Last week’s gathering of the BRICS (Brazil, Russia, India, China, South Africa) heads of government in China looks like another landmark in the Asia-tilted re-balancing of global economic power that has gathered pace since the 2008 banking and financial crisis spread from the United States.
The International Monetary Fund (IMF) says that by 2016 the total GDP of the five countries will exceed that of the US. China last year passed Japan to become the world’s second largest economy, while overtaking Germany to become the world’s biggest exporting country. Predictions vary, but depending on how growth numbers in both countries pan out over the coming years, China could overtake the US to become the world’s biggest economy within two decades or less.
The BRICS grouping called for reform of various international bodies, such as the IMF and World Bank, to better reflect the changes in global economic weight that are taking place. They want a bigger say in how these institutions are run, meaning greater voting rights at the least. The IMF itself says that that â€œemerging marketsâ€ in general will grow by an annual average of 6.5 percent over the next four years, while the majority of western economies will languish with 2 percent average growth.
The US and EU (if the latter is measured as a single entity) remain by some distance the two largest economies in the world. However, on Tuesday ratings agency Standard and Poors for the first time issued a downgrade of US credit-worthiness, citing concerns about American debt, much of which is held by China. Economic collapse was only staved-off in Greece, Ireland and now Portugal by massive â€œbail-outâ€ loans. The packages are prompting resentment in Europe’s stronger economies, such as Germany, which are footing the bill for the loans, though in reality these will have to be repaid by taxpayers in recipient countries.
There are limits, however, to how far BRICS-building might go. Both China and Russia are already permanent members of the United Nations Security Council (UNSC), and it seems unlikely that either they or the other three permanent membersâ€”France, the UK and the USâ€”would dilute their own presence there by admitting additional new members and rivals. India, Japan and Germany are thought to be the most likely next-in-line candidates, with European Union officials and some European Governments in favor of an â€œEU seatâ€ alongside or instead of the current French and British representation.
While the five BRICS countries share the goal of increased international influence in keeping with their growing economic weight, they constitute a varied and disparate grouping. Russia is a key source of oil and gas for China, but both countries have had their periods of rivalry in the past. Burma is a key aspect of the Chinese-Indian rivalry, sharing a land border with both countries, which despite their size and proximity have a relatively-small bilateral trade relationship. Unresolved territorial disputes, Indian support for Tibetan nationalism and the strong Sino-Pakistani ties all serve to make the relationship a fraught one.
China, and Russia to a lesser extent, have acted as patrons of the Burmese military Government at the UNSC, and the rise of the BRICS has implications for Burma. Russia and China sell arms to the Burmese Government, and China is now Burma’s second biggest trade and investment partner, after Thailand, and is likely to top the rankings once the Shwe Gas field comes on-stream, currently scheduled for 2013. Some of the Burma-related US diplomatic cables published by Wikileaks show the USâ€”which retains sanctions on the Burmese Government and its domestic business allies while saying it is open to â€œengagementâ€ if the Burmese adopt reformsâ€”believing Burma to be on the verge of becoming a Chinese satellite state.
While some observers see India as playing a losing game in Burma, the US sees India as a valuable partner in Asia, perhaps even countering Burma’s close links with Beijing. In a cable leaked in December 2010, a US official wrote that India could potentially draw Burma away from Chinaâ€™s growing regional influence, after being told by the Indians that the junta â€œhates Chinaâ€ and welcomes Indiaâ€™s engagement as an alternative. Than Shwe, the apparently â€œretiredâ€ military dictator in Burma, visited India from July 25-29, 2010. This came before a subsequent official visit to China, perhaps a hint to Beijing that Burma has other options.
The common perception is that Burma’s government is immune to Western pressure or sanctions due to over a decade of growing Chinese, Indian and other Asian investment, notably involving Thailand, Singapore and South Korea. As the BRICS and other Asian economies grow, this trend looks set to continue.
Arpitha Bykere is Senior Research Analyst for Asia at Roubini Global Economics, a US-based economic and market research firm. She told The Irrawaddy that, â€œAs emerging Asia’s needs for secure and cheaper energy sources increases, they will increasingly compete with each other in securing deals in Burmaâ€.
Perhaps a litmus test of US leverage in the region will come quite soon. Burma wants its turn as Chair of the Association of Southeast Asian Nations (Asean) in 2014, and is hoping that this can be approved at the next ASEAN summit in Jakarta next month. The first US-ASEAN summit took place only in November 2009, and already the US has said it will review relations with Asean if an unreformed Burma takes the ASEAN Chair.
Kelley Currie, a Senior Fellow with the Asia-focused Project 2049 Institute, says that the Sanya Declaration issued by the BRICS quintet at the end of their recent summit contains hints that the US might regain some leverage on the Burmese Government which, again according to US diplomatic cables, has made quiet overtures to the US in recent years, likely as a hedge against China’s growing influence.
She told The Irrawaddy that â€œthe BRICS reaffirmed a view of the pre-eminence of the UN and regional organizations as the appropriate mechanisms for conflict resolution. For Burma, this means Asea remains the go-to entity for resolving political issues as far as both India and China are concerned, and neither can be expected to go beyond or against anything that ASEAN does on Burma.â€
While ASEAN has typically been timid on Burma and member-states appear motivated by little more than economic self-interest, the prospect of Burma hindering Asean-US relations might prompt the bloc to pressure Burma’s â€œnewâ€ government to undertake some of the reforms sought by the US, if in turn ASEAN is to allow Burma to assume the Chair of ASEAN come 2014. It might be a long shot, and goes against precedent, but if China and India fall in line with the â€œregional consensusâ€ on Burma, there might be some opening to pressure Burma’s government toward reform, if only by proxy.
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