Whether the BRICS countries stand united and whether their cooperation mechanism functions smoothly will be crucial for the development of the bloc, the commentary said. (Express Photo)Whether the BRICS countries stand united and whether their cooperation mechanism functions smoothly will be crucial for the development of the bloc, the commentary said

Brazil’s interim President Michel Temer’s major policy shift has posed a test to the capability of BRICS as the new government has relegated cooperation with the five-nation bloc to “secondary place”, Chinese state media said today.

Outlining China’s thinking towards the political crisis leading to the ouster of President Dilma Roussef, who was suspended from office pending her impeachment trial, a Xinhua news agency’s commentary quoted analysts as saying that Brazil’s interim government is likely to put its cooperation with other BRICS countries – Russia, India, China and South Africa – in a secondary place.

Whether the BRICS countries stand united and whether their cooperation mechanism functions smoothly will be crucial for the development of the bloc, the commentary said. Brazil always valued its cooperative relations with other BRICS countries after the birth of the bloc in 2009. However, the political developments since the suspension of Rousseff are resulting in readjustment of its foreign policies.

Interim Foreign Minister Jose Serra outlined new priorities in foreign policies, saying Brazil would instead put emphasis on bilateral ties with Argentina and Mexico and, meanwhile, make it a priority to restore the “traditional partnerships” with the US, Europe and Japan, it said.

On cooperation with other BRICS countries, Serra said Brazil will seize opportunities brought about by this mechanism with an eye to enhancing trade and investment cooperation among its members. A subtle difference was noticed from the terms frequently used by Rousseff such as “strategic cooperation” and “diplomatic priorities”, the commentary said.

Amid the volatile political situation in Brazil, the fate of Rousseff remains to be seen before the last two rounds of vote at the Senate.

Zhou Zhiwei, Executive Director of the Brazil Research Centre, a unit of the Chinese Academy of Social Sciences, said that no matter what the final result is, the fermenting political crisis could lead to a “backtrack” in the foreign policy of Brazil and affect its dedication to the BRICS mechanism in the short term.

The term BRIC, coined by Goldman Sachs Chief Economist Jim O’Neill in 2001, refers to the grouping of the four fast- growing emerging economies of Brazil, Russia, India and China.

In 2006, Goldman set up the BRIC Fund, which generated fairly good returns for its investors in the first few years. However, with sharp declines in prices of commodities since 2013, BRICS experienced a slowdown in economic growth. Brazil and Russia even registered negative economic growths.

In November last year, the BRIC Fund was finally closed, the report said.

“Western media see the closure as a sign of BRICS on the decline, and some even started to talk about the “death of BRICS” and the potential collapse of the cooperative mechanism among the bloc members,” the report said.

The unfavourable external environment might be an incentive for the members of the bloc to boost their cooperation, Zhou, holding a different point of view, said.

“The fundamental strengths of BRICS, such as the market and population mass, won’t go away for the cyclical downturns of some BRICS members. They still will shine in future economic development,” Zhou said.

“Since the creation of the BRICS summit, the bloc has been more than just an economic concept. It is a platform for the emerging economies to exert their influence on the global economic arena,” Director of the Centre for BRICS Studies at Fudan University Shen Yi said.

In July 2014, BRICS leaders unveiled plans to establish the New Development Bank (NDB) and a contingent reserve arrangement (CRA). A year later, the NDB was formally established, headquartered in Shanghai. The move, aimed at boosting the independence of developing economies, has been viewed by Western media as an attempt to challenge the existing international financial framework dominated by developed economies.

In a sign of its efficiency, the NDB announced in April that it will provide USD 811 million financing for four renewable energy projects in Brazil, India, China and South Africa.

In the wake of Rousseff’s suspension from office, it is possible for Brazil to backtrack in its foreign policy, Zhou said as he suggested that the BRICS countries strengthen their economic ties and optimise the NCB and CRA mechanisms so as to avoid their cooperation being affected by the potential spill over from domestic political changes.

It is important for the BRICS members to meet on the sidelines of multilateral conferences to coordinate their policies, Zhou said. The BRICS countries can further their cooperation in market access, foreign reserves and counter-cyclical long-term loans, Shen said, adding that China could play a leading role in prompting BRICS members to strengthen their cooperation mechanism in face of crises.

“In this way, BRICS could evolve into a more closely knit community underpinned by common interests and have more say in global economic governance,” Shen added.