India would have important choices to make in the period ahead even as BRICS’ political profile gets etched in ever-sharper terms. There is no denying the fact that the BRICS’ New Development Bank presents itself as an alternative to the US-dominated global financial institutions.
Both the bank and the currency reserve pool, which have been formalized at the summit in Brazil, propose to offer financial support for emerging economies worldwide and, in turn, they will become catalysts of change or at the very minimum will compel Washington to do something with the reform package that has been languishing for the past five years in the US Congress awaiting ratification.
It has been the resistance from the US mostly that has held back the reform of the IMF and World Bank. There is a lot of pressure in the US Congress to scale back US funding for these financial institutions both on account of the large US debt and due to what the political establishment in Washington sees as the questionable use of the American taxpayers’ funds. Clearly, with the locus of influence within the Congress shifting to the Republicans, any ramping up of US funding to the global financial institutions or far-reaching reforms that might lead to increased weightage for the emerging economies seem improbable.
What needs to be factored in is that if one were to add up the government debt in America, business debt, mortgage debt and consumer debt, the US economy is in the negative by $59.4 trillion. Washington saw an early challenger in the euro; while this challenge has not gone away, it became weaker due to the crisis in the European economies in the most recent years. It is against such a complex backdrop that the BRICS alliance is shaping up as a new challenger to the US dollar, by taking over from the euro through a combination of currencies. Conceivably, prudent investors would increasingly work on a diversification strategy that included the BRICS in their portfolio.
Again, the financial aspects aside, the BRICS bank will make a departure from the lending practices of the World Bank – for instance, such proclivity as exists today to set conditions that often enough turn out to be intrusions on the sovereignty of the borrower countries. Above all, the system of weighted voting in the World Bank and the IMF has given the rich countries the dominant say within these key financial institutions of the Bretton Woods system and even preserved the informal arrangement whereby the former always has had an American in the top job, while a European invariably led the latter.
The crucial thing in all this is that the political unity behind the BRICS’ economic cooperation is assuming great importance. The Indian policymakers are probably seized of this matter already – even if the pundits are noticeably lagging behind – as the consensus that emerged over the BRICS bank’s location in Shanghai under an Indian as its first president testifies.
Of course, there has been a concerted attempt by the BRICS’ western critics (and the detractors in India) to keep harping on the differences amongst the member states of the grouping (which are evidently there) and the glaring disparity in their physical size and their economies and stages of development (which is absolutely true), or to exaggerate their relative economic slowdown in the past few years – all so patently with a view to run down a process that dares to be audacious to take on Western hegemony.
However, with the Fortaleza summit, the West cannot overlook – even if it still remains reluctant to admit openly – the growing political unity of the grouping and its potential to become a counterweight to the established powers in the West. To quote a Chinese commentator with the Xinhua news agency, «As strategic pivots of their region, the five-nation cluster will also strive to contribute to world peace and prosperity by pushing for global governance reforms in such aspects as the international financial and monetary system, climate change and regional issues».
Deepening, broadening partnerships
A third aspect of the Indian Prime Minister NarendraModi’s trip to Brazil has been that on the sidelines of the summit, he was expected to have ‘bilaterals’ with Russian president Vladimir Putin and Chinese president Xi Jinping, amongst others. No doubt, Russia and China are top priorities in India’s foreign policy. Put differently, this has been Modi’s first venture on to the high table of world politics insofar as his interaction with his peer group so far in the past 50 days in office as prime minister has been limited to his South Asian counterparts.
Of course, India-Russia high-level meetings do not make the adrenaline flow. The threat they face often enough is their apparent look of being rather ‘routine’. But then, that is the drawback of any relationship that has matured over time and is suffused with immense mutual understanding and trust.
Thus, Modi’s meeting with Putin was entirely predictable – although substantive issues didn’t appear to have figured in the discussion. But then, Putin is expected to visit India in December for the annual summit meeting with the Indian prime minister, and a high level visitor from Moscow Deputy Prime Minister Dmitry Rogozin had just met Modi last month in Delhi.
Modispoke on an intensely personal note recalling his visits to Russia and his search and discovery of the historical and cultural links between his native state of Gujarat in western India and the Astrakhan regionsituated on the banks of the great Volga River where it flows into the Caspian Sea.
Modiwas equally effusive in his references to India’s strategic partnership with Russia and emphasized that relations with Russia will «continue to enjoy the priority» in his government’s foreign policies. Modi expressed the hope to «further deepen and broad-base» the strategic partnership. An intriguing part of the conversation pertained to Modi’s pointed invitation to Putin to visit the Kudankulam nuclear power plant, where Moscow had been hoping to sign the contracts for the construction of two more nuclear reactors. Modi government is highly enthusiastic about India’s nuclear power development program.
