Towards a Euro-BRICS mini-summit
Posted by seumasach on January 27, 2013
A recommendation to Euro-BRICS leaders: Organize a mini Euro-BRICS Summit, ahead of the St Petersburg G20, in order to develop common strategic positions to exit the crisis and bring global governance into the XXI° century
16th January, 2013
As a result of the 3rd Euro-BRICS seminar organized by LEAP in partnership with MGIMO in Cannes on September 27-28, 2012, the experts from Euroland and BRICS countries who gathered for the occasion, wished to give their leaders a series of arguments in favour of holding a mini-Euro-BRICS summit ahead of the St Petersburg G20. This recommendation is in line with two other warnings given to the G20 leaders in 2009 (Open letter to the London-G20 leaders, 03/24/2009) and in 2011 (Advice to the Cannes-G20 leaders, 09/15/2011) relating to the management of the global systemic crisis at the initiative of Franck Biancheri, director of Studies and Strategy at LEAP, who passed away last October 30th. This letter is also intended as a tribute to all the energy he expended over four years, despite his illness: explaining the crisis, formulating policy recommendations to solve it, and creating the tools to make these recommendations heard.
In 2013, the world realizes that the U.S. debt that weighs so heavily on the global economy, has no solution: its astronomical size and the extreme weakness of economic fundamentals in the United States leave nothing more than to predict the collapse of the international currency as the inevitable consequence of and solution to the U.S. debt crisis. Thus the global crisis is about to experience a new dramatic development. The question is: Is the world prepared to bear such a shock?
Indeed, since the first signs of the crisis in 2008, the rest of the world has worked well, especially in one objective: to dissociate itself from the faltering U.S. power and make every effort to avoid being dragged into its probable collapse.
Among the many measures in the world, two are noteworthy:
. the significant strengthening of Euroland: helped in this by the frontal attack led by the Anglo-American financial system against the Euro, the Europeans have stood firm, closed ranks, made courageous decisions, introduced innovative mechanisms (MES, banking union,…), increased the role of the ECB,… In 4 years, Euroland has become a reality now calling for a new step of political union which is finally starting to be debated, an entity rooted in the world of the 21st century, and the new engine of European integration.
. the alliance of five major emerging powers of this young 21st century: the BRICS (Brazil, Russia, India, China and South Africa). This group, club, or network, is a promising future bearer of innovation in many ways: participating in all the upward-curves of global statistics such as growth, demographics, geopolitical influence, energy consumption, quality of life and expectancy, etc., the BRICS are five countries that the 21st century will de facto have to cope with. These five countries are also the flagships of continents and, for most of them, of regional entities covering covering almost the entire non-Western world.
Euroland and the BRICS share another eminently modern characteristic: one asset of the BRICS is the structural lightness of their association that allows them to focus their energy on goals rather than on the construction of some institutional structure. Euroland also, despite the absence of any legal reality, is de facto the new engine of European integration, leaving the heavy machinery of the EU institutions far behind. At the time of the Internet, video-conferencing and networking, the project prevails, and entities which have understood this have a considerable advance in efficiency over all others.
Euroland and the BRICS also have a common difficulty to be officially recognized as something other than a monetary union on one side and an economic alliance of the other. But since the world pretends to ignore them, why not start recognizing one another through the holding of a first official meeting together?
Finally, many common interests bring Euroland and the BRICS closer, starting with their desire to create a new international reserve currency based on a basket of key international currencies (U.S. Dollar, Euro, Pound, Yen, Yuan, Real, Rouble, gold …) instead of the U.S. Dollar alone, now unable to take on the role as a pillar of the global monetary system.
While these two entities were gaining weight and structure, G20 Summits followed one another, all of them devoted to the resolution of the crisis but none putting the central question of replacing the basic currency of the global economic system on the agenda (ie the U.S. Dollar, a currency exposing the world to the vagaries of its volatile economy in decline, a currency now unrepresentative of the multi-polar world economy, a central cause of today’s disorders and of even greater disorders tomorrow) by a basket of currencies, called the “Global” for example.
In 2009 (ahead of the London Summit) and in 2011 (ahead of the Cannes Summit), LEAP issued two strong recommendations for the G20 leaders. Meanwhile, this issue has begun to be advocated by actors of more significant size, such as China for example. But the subject failed to be seriously tackled in international fori, revealing the influence of some countries on global governance bodies, and forcing the others to build their economic and monetary decoupling strategies outside this framework.
While everyone calls for the adaptation of international institutions to the characteristic of today’s world, the failure of this reform gives way to the logic of blocks and all the risks they convey.
In its second open letter to G20 leaders in 2011, LEAP mentioned a window of opportunity of two years (2012-2013) opened by the coming to power of a new generation of leaders: « Mexico, South Korea, China, Indian France, Italy, Germany… from the end of 2012, the G20 Summit would bring together political leaders mainly elected “in the crisis”, and not before the crisis as was the case before ». This feature was considered auspicious in terms of the ability to get rid of certain blocks from the G20 table.
As regards the next summit more specifically, that scheduled for September in St. Petersburg, it focuses much hope of renewal because it will be the first to be held outside the Western sphere of influence and the world can a priori rely on Vladimir Putin not to hesitate and put on the agenda sensitive subjects including, hopefully, the question of the reform of the international monetary system.
That said, if putting this question on the agenda would be undeniable progress, it is not certain that the powers gathered around the table will be able to seize the opportunity, despite all their individual goodwill: partly divided goodwill is not able to make a difference.
Another potentially positive aspect consists of the fact that the BRICS will probably – but not certainly – put their alliance to service this cause. Of course, the BRICS have an interest to see a new international currency put in place, but they also have other options available to them, those related to the logics of blocks which have already been mentioned. All the more since, even by combining their five influences, they still lack weight for a real rebalancing of powers.
In contrast, a Euro-BRICS alliance is capable of creating a real majority in the G20: accounting for nine out of twenty of these powers sitting at the table, a Euro-BRICS front defending a project acknowledged as a bearer of positive evolution, is able to win the support of the whole group, marginalizing the few voices that will inevitably rise against.
But such an alliance cannot be improvised. It is for this reason that this third exercise of politico-strategic recommendations is intended for Euro-BRICS leaders of the G20 and focuses on one single recommendation: in the framework of the BRICS Summit scheduled by President Putin on the sidelines of the G20, to plan a first Euro-BRICS mini-summit preparing for the definition of common positions designed to change the balance at work in the decision-making processes of the G20, a body that, if it misses this opportunity to affirm its added-value, will soon disappear from the radar of global governance for the benefit of the great cacophony of supranational entities currently being established throughout the world (CELAC, USAN, MERCOSUR, ALBA, CAN, ALADI, NAFTA, OAS, AU, NEPAD, SADC, COMESA, ECOWAS, WAEMU, CEMAC, Arab League, EU, EFTA, ASEAN, ASEAN+3, EAC, BRICS, CASSH, Eurasian Union, etc …).
From the reconnection of the G20 to global reality, everyone would be a winner, including the powers that are so fiercely opposed to it. A multi-polar world under the auspices of a renovated global governance, or national and supra-national competing blocks, Euro-BRICS leaders have the cards in hand to steer the world in one way or another.