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PM Modi at BRICS: New World Order?

BRICS

A Media Mogul Henry R. Luce had called the 20th Century as the ‘American Century’. However, the emerging geopolitics has witnessed the emergence of the 21st Century as the ‘Asian Century’. India, so far denied her importance and role despite its population and emerging economy during the last two decades, is now poised to be an important actor of the Asia Pacific region following the triumphant visit of Prime Minister Narendra Modi to Brazil to attend the BRICS (Brazil, Russia, India, China & South Africa) summit recently.

BRICS BANK: Answer to Western Dominance over Development Lending?

In yet another powerful signal of the emergence of a new world economic and political order, the BRICS Summit has decided to endorse the Chinese idea to set up a New Development Bank to be known as the Asian Infrastructure Investment Bank (or the BRICS Bank) to challenge Western dominance over development lending. In the new $ 100 billion BRICS bank, though initial shareholdings are equal among all five founders, the equal size currency stabilisation (Reserve) fund shows a preponderance of Chinese influence. China is expected to make the biggest contribution ($41 billion) followed by $18 billion each from Brazil, India and Russia and $5 billion from South Africa. This is, of course, logical, since China has the biggest surpluses and foreign exchange reserves in the world (nearly $4 trillion, or more than one-and-a-half times the size of the Indian economy). Its headquarters will be in Shanghai but India will be the first President of the Bank.

Indian Participation in APEC

India can also now look forward to become a member of the 21-nation  Asia-Pacific Economic Cooperation (APEC)  grouping as Chinese President Xi Jinping has invited her to the APEC meeting in China in the coming November in Shanghai. India has never attended an APEC summit, and has long sought to become a member to help boost its economy. New Delhi’s bid to become an APEC member has been stymied for two decades because its economy wasn’t integrated into the global system and in later years because of a membership freeze.

Geographically speaking, the Asia Pacific region includes all the littoral and island states of South Pacific, Australia, New Zealand, Northeast, Southeast and South Asia. But geopolitically, the Asia Pacific region has been defined somewhat narrowly to include the two Super Powers, the United States and the erstwhile Soviet Union (which disintegrated in 1991), two regional Great Powers – China and Japan, few emerging economically strong sub-continental powers like South Korea, Singapore and India and other vibrant economies and smaller countries of the region.

India’s membership would enhance the effectiveness and importance of the APEC and prove beneficial for India. As a member of the G20, the ASEAN Regional Forum and the East Asia Summit, as well as an ASEAN dialogue partner, India is already capable of playing a very crucial role in deepening trade and investment in the region. India has followed its ‘look east’ policy from 1991 and has signed trade agreements with South Korea, Japan, ASEAN, Singapore, Thailand and Malaysia. India is also a potential production network hub for the region, and being a part of the APEC would encourage India to speed up its trade liberalisation process. Indian membership in APEC, therefore, will enhance capacity building and trade and investment cooperation in the region.

The APEC includes Canada, Mexico, Russia and the United States and accounts for about 40 percent of the world’s population, 55 percent of global gross domestic product and 44 percent of world trade.

The Chinese President Xi not only invited India to the APEC meet but asked India to deepen its involvement in the Shanghai Cooperation Organization (SCO), which includes only six nations – China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan.

As an observer, India participates in Shanghai Cooperation Organisation

A February 2014 visit by the Secretary-General of the SCO to India highlighted the importance of the SCO in India’s larger relations with Central Asia and South Asia. So far, China seemed to be a bit reluctant vis-a-vis India. Beijing so far wanted to use the SCO as a bargaining card with India to get an entry to the SAARC (South Asian Association for Regional Cooperation).

The SCO’s importance cannot be understated. The region covers almost 60 percent of the total Eurasian landmass, with over 1.5 billion in population (a quarter of the world’s), including some of the world’s leading energy-rich nations. With observer states included, its affiliates account for about half of the human species. It is this richness and political potential of the area that attracts India towards the SCO.

SCO is a Eurasian political, economic and military organisation which was founded in 2001 in Shanghai by the leaders of China, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. Except for Uzbekistan, the other countries had been members of the Shanghai Five, founded in 1996; after the inclusion of Uzbekistan in 2001, the members renamed the organisation as SCO. India is among the 11 countries enjoying the status of Observer States.

The SCO is primarily centered on its member nations’ Central Asia security-related concerns, often describing the main threats it confronts as being terrorism, separatism and extremism. However evidence is growing that its activities in the area of social development of its member states are increasing fast.

However, he naysayers have started picking holes in the structure, focus and potential limitations of the new bank. Nyshka Chandran for CNBC wrote that the selection of Shanghai as the headquarters for the BRICS Development Bank can hurt Narendra Modi’s domestic ratings. Quoting Aditi Phadnis who is also a South Asia Advisor at Teneo Intelligence, the CNBC report argued that Narendra Modi has been outmanoeuvred:

“With Shanghai rather than Mumbai as the headquarters for the new BRICS (Brazil, Russia, India, China and South Africa) bank, Modi will have to return home empty-handed.”

Even when the agreement had not been signed, The Reuters, a Western news agency had expressed apprehension by stating that the bonhomie was partially overshadowed by news that the BRICS groups – Brazil, Russia, India, China and South Africa – had not yet decided on where to locate the headquarters of the development bank they were expected to launch.

Discounting these apprehensions, during the wide-ranging talks on an entire gamut of bilateral ties between the two Asian giants, Modi underscored India’s priorities by emphasising the importance of resolving the boundary dispute, saying it would set an example to the world on conflict resolution. He also insisted to the Chinese President Xi that peace and tranquility must be maintained on the border until the resolution, a reference to frequent incursions by Chinese troops across the Line of Actual Control.

Xi also called for speedy negotiations to settle disputes over the 4,000-km (2,500-mile) Himalayan border over which India and China went to war in 1962 and which flares time to time over allegations of cross-border incursions.

“Xi suggested the two sides manage, control and handle differences with a positive and forward-looking attitude and find fair, reasonable and mutually acceptable solutions to their border issues at an early date,” Xinhua quoted him as saying.

China claims more than 90,000 sq km in the eastern sector of the Himalayas. India says China occupies 38,000 sq km of its territory on the Aksai Chin plateau in the west.

The meeting — the first between the two leaders — was scheduled for 40 minutes but it went on for 80 minutes as it was a free-wheeling discussion without any constraints.

Modi has sought to build on a booming trade relationship with China while trying to balance India’s security interests. He also sought Chinese investment in Indian infrastructure projects which he suggested to Xi would help address the trade imbalance currently in Beijing’s favour.

Anil Maheshwari

Anil is a senior journalist and a published author. He's published 6 books including “Aligarh Muslim University: Perfect Past and Precarious Present”
  • sharky

    Asian century

  • Amak4u

    APEC is being given far too much importance than it deserves. If India independently as well as BRICs were to become strong, ASEAN and APEC would be of little relevance. In any case economically atleast, the WTO agenda seeks to replace these regional groupings.

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