BRASILIA (Reuters) - The leaders of the world’s top four emerging markets will renew calls for a greater say in the global economic order when they meet in Brazil’s capital this week but they may struggle to come up with clear proposals to advance a common agenda.
At their first summit last year in the Russian city of Yekaterinburg, the so-called BRIC countries of Brazil, Russia, India and China were at the forefront of a push to overhaul global financial regulations and move toward a new international reserve currency.
But with the worst of the global economic crisis now over, differences between the four countries have become more evident, exposing the limitations of the group’s ambitions.
“Don’t expect the BRICs to make bombastic or revolutionary proposals because it’s not going to happen,” said Roberto Jaguaribe, undersecretary of political affairs at Brazil’s foreign ministry.
Finding alternatives to the U.S. dollar as a global reserve currency and using local currencies for trade are not on the official agenda of the leaders’ two-day meeting in Brasilia that begins on Thursday, although they will be discussed.
The BRICs, a term coined by Goldman Sachs economist Jim O’Neill in 2001 to describe the growing influence of big emerging economies, represent 40 percent of the world population and around 20 percent of global economic output.
The foursome is sure to cite that growing clout to push its demands that the BRICs and other developing countries be given more say in global financial institutions such as the World Bank and the International Monetary Fund.
While the BRICs share concerns on global governance issues, they have little in common besides being large, fast-growing economies with massive domestic markets.
China’s relations with Russia and India are complicated by security tensions, and Beijing and Moscow are not enthusiastic about Brazil and India’s push to broaden the United Nations Security Council. Differences abound on climate, trade and currency issues.
“On trade and climate, it’s difficult to see more than a generic statement to advance global talks,” said Andre Nassar of the Institute for International Trade Negotiations, a research group based in Sao Paulo.
As a major food exporter, Brazil wants to cut trade barriers on agriculture, something that India has been reluctant to do. Russia, a major oil producer, is unlikely to embrace any ambitious emissions reductions.
China’s undervalued currency, the yuan, is also a point of tension since it erodes the competitiveness of domestic manufacturers in other BRIC countries. Last week, Brazilian Finance Minister Guido Mantega backed calls for China to revalue the yuan, saying it would be good for the global economy.
Still, few expect the BRICs as a group to pressure Beijing on the issue.
“I think they’ll leave that one to the United States to deal with,” said Roberto Abdenur, a former Brazilian ambassador to China and the United States.
In the absence of a far-reaching external agenda, the BRICs will focus on strengthening trade and investment ties with delegations of business leaders, bankers, cooperatives, and state development banks exploring business opportunities.
“Greater intra-BRIC cooperation would help members, as this could in itself emerge as a strong counterweight to established powerhouses in economic and political terms,” said a senior official at India’s finance ministry, who requested anonymity.
China and Brazil will use the summit to sign a five-year strategic plan to further expand their fast-growing trade relationship. And Chinese companies are expected to unveil some investments in Brazil, one of China’s main suppliers of commodities such as iron ore and soybeans.
For Brazilian President Luiz Inacio Lula da Silva, the BRIC summit is one of the last big events he will host before leaving office at the end of the year. He is expected to use the occasion to reiterate Brazil’s push for a permanent seat on the U.N. Security Council.
Beijing sees the BRICs as a forum allowing it to bolster links with other major emerging economies, strengthening the perception that it is helping other developing countries as it is often urged to do.
But China is keen for the BRICs not to been seen as a challenge to Washington.
“We come together seeking mutual benefit ... rather than confrontation with other third parties,” said China’s vice foreign minister, Cui Tiankai.
Still, there are concerns that China’s economic and diplomatic might may end up undermining the BRIC as a coherent group, since it doesn’t need others to effectively push its agenda. The sheer size of its economy also means that policy coordination with its BRIC peers will be difficult.
“China’s power will likely provide a challenge to BRIC cooperation and the BRICs as a grouping,” said Michael Glosny, China expert at the Massachusetts Institute of Technology.
Additional reporting by Abhijit Neogy in New Dehli, Emma Graham-Harrison in Beijing, Todd Benson in Sao Paulo, and Denis Demkin in Moscow; Editing by Todd Benson and Kieran Murray