The BRICS, an economic bloc composed by the fastest-growing economies of the 21st Century, have always dealt with high expectations from the international community, despite its inertia on building real and solid institutions. Later on, although still low, the interaction inside the bloc has surely been enhanced by recent political moves and economic agreements among the members. July’s New Development Bank and recurrent international meetings are clues for the possible development of a de facto counterweight to both G8 and G20. Still, the BRICS is not that simple. Made out of very politically different countries with very different geographies and pasts, a success or failure of the bloc does not necessarily means the same for all individual parts. Here, I try to trace some expectations Brazil should have concerning its performance inside such a diversified group – independently on the bloc’s performance in a whole. I find that, due to a GDP stagnation summed with politico-cultural differences, and a growing isolation on important inter-state projects from inside the bloc, Brazil should not be so institutionally eager to join the BRICS.
Brazil’s Economic Crisis and its Effects
When Jim O’Neill brought together four emerging countries to build such a group as the BRICs, his goal was clear: to determine where much of the world’s growth would come from in the near future. Hence, there was no criteria as political similarities, cultural resemblance or historical affinity taken into account – it was totally based on GDP growth and economic projections. Later on, when this almost theoretical group turned into a real-world bloc, critics are often warning about the huge lack of harmony among the members. This situation, in fact, brought some academics to describe the BRICS as an “artificial bloc” or even a “GDP Club” . Although important, discussions about the de facto legitimacy of the bloc are not where I want to get; rather, it is about how GDP sizes and economic numbers can transcend the importance of all the other factors in the present international context. This solely economic nature of the BRICS is well illustrated when Jim O’Neill, the creator of the acronym, analyzed the entrance of South Africa in the group. He said: “South Africa has too small an economy. There are not many similarities with the other four countries in terms of the numbers” . Therefore, it is laid the first variable that can alter Brazil’s future inside the BRICS: a GDP-led nature of the bloc.
One may be asking: in what way would a GDP-led mentality interfere in the Brazilian importance inside the BRICS? Well, Brazil is passing through an intense economic crisis – the hardest one since the beginning of the 1990’s, when the country experienced a period of hyperinflation . It all started with the huge corruption schemes that have been uncovered recently. Both the Mensalão and the Petrolão were huge nets of corruption and money washing among politicians, officials and big CEOs. The n-digit values of uncovered illegal money inside the Brazilian public apparatus brought a profound drop in national trust and hence in FDI rates. Besides all of this, however, there are still other factors that have built such a dangerous domestic situation: (1) a too vast state scope, which brings high administrative costs to an already deteriorated economy and spurs public dissatisfaction with the rise of tax rates; (2) a profound lack of political harmony between the government and the Congress, making harder the development of economic plans for national restauration; and (3) high expenditures on big but unprofitable international events, like FIFA World Cup and the coming Rio 2016 Olympics. The result of all the factors? Minimal or even negative GDP growth rates since January 2014, the last contraction being the worst since the introduction of the Real, in 1996 . The projections for 2016, by the way, seem even more pessimistic. By this far, we should all know what happens to a country under economic recession that is inside a “GDP Club”: it surely is put aside from the core decisions and agreements.
There is still one more question: both Russia and, to some extent, China are also passing through a reasonably big economic crisis; should not China’s stock market crash or Russia’s Ruble Crisis foster inter-state interactions as much as the current Brazilian crisis?
The answer lays on the variables Jim O’Neill did not consider when creating the BRICS. Yes, those that were shadowed by the importance of the GDP projections: political similarities, and cultural resemblance.
First, political similarities come as a big factor that can compensate the economic instability of Russia and China. Both regimes are authoritarian – China a one-party autocracy, Russia an explicit managed democracy. These illiberal characteristics allow both countries to have a more stable political scenario, since autocratic governments often have vast propaganda agencies, charismatic leaders, and censorship programs. Putin, for example, still holds the majority of the Russian population (89,9% recently) backing up all kinds of actions he chooses to implement, even in the midst of a profound ruble crisis and polemic atrocities involving the government (see Boris Berezovsky’s case). China also has the majority of the population supporting the CCP, usually by the justification of economic prosperity, even though the Chinese’s’ liberal rights are disrespected. In short, authoritarian regimes are long held to be more stable than democracies, even if their agencies are not the most correct ones. Brazil, on the other hand, even though experiencing several corruption scandals that put its democracy’s legitimacy at stake, still holds solid democratic institutions – and they bring political instability willy-nilly. Therefore, Brazil’s case is more dangerous because its economic crisis is exposed to political unpredictability.
