Following the end of the Shanghai Cooperation Organization Summit (SCO), the leaders of the BRICs - Brazil, Russia, India and China met formally for the first time on June 16th. This leaders meeting caps a series of ministerial gatherings of either the BRICs or the G5 (Brazil, Russia, India, China, South Africa and Mexico).
In the run up to the Leaders meeting there was much speculation over the Leaders’ possible statements or actions in reducing the reserve currency role of the US dollar. But as noted by ‘Dr. Doom,’ Nouriel Roubini, Professor of Economics at the Stern School of Business at NYU, in an online piece on Forbes.com, “the inaugural summit focused primarily on forging common positions on financial regulatory reform and climate change, rather than foreign exchange rate management.” Still the fact that these Leaders met at all is slightly stunning and adds to the overall momentum for large emerging economies collaborative efforts. But we need to be realistic about such collaborative action.
The large emerging market powers, whether in the G5 or the BRIC gatherings, are making their collective presence known. However, much of their focus is on the global financial crisis and the Leaders club - the G20. The G5 and BRIC gatherings have called for coordination and have identified the G20 as the appropriate forum for such collaboration. In the Sapporo Declaration of July 8, 2008 the G5 declared:
Given current global macroeconomic imbalances, it is essential to enhance policy coordination not only among advanced economies but also with emerging market economies, including by reinforcing existing multilateral mechanism for Coordination. The Financial G-20 is an appropriate forum for this endeavor.
And the BRIC Finance Ministers just prior the G20 Leaders meeting in London expressed their support for the G20:
We consider that the G20’s position as the focal point to coordinate with global economic and financial challenges and to lead international efforts responding to the current crisis should be consolidated.
Finally, in their joint statement following the historic Leaders meeting, the BRIC leaders declared:
1. We stress the central role played by the G20 Summits in dealing with the financial crisis. They have fostered cooperation, policy coordination and political dialogue regarding international economic and financial matters.
2. We call upon all states and relevant international bodies to act vigorously to implement the decisions adopted at the G20 Summit in London on April 2, 2009. We shall cooperate closely among ourselves and with other partners to ensure further progress of collective action at the next G20 Summit to be held in Pittsburgh in September 2009. We look forward to a successful outcome of the United Nations Conference on the World Financial and Economic Crisis and its Impact on Development to be held in New York on June 24-26, 2009.
Too many commentators have been quick to declare the successful collective leadership either for the BRICs or the G5. It is evident that these countries are exploring collective action but there is a long way to go before declaring these clubs a permanent presence. Meanwhile that leadership of the emerging market countries is focused on the G20 and its attention on the global financial crisis.