19 April 2011, 11:43

BRICS: from economic growth to political influence

BRICS: from economic growth to political influence
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Interview with the Russian diplomat, former Deputy of the Minister of Foreign Affairs of the Russian Federation, Ambassador Alexander Panov . What are you impressions of this summit? I think, it is a very important summit.

Interview with the Russian diplomat, former Deputy of the Minister of Foreign Affairs of the Russian Federation, Ambassador Alexander Panov.

What are you impressions of this summit?

I think, it is a very important summit. First of all, they have now five states, and those states are very important not only because they have almost half of the population of the world living on their territories, but because they have growing economies, which are now more and more influencing the development of the world economy. And also, may be for the first time, these five states produced a document concerning international relations in the world, showing that the voice of those five countries is quite influential not only in economy, but also in international politics. So now no one can deny that in the future the position of these countries in the world will be more and more important.

Do I get it right, that on some issues these countries take collision course with some other global players?

I cannot say that it is a collision course, it is still not a consensus, but even the majority of the states in the United Nations cannot work out modalities how to reorganize the Security Council of the UN, and this is the core of the problem. It is now more than 65 years after establishment of the United Nations, and world changed, so it is quite necessarily to change the structure of the Security Council, but how to change, what countries should participate, what will be the power of these new states in the Security Council, what will be the position of five permanent states of the Security Council? So discussions already last for more than 20 years, but not only the consensus, the majority of the countries-members of the United Nations cannot reach any valuable agreement. Of course, among five states there is already exists common attitude how to reform the Security Council, but it is so sensitive, that even these five nations, they cannot force their vision how to do this.

Which of the decisions of the Summit might have a long-term influence on the world politics?

First of all, influence will be on economic politics, because the five states agreed to raise their positions in the world economic organizations, they put forward an idea how to develop currency problem, also they started to speak about international problems, they expressed their position towards the situation in Libya and some decisions of the UN Security Council. This is only the beginning, I’m sure that this process will develop, and there will be more and more cases when BRICS will put forward their joined position toward international problems, and it will be very important, not only to listen, but also agree or not agree with such positions, because behind these five nations stands half of the world population.

Still, what is more important, that those countries are now discussing, they have growing economies and they would like to have more powerful voice in the world economy; they have similar problems, when they approach world markets, world financial institutions. So this is important, that despite the difference of how govern their economies; they have many common problems, which make them close to each other.

Now the BRICS summit has developed smoothly into the Asian Economic Forum. What could be the key decisions of that forum?

This forum is only at the beginning of its activity, but in Asian Pacific we see many interesting processes, especially how the economic integration of these huge territories is developing. We have different ideas, we have American idea, we have East Asian Economic Forum; this process only started, and it is very important for BRICS countries to work out their joined vision, which will help them to have more powerful position in creating future integration processes in this region, because so many unclear problems we have in this region; it is not Europe, for which integration was also difficult, but still easier, than it will be in Asian Pacific. But those countries in Asian Pacific should also cope in many cases with the same problems – customs, taxation, logistics, transportation. So it is the beginning of the long process, and the forum, which was held, is important, but it is only the first step.

To me at least it is significant, that it was China who was hosting this forum.

It is significant for everybody, because China is definitely the leading economy in this region and it is the second economy in the world. China outmatched Japanese economy even before this disaster in Japan; so, of course, China has very powerful voice in all the processes, but China alone cannot organize everything.

What challenges do you see oppose before the Chinese government now in respect of economic regional development and the place of China in that system?

China, having very powerful economy, should understand, that its position is quite sensitive, meaning those countries in the region, which may see China grows in some manner to their interest, and for China is very important to convince smaller nations in the region, that they should not worry about Chinese leadership or Chinese ideas. For China it is very important if those countries would like to have some ideas to be accepted, to consult them. It is such atmosphere, when you are more powerful than others, but still you should respect all countries; if not, then it will be rejection of Chinese position, and it may create some trade or financial wars, which is not good for the region.

What is interesting is that same sensitivity is seeing by some analysts in relation to the BRICS, because some of them are saying that BRICS seeks to promote itself as a counter way to established western powers. So why? I think, the BRICS notion as such even was invented by western analysts.

You know, that this economic system, we have now, was established mainly after the 2nd World War, with dollars as a predominance currency, with such institutes like World Bank, which is also a leading financial institute, and shares of the United States in those institutes were predominant, so the system was created, when the United States was economically dominant power and Europe to some extent. But now there is emerging a new situation, new states coming to the table, and for them is quite natural to ask for more shares, for more influential positions in this new emerging economic structure, and, of course, the old states are jealous, they are not happy with such situation, they prefer to keep the situation as it was. In 1990s there was a big financial crisis in the Asian Pacific, which was created by big western companies to try to push down emerging economies of the region. To some extent it was done, the rise of Asian Pacific economy was in crisis for some period, but finally it didn’t work, because Asian Pacific countries coped with these problems, they showed their vitality and even started to be more aggressive and demanding to take into account their interests. So we may see that in the coming period this struggle will take place more and more often, because this is reality of economic life in the world, and emerging powers definitely will ask for more, they will defend their position more aggressively.

