From eurozone bailouts to health, the BRICS are flexing their economic muscle and flipping old notions of who aids who upside down
By Krista Mahr | June 22, 2012
Earlier this week, India’s Prime Minister Manmohan Singh stood before the leaders of the G20 in Los Cabos, Mexico, and pledged $10 billion of India’s reserves to the IMF firewall fund designed to help the ailing eurozone. “India’s contribution reflects our recognition that as a responsible player in the global community, we must play our part,” Singh said in a statement to the media after the June 19 plenary session.
Of the nearly $460 billion that nations have committed to the IMF fund, India and the other BRICS chipped in $75 billion. (China pledged $43 billion; Brazil and Russia each pledged $10 billion; and South Africa pledged $2 billion). It’s a significant contribution, and one that the five nations – Brazil, Russia, India, China and South Africa – want to be tied to IMF reforms that will give them more sway in the global lending body. “Many leaders emphasized the importance of accelerating governance reforms in the IMF… to reflect economic weight,” Singh went on to say in the media statement. Once the reforms, based on a recalculation of GDP and PPP and which were agreed upon in 2010, finally kick in, India will go from being the 11th to the 8th largest shareholder in the agency. (MORE: If the eurozone breaks up, poor countries could suffer the most.)
If it seems counter-intuitive that countries with such high poverty rates are helping bailout out one of the richest parts of the world, it shouldn’t. China, India, Brazil and Russia are home to 40% of the population, and their governments are exercising increasing influence across a wide spectrum of policy areas. At this week’s Rio+20 summit, for instance, the BRIC nations are expected to have a stronger presence than the G7, an older grouping of the most industrialized countries. That will fuel another round in the endless debate over who is responsible for cleaning up the earth’s mess, but a more interesting note is how the summit could mark a turning point in who shapes 21st century global environmental policy. BRIC nations are on the frontline of some of our biggest environmental challenges, facing problems like huge population growth and rising energy demands that shrinking, aging industrialized countries don’t have. “This is potentially the moment we will look back at in 10 years’ time and say this was the time when the emerging economies took over to become the major influence on the international process,” Lasse Gustavsson of the World Wildlife Fund told the FT.
BRICS countries have already been offering more and more assistance to other developing nations, creating an alternative to traditional aid mechanisms that are floundering as traditional donors struggle to get out from under lingering recessions. Between 2005 and 2010, the foreign assistance spending of Brazil grew about 20% each year. In China, it grew around 24%, and in India, 11%, according to a recent report by the international non-profit Global Health Strategies. The report examines how the the fast-growing emerging economies, who fared relatively well in or recovered quickly from the 2008 financial crisis, are increasing their foreign assistance in public health while funding streams like the Global Fund are drying up.
India’s profile in this scenario is interesting, given that the government faces such enormous challenges in its own population, and that its domestic spending on health is so meager. India relies heavily on its massive but largely unregulated private sector to subsidize the public health care system, spending only $130 per capita on health, compared to $1040 in Russia and $940 in Brazil. In spite of that – and also because of robust, if inconsistent, private health care – India has made crucial contributions to public health since it started sending aid money abroad sixty years ago. Best known is how the nation’s private pharmaceutical companies helped drive down the price of HIV/AIDS treatments and make generic ARV drugs available around the world. That saved millions of lives, but so has India’s huge contribution to vaccines. Today, India makes between 60% and 80% of all the vaccines that the U.N. buys, and its scientists have developed new vaccines for non-Indian problems, such as a meningitis vaccine designed specifically for Africa.
Because it hosts such a large proportion of the world’s health burden, India is also making significant public health contributions simply by tackling its own problems. For instance, in February, the country was declared polio free, just three years after having more polio cases than any other nation. The huge level of mobilization needed to pull that off in a country like India is an extremely useful model in reactive implementation of a government directive – to get rid of polio. To give another example of this kind of soft power contribution, just this week, India became the first country to ban the import, sale and use of an ineffective TB test that has been widely used around the country. If other countries follow suit, it could improve the standard of TB diagnostics around the world.
This kind of assistance model is totally different than the traditional flow of aid, of which India has been a huge recipient for most of its existence as an independent nation. The GHS report offers a neat explanation of India’s “aid” philosophy: Indian policymakers do not view the country as a “donor” in the traditional sense. Instead, policymakers see India’s assistance program as an expression of soft power centered on South- South solidarity, technical capacity building and sustainability. They also emphasize that, unlike Western donor programs, Indian assistance is “demand-driven” and “reactive.” The country does not put out formal requests for proposals; instead, recipients approach India for support as they deem necessary.28 At the same time, however, India appears to be taking a more proactive approach to foreign assistance in an effort to counteract Chinese influence.
All this, of course, is just India’s part in one sliver of the development world. As a whole, the BRICS contribution is much greater, and together these emerging economies will continue to have a serious impact on the way that the international aid model—with its labyrinthine bureaucracies and uncomfortable paternalism—is structured.
“The BRICS explicitly reject many models used by Western donors, and are instead trying to utilize innovative approaches to global health engagement that are rooted in their own domestic experiences,” the GHS report reads. Critics, the report says, accuse the BRICS’ non-traditional efforts as lacking accountability, or of having ulterior motives. But one could level the same charges at any of the older mechanisms in place today. And as Prime Minister Singh himself once said, conjuring the words of Victor Hugo on the eve of India’s economic liberalization, “No one can resist an idea whose time has come.”
See online: After the G-20: Can the BRICS Save the Day?