge with the G20 group of developed countries, since it hosts a broader range of political and economic interests.

CFR Senior Fellow Charles Kupchan agrees. "As these countries mature, they will find other fora more useful. It's a sign of rising countries wanting their seat at the table, but that doesn't mean it's a permanent fixture," he says. Another CFR senior fellow, Elizabeth Economy, says the longevity of the group ultimately depends on "whether they find their voices and needs being met by the G20. At this point, they see value in an additional forum for discussing issues like Iran and currency values."

Additional Analysis:

This CFR Quarterly Update (PDF) on foreign exchange reserves in the BRICs says despite much talk about these countries as a group, China differs significantly in its financing of U.S. debt.

In the political science quarterly Polity, Columbia University's Cynthia Roberts says on certain issues, all of the BRICs have reason to maintain a closer relationship with the United States than with each other.


Read the BRIC Summit Joint Statement issued by Brazil, Russia, India, and China's leaders following the summit.

This Carnegie Endowment (PDF) paper examines the trajectory of the BRIC and G20 economies through 2050 and their effects on the world economy.

This Goldman Sachs Global Economics paper (PDF) analyses the long-term economic outlook for the BRICs.

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