ANAL­Y­SIS: A Brics Plus may bring closer dis­tant ar­eas

The Star Early Edition - - NEWS -

BRICS Plus, the pro­posed ex­pan­sion of the in­for­mal Brics bloc of emerg­ing economies, is likely to ini­tially fo­cus on trans­port and fi­nance, help­ing in­crease con­ti­nen­tal co-op­er­a­tion and bring coun­tries that are very far apart ge­o­graph­i­cally closer to­gether, ex­perts said on the side­lines of the Val­dai Dis­cus­sion Club ses­sion.

Min­is­ter of For­eign Af­fairs of China, Wang Yi said in the spring that China, which holds the pres­i­dency of Brics this year, was hop­ing to ex­pand the club’s reach and scope, es­tab­lish­ing the so called Brics Plus, or part­ner­ships with coun­tries in­volved in re­gional net­works with Brics mem­bers: Brazil, Rus­sia, In­dia, China and South Africa.

The devel­op­ment of re­gional lo­gis­tics and fi­nance across the wider ge­og­ra­phy of Brics will be the pri­mary task of Brivs Plus and its even larger pos­si­ble ex­ten­sion, dubbed Brics Plus Plus, ac­cord­ing to Yaroslav Lisso­vo­lik, the chief econ­o­mist of the Eurasian Devel­op­ment Bank and pro­gramme direc­tor of the Val­dai Club.

“I think the most im­por­tant sec­tor here is lo­gis­tics, trans­port, be­cause you see, the unique na­ture of Brics is that the coun­tries are on dif­fer­ent con­ti­nents and link­ing them in terms of roads, rail­ways and so on, is not doable … This con­cept of Brics Plus, Brics Plus Plus pro­vides a re­gional di­men­sion and ex­pands the po­ten­tial co­op­er­a­tion ge­og­ra­phy of Brics coun­tries and their part­ners and al­lows to de­velop con­ti­nen­tal in­te­gra­tion,” Lisso­vo­lik said.


In Rus­sia’s case, ac­cord­ing to the ex­pert, it could mean the devel­op­ment of in­te­gra­tion with the Eurasian Eco­nomic Union, in­clud­ing pro­jects in in­fra­struc­ture, lo­gis­tics and trans­porta­tion cor­ri­dors.

Another vi­able vari­ant of in­ter­ac­tion for those coun­tries that are sep­a­rated by great ge­o­graph­i­cal dis­tances men­tioned at the ses­sion is the devel­op­ment of pay­ment sys­tems.

Lisso­vo­lik sug­gested the “fi­nan­cial sphere, co-op­er­a­tion in the bank­ing sphere… es­tab­lish­ment of pay­ment sys­tems, pay­ment cards and the pos­si­bil­ity to use na­tional cur­ren­cies more for pay­ments” as key devel­op­ment pos­si­bil­i­ties.

Ac­cord­ing to high com­mis­sioner for fi­nance and in­vest­ment at the Eurasian Eco­nomic Co-op­er­a­tion Or­gan­i­sa­tion, Oleg Preksin, one of the most im­por­tant steps to­ward deeper in­te­gra­tion should be the cre­ation of a joint rat­ing sys­tem within Brics coun­tries.

“I would con­sider the es­tab­lish­ment of a joint rat­ing agency of Brics coun­tries, which other coun­tries may join as a sort of a first step, a core,” Preksin said.

The high com­mis­sioner added that it would not be easy to de­velop trade and in­vest­ments if one had to rely on the so-called big three rat­ing agen­cies, namely Moody’s, S&P and Fitch, for the eval­u­a­tion of part­ners’ risks. Preksin pointed out that the three agen­cies gave triple A rat­ings to a num­ber of low qual­ity as­sets in the past dur­ing the pre­vi­ous global cri­sis, but this was promptly for­got­ten later.


