BRICS Seeks to Remodel World’s Financial System

BRICS is an international political organization comprised of the following high-growth countries: Brazil, Russia, India, China and South Africa. At a 2012 Summit in New Delhi, BRICS leaders discussed the need to remodel the current financial system controlled by Western nations and boost intra-trade exports. Here are some facts about the BRICS countries:

• The four countries currently account for more than a quarter of the world’s land area and more than 40% of the world’s population.
• Mr. Jim O’Neill, a Goldman Sachs economist, predicted that the group’s combined economies – now worth $13 trillion – would double in the coming decade, eventually surpassing the size of the economies of both the U.S. and the European Union.
• The BRICS countries are responsible for over 50% of global economic growth in the last decade.

On June 16, 2009, the leaders of the BRIC countries held their first official Summit in Yekaterinburg and issued a declaration calling for the establishment of a multi-polar world order. In the recent New Delhi summit, the Group’s representatives discussed topics such as changes in the monetary system, including an alternate global reserve currency to reduce the dominance of the dollar.

The BRICS nations indicated they are empowering their finance ministers to create a Development Bank that will not use U.S. dollars, but will rival the U.S.-dominated World Bank. Such a mega bank will be instrumental to pooling resources of the BRIC nations and providing resources for growth-oriented infrastructure improvements within the Group.
The leaders of the Group see intra-trade as an important component of their economic growth, along with reducing dependency on exports to the economically-challenged Europe and the U.S. The current Intra-BRICS trade is in the neighborhood of $230 billion and expected to reach $500 billion by 2015.

Despite the Group’s differences on tensions caused by territorial disputes between China and India, and Beijing’s substantial trade surplus with New Delhi, they have managed to focus their efforts in becoming economic powerhouses and to express their resentment against Western-dominated financial institutions.

Only time will prove whether the BRICS nations will become a powerful, cohesive group or just end up being a fragmented organization that lacks strong vision, or what the French call a bricolage, an assembly of available objects brought together despite their diversity.

Ayse Oge is President of Ultimate Trade, International Trade Consulting, Speaking and Training. She is the author of “Global Business Guide” and “Worldwise Children.” Her website is www.goglobaltowin and she can be reached at oge@earthlink.net.