BRICS obituaries are premature

2013 has barely got under way but Indian foreign policy is already trotting — between a walk and a canter in speed. Certainly, the consultations with the secretary-general of Iran’s national security council, Saeed Jalili have been extremely significant both in timing and content.

Iran has just announced its willingness to resume talks on the nuclear issue amidst a flurry of diplomatic signaling that the United States President Barack Obama is not waiting till the presidential election in Iran in May to get over before engaging the leadership in Tehran. If the reports are true, Obama is all set to make a great announcement early next week naming Chuck Hagel as the new Secretary of Defence.

If that great announcement is duly made on Monday or Tuesday in Washington, one can safely surmise that Obama is keenly looking for a political/diplomatic resolution of the US-Iran standoff. The Iran nuclear issue has always been a totem; what is at stake is Iran’s integration into the international community. It is a momentous issue, not least because Iran’ is the last frontier in energy security.

National Security Advisor Shiv Shankar Menon’s decision to schedule the consultations with Jalili (which were overdue) on the first day of the New Year underscores that the policymakers are on the ball regarding the likely paradigm shift in the regional security scenario and the consequent power dynamic in a vast swathe of land to the west and northwest which is critical to India’s vital interests.

So far so good — the equestrian has been masterly. However, what takes the breath away is that Menon will be playing host to his counterparts from the BRICS grouping in New Delhi on Thursday. This will be the first such meeting of the NSAs from the BRICS. That India has taken the initiative to add such a strategic dimension to the BRICS process needs to be noted.

Because, it also signifies consolidation of the remarkable transformation that has come over the India-China discourses in the past year. There is no gainsaying the fact that the BRICS’s strategic credibility in the international system depends heavily on the extent to which China and India can set aside their differences and recognize that they have more — much more, in fact — in common by way of shared interests and concerns than what might separate them in the contemporary world situation.

The upcoming BRICS meet on Thursday brings Menon face to face with Dai Bingguo for the second time in successive months. The two officials also double up as the respective special representatives with regard to the talks on the border dispute.

The BRICS meet is expected to focus on the Middle East and what passes as ‘counter-terrorism’. The brew in the BRICS NSAs’ cauldron can be expected to carry the flavor of the season — Syria, Iran, Arab Spring, Afghanistan and so on. As host country, the responsibility to distill the consensus on these burning issues lies with New Delhi.

What remains to be seen is whether there is going to be an institutionalization of the ‘NSA-format’ within the BRICS, similar to what exists within the Shanghai Cooperation Organization.

Funnily, my mind goes back to the words commonly attributed to Mark Twain: ‘The rumors of my death have been greatly exaggerated.” I just filed away for future reference in my archives with a heavy heart a few ‘obituaries’ on BRICS written by some worthy names in some worthy publications — WSJ, Morgan Stanley, Ruchir Sharma.

But then, as more than recompense, there is always the other side of the story as well, written by the man who ‘invented’ the BRICS acronym – Jim O’Neill, president of Goldman Sachs — who remains convinced still that the ‘emerging world is rising’. Speaking of the mystique of slower growth rates in BRICS economies, which was the refrain in the ‘obituaries’, O’Neill made a forceful point:

“China will grow by 7-8% partly because that is what policymakers have decided they want. In late 2009, within a year of their massive policy stimulus in response to the global credit crisis, the Chinese leadership, I believe, decided that 10% annual growth had outlived its usefulness. Income inequality was rising dramatically, environmental damage was worsening rapidly, and inflation was leading to weak real-income growth for poor households. Indeed, a key reason for China’s slowdown in 2011-2012 is that officials wanted it.”

So, what explains the ‘obituaries’? Evidently, there is growing worry in the West that BRICS could come of age and pose formidable challenges to the established economic and political order. Belying prognosis, the Indian proposal on creating a BRICS development bank gained traction, after all, and might get formalized at the summit in Durban in March.

The stunning point is, BRICS’ output growth amounts to “creating the equivalent of another Italy every 12 months.” In sum, the emerging powers are the main story for the global economy. And that is a disconcerting thought, isn’t it? O’Neill’s column is here.