On the other hand, Modi’s meeting with Xi raised immense curiosity, as happens invariably whenever Sino-Indian high-level exchanges take place. Although Modi has visited China before and has apparently been an admirer of China’s phenomenal rise, there are two narratives possible today as regards his government’s China policies.
One, of course, is the classic narrative borne out of the Hindu nationalist ideology that casts China as an implacable adversary or even ‘enemy country’ and which is deeply suspicious of the Middle Kingdom’s inscrutable mind and real intentions toward India. The ruling party has a sizeable section of followers who hold such views.
At the same time, there is alsoa second narrative that has been lately struggling to compete, namely, that the mandate of the Modi government essentially concerns the promises he made as regards the revivalof the Indian economy, and that in the fulfillment of that pledge (which becomes accountable to public opinion at some point), increased trade with China and, more important, investment by China in the development of India’s infrastructure and manufacturing sector would be highly welcome.
Having said that, both narratives also converge on the need for India to remain vigilant in narrowing the gap in defence preparedness that currently exists vis-à-vis China on the disputed border. The meeting at Fortaleza harped on these contrarian impulses in the Indian sensibility, especially as regards the desirability of reaching a border settlement, which, as Modi told Xi, would be a defining moment that could transform the Sino-Indian ties as a model relationship between any two countries in the contemporary world.
To be sure, there is a sub-text here as well insofar as India has incrementally become conscious of the positive fallouts of working with China on the BRICS forum both for strengthening mutual trust as well as to advance the shared interests and concerns on the world stage as emerging economies that would gain out of a democratization of the world order. So far, the accent has been on economic issues, but it is important to note that at the summit in Brazil, Modimade a strong pitch for India’s membership of a reformed UN Security Council.
Equally, Xi’s invitation to Modi to attend the APEC summit meeting in China in November (virtually preempting an American initiative in this direction) and the suggestion that India should be more active in the Shanghai Cooperation Organization as well as Beijing’s offer that India should be a founding member of the proposed Asian Investment Development Bank for the Asia-Pacific region would show that a new gravitas is visible in the Sino-Indian discourse. Xi put it succinctly when he told Modithat China and India don’t have to be ‘rivals’.
A turning point
All things considered, therefore, from the Indian perspective, much would depend on the BRICS’ ‘utility’ as a forum for realizing its aspirations as an emerging power. Thus, although there is still some angst amongst pundits that the new BRICS bank would be overshadowed by China, the mainstream Indian discourse has veered round to estimating the benefits that accrue to the critical needs of its infrastructure development for which foreign investment from all, any sources as much as could be available becomes a dire necessity for the country.
In short, the Fortaleza summit could be, in retrospect, a turning point in India’s tryst with the BRICS. The engagement is no doubt gaining traction, notwithstanding the constant berating by the pro-American lobbyists and motivated sections of the Indian media who keep raising the China bogey – that the Big Brother might come to dominate the BRICS.
Interestingly, there is a subtle recognition discernible on the part of China too regarding the need to carry India along and to consciously make space for India to feel comfortable within the BRICS tent. China’s willingness to concede equal voting rights for all members in the new BRICS bank – notwithstanding the fact that the ‘Middle Kingdom’ represents over half of the grouping’s GDP– underscores that Beijing too senses the importance of not creating any heartburn that it is more equal than others in the BRICS tent.
Therefore, no matter Delhi’s ‘de-ideolgised’ perspectives on the BRICS processes hitherto, India is almost inevitably going to be drawn into the overall orientation of the forum, which is steadily crystallizing, as a challenger to the established Western-dominated global political and economic system that came into being after World War II. Indeed, there is really no contradiction here, either, since the fact of the matter is that under Modi’s watch continuity by and large will characterize the Indian foreign policies.
What does this continuity mean? In essence, the underlying principle of Indian foreign policy in the post-cold war period has been what can be called ‘multi-alignment’. It may sound a jettisoning of the past policies of non-alignment, but in reality it has turned out to be non-alignment in spirit without admitting it. ‘Multi-alignment’ implies diversification of relations; avoidingentanglement in big-power rifts;weighingissues on merit and engaging with them in tune with India’s interests; and, keeping an open attitude to positive platforms while at the same time retaining strategic autonomy – on the whole, ensuring the strengthening of the multi-polarity in the world order.
Besides, it becomes necessary to appreciate that considering the situation surrounding India, the country has to do some amount of hedging as it navigates the power dynamic regionally and internationally. In such a calculus, BRICS is destined to be a unique asset for Indian diplomacy. Even today’s detractors are bound to appreciate at some point that BRICS has great value for an impatient leader like Modi who is bent on creating new momentum for India’s national policies.