Opening Up to the BRICS Generation

[REUTERS/Luke MacGregor]

When French politician Pascal Lamy set the process in motion to replace himself as the head of the World Trade Organization (WTO), it was an interesting outcome that the two last candidates for the position were both from Latin America and were both from economies either from BRICS nations or that are considered as pre-BRICS nations. Brazil and Mexico in the recent past would have never been considered as having a chance at the head of one of the European or American dominated international organisations like the International Monetary Fund (IMF). Despite Christine LaGarde beating out her Latin American rivals to become the latest head of the IMF, there is no doubt that Latin America’s economic giants have come full circle in representing the region as being a large part of the world economic system. In the end, Brazil’s Roberto Azevedo won to become the next head of the WTO with the challenge to reinvigorate Doha with a perspective coming from a BRICS nation. Azevedo might have the natural advantage of coming from a BRICS nation as he will be able to represent both developed and developing countries’ interests as opposed to a Doha trade liberalization process born out of European or American interests. While countries like Mexico have been outperforming many of the BRICS nations recently, the ability to have a strong say in the international economic system for countries like Mexico has gone very far in officially placing them at the head table of the international economic order, even without being part of the informal BRICS designation.

The Obama administration and the previous Bush administration had done little to activate their natural relationship with Latin America after 9/11. In Obama’s second term as president, there has been an active push for President Obama and Vice President Biden to re-engage with Latin America, not as rulers of the backyard of the Americas, but as partners in a region that has a great deal of economic and political potential in the world economic order. The United States has sat back over the last ten years while China has created lucrative ties with countries like Brazil, Venezuela and Argentina. U.S. officials were unable to pivot any interest or policy initiatives away from the Middle East, despite having a wealth of resources and experts that were able to develop more than one prudent foreign policy action. The lack of interest the U.S. had showed in the recent past had left many U.S. allies in the region looking for ways to peak America’s interest in their issues and lead them to tackling many issues individually without any significant U.S. assistance. Many U.S. allies in South America took to their traditional position of diversifying trade, but instead of balancing the U.S., EU and international trade relationship, much of the new trade relations have gone directly to China with little American overtures to increase trade across the Americas post 9/11. As for the opposition to the U.S. in the region, the left in Latin America under the late Hugo Chavez had become very strong to the point where Latin American opposition to the U.S. was able to affect U.S.-Iranian relations for a short period of time. The influences of the BRICS and pre-BRICS nations have earned their respect globally, and finally it has become somewhat of a priority for the United States.

BRICS nations might be gaining intangible power in the international system, but the label of “BRICS” is not a complete solution to issues that have slowed growth in BRICS nations or challenge development of the economic system in pre-BRICS nations. Mexico’s economic boom under the previous PAN government did not save them in the last election, and even placed the past ruling party in third place despite Mexico’s historically high growth rates. Countries like Brazil has slowed their growth significantly and are struggling to reform their political system to make FDI gains accountable to national growth and not to a few wealthy and powerful individuals. India’s growth has slowed due to the systemic inability to quell nepotism and promote a reduction of red tape in creating commercial entrepreneurs in India. Red tape is also a large restriction to investment in China, a country that is trying to move from a purely manufacturing based economy into more diverse industries before its employees working in manufacturing become too old to keep up its growth rate. Any successful BRICS nation will only remain successful if stability and a healthy growth rate prevails over a addictive super growth rate and eventual bust cycle. Trying to develop the country before it is no longer possible to do so will only place BRICS in a situation that plagued Latin America throughout the latter half of the 20th century. For Brazil and Mexico to remain significant players in the WTO and worldwide, Azevedo and other policy experts assisting BRICS and pre-BRICS nations must look for stability and long term growth as policy goals above any scenario where boom and bust cycles dominate economic models.