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G20: Moving Up BRIC by BRIC
Analysis by Sanjay Suri
LONDON, Sep 4 (IPS) - Every one of these 'G' meetings becomes now an occasion for the developing countries - say
the emerging economies - to turn that extra energy into a louder voice in the business of
global decision-taking.
A day before the leaders of the wealthiest developed nations met at the last G8 summit in
L'Aquila, Italy in July, the G5 met with announcements of consolidated positions. They held
together jointly, and therefore that much more firmly, against a particularly European push
for some binding commitments on actions towards curbing climate change.
And now on the eve of the substantive part of the G20 finance ministers meeting in
London Saturday, the BRIC nations came together to make a collective announcement that
would both inform the formal meeting in advance of common positions, and pre-empt
increased pressure from the developed - the G8 part of the G20.
For the record, the G8 are the U.S., Canada, Britain, France, Germany, Italy, Japan and
Russia; the G5 are Brazil, India, China, South Africa and Mexico; and BRIC are Brazil,
Russia, India and China. The remaining members of the G20 are Argentina, Australia,
Indonesia, Saudi Arabia, South Korea, Turkey and the EU represented by its rotating
presidency (currently Sweden).
Russia belongs to both the G8 and outside, China some say should really belong to a G2
alongside the U.S., to sit above the G8. These numbers are not that serious; certainly they
are not formal. That one or two may move this side or that is just a fallout of what
everyone calls these days 'the changing world order.'
Change has come outside of the U.S. too, and U.S. President Barack Obama is not the only
one looking for change, even if that sort of push coming from others makes for smaller
headlines. But the push is unmistakable – and change inevitable.
So the BRIC finance ministers did not just call for reform of the international financial
institutions when they met in London Friday ahead of the finance ministers meeting
proper. "The main governance problem, which severely undermines their legitimacy, is the
unfair distribution of quotas, shares and voting power," the BRIC ministers said in a
statement following their meeting. That they have said before, but on Friday they went
further.
"We propose the setting of a target for that shift of the order of seven percent in the IMF
and six percent in the World Bank Group so as to reach an equitable distribution of voting
power between advanced and developing countries. This would lead the overall share of
emerging market and developing countries in the IMF and World Bank to correspond
roughly to their share in world GDP."
Six or seven percent may not sound like a lot. But the last time, three percent of votes
shifted from rich to developing countries. Now they want the next shift to be twice as big.
Push has not yet come to shove – the emerging economies are looking for change, not
upheaval, for steps that will in time add up to a change that is certain to be revolutionary,
but not looking for a dramatic revolution in the old ways.
The G8 governments have been dragging their feet since agreeing to reform of these
institutions. At this G20 gathering, the pressure will be on for reform. U.S. Treasury
Secretary Tim Geithner dropped in at the end of the BRIC ministers meeting to hear what
the ministers had to say, and to reassure them the U.S. will back change. Brazilian Finance
Minister Guido Mantega reported at the end of the meeting that Geithner agreed action to
reform the international financial institutions, and to do so quickly.
And he agreed too, as the BRIC ministers demanded, that the next managing director of
the IMF and the next president of the World Bank should be elected "irrespective of
nationality or any geographical preference." And that the executive boards of these
institutions give more representation to developing countries.
This was always a good argument, but now strength speaks. As Indian Finance Minister
Pranab Mukherji said after the meeting, BRIC nations between them have a higher gross
national income (GNI) now than does the U.S. Sure, that is still four big countries that just
about surpass the U.S. standing alone – but the U.S. giant stands less tall above others
now than it did before, and looks more fragile than the smaller economies.
"Emerging market economies have shown resilience and helped the world economy absorb
the impact of the deterioration of trade, credit flows and demand," the BRIC ministers
pointed out in their statement. "In many of them, growth is already back on track after a
few quarters of recession or slowdown."
And with 80 billion dollars of their money now going into the international financial
institutions, it does not seem likely they will be able to resist change for long along the
lines that the emerging economies are pushing insistently for.
The BRIC ministers held on to earlier positions on the principle of common but
differentiated responsibilities in taking action on climate change. But they acknowledged
too that there is much that needs to be reformed beyond voting rights and the lot within
financial institutions.
"Permanent, stable reforms must still be implemented on multiple fronts," they
acknowledged. The need, they said, is to "change international practices, rules and
governance structures to make the global economy more resilient to future crises." They
have an interest in this, suffering as they did from a crisis not of their making.
Few expect the developing nations to secure all the reforms they want in a hurry. But few
doubt, either, that the developing world has taken at least some steps towards that end as
never before. (END/2009)
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