Ac­cord­ing to Preksin, the Brics’ own scale would have to be ap­proved by banks and nec­es­sary re­gional struc­tures, adopted by lo­cal fi­nance min­istries and lo­cal cen­tral banks.

“Then you may de­velop that pay­ment sys­tem, de­velop those (pay­ment) cards, de­velop cur­ren­cies. It is very im­por­tant to de­velop the sys­tem of the in­sur­ance of in­vest­ments, and this is the topic for state-pri­vate co-op­er­a­tion,” Preksin said.

The high com­mis­sioner noted that it would be very dif­fi­cult to cre­ate a cor­re­spond­ing sys­tem through pri­vate com­pa­nies due to the high costs.

“State in­sti­tu­tions usu­ally as­sume re­spon­si­bil­i­ties for po­lit­i­cal risks. This in­sti­tu­tion for Brics coun­tries is in prospect, but it is im­por­tant, it will be formed,” Preksin said.

The ex­pert said that the deeper in­te­gra­tion on a fi­nan­cial level was al­ready hap­pen­ing, al­though it was not as vis­i­ble as the meet­ings of lead­ers. “In fact, very im­por­tant work on form­ing in­fra­struc­ture for mu­tu­ally ben­e­fi­cial part­ner­ship is go­ing for­ward,” Preksin said.

The ex­pert stressed the im­por­tance of us­ing open ar­chi­tec­ture, cit­ing the Asian In­fra­struc­ture In­vest­ment Bank as an ex­am­ple.

The deeper co-op­er­a­tion would go be­yond the eco­nomic sphere and could help gen­er­ally im­prove the stan­dards of liv­ing, ac­cord­ing to Lisso­vo­lik.

The econ­o­mist said that one of the as­pects of Brics coun­tries’ in­ter­ac­tions in the Brics Plus for­mat is the in­ter­ac­tion among their devel­op­ment banks, which are of­ten ori­en­tated to­ward in­fra­struc­ture and man­u­fac­tur­ing, but are also, in­creas­ingly, pay­ing more at­ten­tion to the devel­op­ment of the “hu­man cap­i­tal, ed­u­ca­tion, health care, ecol­ogy-re­lated pro­jects.”


“I think it is very im­por­tant that, in these spheres, this kind of for­mat pro­vides an op­por­tu­nity for Brics coun­tries to play an im­por­tant role in the pro­mo­tion of these larger, let’s say, eco­log­i­cal stan­dards, pro­mo­tion of higher so­cial stan­dards, the devel­op­ment of the hu­man cap­i­tal. This can be done by our coun­tries based on joint fi­nanc­ing, based on the in­ter­ac­tion with new struc­tures, such as the Brics New Devel­op­ment Bank,” Lisso­vo­lik said.

He said this new di­men­sion was only be­gin­ning to gain trac­tion and Brics coun­tries could con­trib­ute to the pro­mo­tion of the new eco­nomic in­te­gra­tion for­mat within the global econ­omy.

Nat­u­rally, bring­ing re­gional net­works into the fold is not with­out its risks, and Brics coun­tries have sev­eral reser­va­tions about this ex­pan­sion.

“The main worry, I think, is the fact, and it has been voiced re­peat­edly, that any ex­pan­sion of the Brics in any way may some­how erode or weaken the in­ter­ac­tion im­pulse among the Brics coun­tries them­selves, within this core, may dis­tract their at­ten­tion, their en­ergy from mu­tual part­ner­ship to some­thing ex­ter­nal, en­large­ment and so on,” Lisso­vo­lik said. The econ­o­mist stressed that he did not see it as a se­ri­ous threat.

“Ob­vi­ously, each coun­try that has the pres­i­dency of Brics sets out these or other pro­jects or goals, based on its own in­ter­ests. To un­der­stand, how com­pat­i­ble they are, we need de­tails, and there aren’t any at the mo­ment,” Ge­orgy Toloraya, ex­ec­u­tive direc­tor of the Rus­sian Na­tional Com­mit­tee on Brics Re­search, said.

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