That is interesting, that you mentioned the crisis, because if we look at the recent crisis, it still seems, that the BRICS countries were the ones, who have managed to survive it a little bit better, than large developed countries. But doesn’t that mean that they need to invent some kind of protection mechanism against new crises, because now western analysts say, there is a real chance, that another wave of crises could hit the global markets. So is there any way to protect against that?

The BRICS countries have already started to think how to escape from future crises and to help each other to create some funds; they are trying now to establish the system of using their currencies in trade between themselves; it is also the way to distance from too tight involvement in economies, which are headed by western countries. Still the structure of economies of these five states is differed from what we have in the United States, in Europe or in Japan. Even the substance of the production is different. They are emerging, but they still don’t produce so many intellectual products as the US, Japan and European countries do.

You already said that those countries are going to play an increasing role in the global economics and politics. And you also said that we should expect more opposition from old world countries. So how is the BRICS going to maneuver out of that?

I think, there will be a period, during which both sides should accommodate to new realities; and, of course, one way is to take the road of confrontation, which is not productive; the other way, the better way is what the BRICS states are saying to western countries: you should give us more room in world economy, and it is not at your expenses, it is simply the reality, and we would cooperate with each other without confrontation, we can make agreements. So, I think, this is the best way.

So we are appealing to the common sense of the old players?

We expect so, but, of course, situation may evolve in different direction. For instance, the United States now in a very unprecedented situation of default; and in reality how this leading world economy will behave may also have fallout for the whole world economy and for BRICS economy as well.

Are you saying that perhaps there could be unexpected circumstances?

Yes, it might be, that is why BRICS are trying to make early preparations for the worst scenario, how not only to survive, but to continue their growth.

BRICS is still seeing as economic and political organization. So let’s hope the world powers do not see it as a major threat.

I hope so, but I should say once again that the world is changing; it was easier to predict, what will happen, when it was Cold War and rivalry between the Soviet Union and the United States, between socialism and capitalism. Now it is a different situation, and logically the United States can do anything against new growing economies such as, for instance, with China: the US is trying to find some kind of containment, because there is no other way, already American economy is heavily influenced with Chinese money.

But on the other hand, as far as I understand, the recent developments in the Middle East and North Africa and the increased oil prices must have affected the Chinese economy.

We cannot say that Chinese economy is perfect, they have a lot of problems – energy, water, population. So far Chinese leaders managed to cope with all these problems, and I’m sure, they will find solutions for their problems. The energy problem may have influence over the oil prices, but China already predicted such situation, and they started to invest a lot of money into developing of oil deposit bank. Later Chinese economy will also change, because they will step at another level of production, not so much using resources, as it is now. Look what happened with Japan: they don’t have resources, so they organized their economy in the way, which is not depended on a lot of oil and gas; when it was oil crisis in 1973 Japan decided to estimate the level of how much oil they would import and not to overcome this level; and they not only did this, they decreased the import of oil and at the same time increased production.

How did they manage to do that?

Now Japanese economy is the most energy efficient economy in the world. Problems stimulate the efforts to cope with these problems, and if you have such clever approach, then you can cope with any kind of problem: a little change the structure of economy, find new markets, new products etc.

Good conditions for further developments. But are there any charges within the BRICS organization that we should be aware of and to which we should prepare ourselves?

Of course, economies of these Big Five have similarities, but also they have their own specialties, and at this moment it is still a very vague group of countries, I mean, vague about joined economic policies. Is some sectors they have common aims and purposes, but still their economies are not so sophisticated, they are not so firmly established, that they may be sure there will be no crisis in their economies in the future, so they should prepare for many things. For instance, for Russia it is modernization, and if Russia will fail with modernization, then even in BRICS Russia will be not in a very strong position; for China is also a problem, how to sustain its economic growth and to cope with its internal social and economic problems; South Africa is the biggest economy in Africa, but still they do not have advanced production facilities; the same with India, which is a huge country, but there is still a big division between rich and poor, and they also have a lot of problems; and Brazil is of course a growing economy, but it is still fragile economy. So all five have their own problems and common problems, it is the reason, why they get together, they are trying to use their joined vision to help each other, and at the same time they are trying to be more important players in the world economy, because if not so, then they cannot use that privilege, which world economy can give them in return.

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