Rising World Powers Align

Washington pushes further away.

The coalition of major developing nations known as BASIC (Brazil, South Africa, India and China) continues to pull closer together while becoming more alienated from the United States. The Obama administration has made constant pushes to limit BASIC's economic growth in an effort to curb their greenhouse gas emissions. However, the agenda of BASIC at the United Nations has been to pressure the industrialized nations (America, Europe, Japan) to commit to ambitious cuts in emissions while staying free of any restrictions on their own activities. They have also demanded technical and financial support to speed the transfer of production capabilities from the West to the Third World.

The three core members of BASIC are also part of BRIC (Brazil, Russia, India and China.) The BRIC group met in Brasilia on April 14-16 to draw up a common plan for a “new international order” to be presented at the G20 meeting in June. The BRIC nations account for 42% of the world's population but only 15% of the world's gross domestic product. Promoting economic growth to improve per capita incomes and living standards is their top priority, but they believe they will need greater political clout in world affairs to gain the wealth they seek.

The Chinese Ministry of Foreign Affairs' report on the meeting between President Hu Jintao of China and President Luiz Inacio Lula da Silva of Brazil at BRIC emphasized “investment cooperation" between the two countries which would entail that "both sides...actively encourage two-way investment...in the areas of energy, mining, agriculture, industry and infrastructure construction.” Brazil has been leery of China’s economic pattern in Latin America which resembles that of the old colonial model. Beijing trades manufactured goods for raw materials and fuel which stunts the economic development of its trading partners. In the case of Brazil last year, 76.8% of exports to China were basic products and 98.1% of Chinese imports were manufactured goods. Trade rose from $6.7 billion in 2003 to $36.1 billion last year, with China surpassing the United States as Brazil’s main trading partner.

In the wake of the international financial crisis, any inflow of capital is welcome in Latin America. China has been investing in the mining and the oil industries and in building infrastructure. A common interest in promoting growth and a shared antipathy towards the United States is pulling Brasilia and Beijing together despite concerns in Brazilian industrial circles about the influx of Chinese goods. The developing countries hold the American banks responsible for the financial crisis, which they see as another negative manifestation of U.S. "hegemony.” Calls for global financial reform and a “multipolar” world were major BRIC themes articulated by all four nations.

The first BRIC meeting was held in June, 2009. The central topic was the need to move trade away from dependence on the dollar as the world’s reserve currency. At Brasilia last week, Russian President Dmitry Medvedev again raised this issue. His statement called for “multilateral cooperation in nuclear energy, aircraft engineering, space exploration and nanotechnologies. Such cooperation can be enhanced through financial interaction of the BRIC countries, in particular in the form of agreements on the use of national currencies in mutual trade.” While still well short of calling for a new non-dollar reserve currency, in its final statement, BRIC called for a greater role of its members in the International Monetary Fund and World Bank.

At the BRIC summit, President Hu spoke of the same goals of an international transfer of wealth as China has insisted upon in the UN climate talks. He said the developed countries should honor their commitments of increased assistance, debt relief, market access and technology transfer while helping developing countries promote economic growth and improve people's well-being. Indian Prime Minister Manmohan Singh joined in, calling for a “multipolar” world order in which the UN would play a central role.

The unity on economic goals provides a foundation which allows Beijing and Moscow to pull Brasilia and New Delhi in their direction on other strategic issues. Though Iran was not mentioned in the final BRIC communiqué, Lula made Brazil’s opposition to new UN sanctions on Tehran known at the close of his private meeting with Hu. Indeed, Brazil’s position seemed identical to China’s.

Though President Obama tried to give the impression that he had persuaded President Hu to support new sanctions on Iran when they met at the Nuclear Security Summit, this was not the case. When Chinese Foreign Ministry Spokesperson Jiang Yu was asked about this at a press conference April 13, he stated, “On the Iranian nuclear issue, our position has been consistent....Sanctions and pressure are not the fundamental way out. Relevant actions of the UN Security Council should be conducive to the turn-around of the situation and proper settlement of the issue through dialogue and negotiation.” News reports cited Brazilian officials as saying that their country shares “great affinity” with China over what course to take on Iran.

The visit to Brazil by Secretary of State Hillary Clinton in March proved a failure. Clinton had urged Brazil, who currently holds one of the rotating seats on the UN Security Council, to support sanctions. But she had combined talks about Iran with discussions about how to move the UN climate talks forward, a combination that did not go over well. Brasilia kept its distance from Washington DC on both issues.

After the BRIC summit, President Hu had to return home to deal with the Tibet earthquake, but the Chinese delegation continued on to Venezuela as planned. The rabidly anti-American strongman President Hugo Chavez was offered $20 billion in “soft loans” from the state-owned China Development Bank and a $16 billion investment package for oil development in the eastern Orinoco region. The loan will be paid back with increased oil exports to China. Venezuela has already increased oil shipments to China by 21% over the last year while cutting back exports to the U.S. Beijing’s strategy has been to lock up oil supplies rather than be dependent on a volatile world market where increasing demand is driving up prices.

Earlier in April, Russian Prime Minister Vladimir Putin traveled to Venezuela and promised to help build a nuclear power plant. Putin also discussed arms sales and cooperation on a space program.

The coalition may expand further, as it has been suggested that Indonesia join both BRIC and BASIC.

The Obama administration seems asleep at the switch as new powers not only rise, but cooperate on strategic issues that directly target American interests. If the White House pushes Congress to adopt a crippling energy tax and other restrictions on domestic growth as a result of climate paranoia, the need to adopt universal mandates at the UN will be increased. Unilateral anti-growth policies by the U.S. would put American firms and workers at a terrible disadvantage in global competition. Yet, pushing for UN restrictions on the developing world to make stagnation more “symmetrical” will only make the BASIC-BRIC bloc stronger, with major negative consequences to U.S. security as well as to prosperity in the years to come.