THE heady days of the early 21st century are over. The overblown claims attending the gathering of the so-called Brics countries (Brazil, Russia, India, China and SA ) in New Delhi last month shows us one thing: the Brics were once the future but the dream has started to dissolve.
I am sorry to say it, but the tragi comedy over the leadership of the World Bank, just as was seen last year with the International Monetary Fund (IMF), demonstrates that these Brics are made of straw. We once thought the emerging economies would pull the global economy through its morass. But we are no more out of it than three years ago.
The US will pull out of the mire, but no thanks to the Brics. The euro area will stagnate. No one can help Europe unless it shows better leadership. We may well have to rely on the US, once again, to show its leadership qualities.
The world has to get back to the fundamentals of economics and not expect political economy manoeuvres such as the Brics construct to get us out of the mess. This means fiscal responsibility and good growth. The constant interplay of politics with economics may occasionally give us what masochists call fun, but it gets in the way of clear thinking.
The notion that Brazil, Russia, China and India constitute a homogenous group is the result of a public-relations stunt by Goldman Sachs. Then they threw in SA, just to increase the heterogeneity. SA is not in the vanguard of African growth. It is there because of its size. To think this bunch can cohere is not very coherent.
The Brics were once rapidly growing economies. The "southern engines of growth". The description is no longer apt. India has slowed down from its 8,5%-plus growth rate to less than 7% and is going down. China has decided as a policy measure to go for 7,5% rather than double-digit figures. As for the other three, they do not even clear the 5% bar.
So where do we see the Brics countries' commonality? One aspect became clear in New Delhi: their anti-US foreign policy posture. On Iran, they don't like US bullying. On Syria, they are happy for President Bashar al-Assad to go on killing his people as long as the Americans are against him.
The one economic issue that came up is their intense dislike of quantitative easing, or a "monetary tsunami" as Brazilian President Dilma Rousseff called it. The Brics see it as an exchange rate war, shifting the developed economies' problems offshore. Indian Prime Minister Manmohan Singh complained about volatility in capital flows, though India's current problems are as much home-grown as due to quantitative easing.
The relevance of Brics lies in the group's negative force. It thrives as long as the US is uncertain about its economic strength. The presidency of the World Bank has bubbled to the surface thanks to the persistent anomaly of the postwar settlement on the Bretton Woods institutions' leadership. At the IMF, a lukewarm coalition threw up a rival to Christine Lagarde but lost. Now with the World Bank presidency, US President Barack Obama has played a blinder, pushing through a Korean-American health expert, Jim Yong Kim. The ploy is so clever, it's almost unfair.
With Kim's victory, US hegemony has been well and truly reasserted. After all, we now see the US at probably the weakest it has been in recent years. I predict the US will be back in good growth territory by the middle of next year. The Brics, on the other hand, will be struggling to prove they're anything more than an uncomfortably anti-US Cold War remnant.
As we all know, "It's the economics, stupid!" The Brics countries had a good run but have now halted their march. China is having a difficult transition. We don't know whether there was an attempted coup by the friends of Bo Xilai, but the Maoists have always harboured opposition to liberalisation. Similar forces in India's Congress Party have been inclined to obstruct economic reforms.
The Brics group has passed its zenith. It doesn't provide the answer to the world economy's many unsolved problems.
If you want good leadership, don't grasp at straws.
. Desai is chairman of the advisory board of think-tank OMFIF, an emeritus professor at the London School of Economics and a Labour peer. This article first appeared in the OMFIF bulletin.