Cultural resemblance is also a factor that goes against isolation in the BRICS. Both Asian countries have a great similarity: they do not strictly follow a human rights agenda. For being authoritarian regimes, they do not guarantee basic rights like freedom of communication or freedom of protest. Moreover, both nations – and this time also India and South Africa – disrespect the calls for environmental causes. According to the Environmental Performance Index, which measures how environmental-friendly a country is, Brazil ranks 30th out of 132 countries, while Russia, China, India and South Africa rank 106th, 116th, 125th and 128th, respectively . These cultural similarities have the potential to open several doors to business affairs – advantage that Brazil does not have.
Brazil’s Geographic Isolation
The second reason why Brazil should not expect great prospects inside the BRICS lays on its geographic position. Russia, India and China are undoubtedly the richest and most influential countries in the bloc. China, for instance, has huge reserve polls for FDI and holds 46% of the voting weights inside BRICS’ New Development Bank; Russia has the mightiest military services, which still creates a vast radius of influence; and India has the fastest-growing economy and population in the world, with great projections for future R&D trade. Surely, the most important decisions from the bloc will be made in the Eastern territory, among the Asian trio. Brazil, in turn, does not share enough geographic features in order to be included in eventual infrastructural projects and economic agreements. Some of the most important BRICS’ projects are listed below.
Currently, the most relevant infrastructural project in Asia is China’s New Silk Road plan. It is essentially a new net of infrastructural constructions in the best Chinese style – roads, ports, and high-speed trains – that cuts all throughout Asia and the Indian Ocean . While Central Asia countries are the most benefited by the land part of the project, India reveals itself as a crucial part of the maritime section. The port infrastructure on the city of Kolkata will be the essential connection between Asia and Africa in the Chinese project. Therefore, it is very reasonable to assume that, due to the importance of India inside this extremely expensive Chinese plan, Sino-Indian economic relations tend to increase in the near future.
China is also innovating when it comes to new economic agreements on energy supply. In May 2015, 32 bilateral contracts between Russia and China were signed, establishing increased economic relations and energetic trade between both countries . The deal was made in a period when the West-Russian relationships were very troubled, since the Crimean incident. While Russia gives a major step on its energetic supply – there are already Chinese gas pipelines in Putin’s territory – it will be also flooded by Chinese manufactured goods. Therefore, Sino-Russian economic relations tend to skyrocket.
Finally, there is another rise on economic ties in the Asian context – this time, unexpectedly, between Russia and India. Both countries have never been great friends, both in diplomatic and in ideological terms. However, at least for the global political-economic scenario, there is no such a thing as eternal enemies. The proof is the signature of a framework agreement for free trade negotiations between India and the Eurasian Economic Union (EEU) – group that is largely headed by Russia . Through this agreement, signed at the International Economic Forum in St. Petersburg this June, economic exchange between India and Russia will surely increase.
Of course, all situations presented here are possibilities, prospects. However, they all constitute reasonable points about why the economic ties between the BRICS trio should rise in all directions. Alternatively, Brazil does not have such optimistic economic prospects with any of its Asian counterparts. And, since capital is limited and scarce, Brazil should become increasingly alone while the Eastern part of the BRICS connect itself constantly more, at least economically.
An Ambiguous Future
Although the BRICS have recently achieved phases they had never passed before, such a partial success does not translate into Brazil’s case. The country’s relevance in the bloc tends to decrease, due to:
1. Bad economic performance summed up with seldom political, historical, and cultural similarities with the other countries. Such a mix of factors can build a less promising Brazil, which does not offer any advantage or even justification for enhanced diplomatic and economic ties.
2. A mere geographic difference that seems irrelevant in our rapid and connected era, but corresponds to huge logistic difficulties when it comes to infrastructural projects and economic trade nets. Therefore, Brazil might be dangerously excluded from the coming important plans involving BRICS members.