Getting to grips with the BRICs: Foreign Office insights for the City

FOUR former British Ambassadors to Brazil, Russia, India and China gathered recently at the Royal Automobile Club in SW1 to discuss these fast-growing economies, collectively nicknamed the BRICs. The objective was to help an audience of business people better understand how these countries see themselves in the context of their emerging status as world powers; who are their friends and chief rivals, what are the geopolitical challenges that most pre-occupy their governments?

The four panellists – Dr Peter Collecott (Brazil, 2004/8), Sir Anthony Brenton (Russia, 2004/8), Sir Michael Arthur (India, 2003/7) and Sir Christopher Hum (China, 2001/5) – were expert, candid and realistic. The discussion was private but they have kindly allowed me to summarise their key points.

1. THE CRUCIBLE OF THE PACIFIC
The Pacific Ocean has replaced the Atlantic as the crucible of world events. This transition is hardly news, but it is now well underway, accelerated by the economic crisis, and its consequences are so serious and challenging for the West that we shouldn’t miss an opportunity to remind ourselves that we are living in a new world order. For the BRICs this transition creates opportunity, and threats. Indo-Sino-US rivalry in the Pacific will be the defining dynamic of 21st-century geopolitics (more on this later). Russia, which maintains its Pacific Fleet at Vladivostok (and nine time zones to the west, the Black Sea Fleet at Sevastopol), looks on with unease. In 2008 a Sino-Russian agreement resolved long running border disputes between Moscow and Beijing but, warned one of the ambassadors, “Russia is empty, and China is full” – Russia’s porous southern border with China will give Moscow a headache, as well as a business opportunity, for the foreseeable future. Only Brazil has no active interests in the Pacific Basin.

2. A GATHERING STORM IN ASIA
One of the ambassadors compared South East Asia’s geopolitics with those of Europe in the first decade of the 20th century. This does not mean conflict is inevitable, he stressed, but tensions will develop as the Pacific Rim’s emerging powers seek to exert influence in a confined geographic space which the US perceives to be vital to its own interests. China and India are commissioning blue water navies; India’s Ministry of Defence has pledged to spend $100bn (£64bn) modernising its armed forces in the coming decade. Tensions will emerge and these will have to be managed. Brazil is well out of it.

3. FOUR VIEWS ON AMERICAN POWER
Each of the BRIC states is obsessed by the US. All of them have a thriving economic relationship with the world’s leading importer, and they see the US as the place to educate their elites and a cultural force that continues to exert a massive influence and pull on their citizens. But each BRIC has a different political perspective on the US:

● For Brazil, the US is a regional paterfamilias; someone with whom it wishes to enjoy close relations, but one it also wishes would cease meddling in its backyard, and treat it more like a grown-up.

● Obama’s reset has transformed the relationship between Washington and Moscow; witness the recent deal between NATO’s leaders and President Medvedev which brings Russia inside NATO’s once-contentious missile defence programme, and Russia’s discreet help for NATO in Afghanistan. Fear of Islamic terrorism, and China’s growing power, will gradually push Russia westward.

● India’s goodwill towards the US is uncomplicated: most of its best young men and women now go to American universities and Silicon Valley buzzes with Indian expats. The world’s two most important democracies are establishing a strategic partnership – witness their 2008 civil nuclear agreement and a developing defence relationship. Barack Obama made a state visit to New Delhi in November, when he blessed India’s campaign to become a permanent member of the UN’s Security Council and encouraged the Indian Air Force to modernise its fleet of multi-role combat aircraft with Super Hornets and F-16s. The US sees an armed, regionally active India as a useful balance to China. So does New Delhi.

● Obama calls China “our vital partner and competitor”. Of all the BRICs, China is the most committed to rival America as a world power. Analysts predict China could overtake the US economy (in terms of GDP) as early as 2020 and the prospect fills Chinese policy makers with pride, as China re-asserts itself as a world power, and trepidation, as they anticipate the response of the US, and consider how to weight their diplomatic and military programmes to match China’s economic muscle. The Chinese leadership feels vindicated by the economic crisis, and the fault-lines it has revealed in Western capitalism. But the Chinese and the US economies are highly interdependent; and the scale of China’s domestic challenges stops Beijing from feeling too sure of itself. So does the knowledge that China cannot match US military power for the foreseeable future (the US Pacific Fleet consists of around 180 ships, nearly 2,000 aircraft and 125,000 sailors, marines and civilians). China’s two regional priorities are to protect China’s extended shipping lanes and to restore sovereignty over Taiwan. No wonder China is currently building its own aircraft carriers.

4. THE EUROPEAN UNION SIDESHOW
None of the BRICs take the European Union seriously. They are confused by its complex structure and unmoved by its demonstrations of soft power. China welcomes the EU’s commitment to a multi-polar international system, but Beijing prefers to deal directly with what it regards as Europe’s principal powers (Germany, France and the UK, probably in that order). India feels comfortable with Europe, and especially the UK; Britain needs to do more to turn this goodwill into a meaningful partnership (hence the unprecedented scale of David Cameron’s visit to India in July). But like China, India prefers to do its diplomatic business bilaterally. Ditto Brazil. Russia has the deepest relationship with the EU, and this looks set to grow as Chinese power in the Pacific pushes Russia west, and the EU works hard to accommodate it.

5. NEW RIVALS TO OUR KNOWLEDGE
The BRICs all aspire to be knowledge economies, something that too many in the West still regard as a natural monopoly of the old world. Russia sits on a first-class science and engineering base. India is one of the few powers to have developed a nuclear capability without external assistance. Many of India’s software firms are now world leaders. Brazil’s biodiversity and technological base has made it a global centre for agritech and biotech research and development; Embraer, an aviation conglomerate based near Sao Paolo is now the third largest commercial aircraft manufacturer in the world. China knows its growing prosperity is eroding the competitiveness of its low-tech, high-volume manufacturing base; it too is moving up the value chain. In 2008 the government set up a passenger aircraft manufacturer, Commercial Aircraft Corporation of China (COMAC) to reduce the country’s dependency on Boeing and Airbus.

6. SOME THINGS WON’T CHANGE
The discussion closed with a consensus that in 2050 China would be the largest economy in the world, but that the US would still be the world’s pre-eminent power.

Alex Hickman, former foreign affairs adviser to David Cameron (2006/7) is managing partner of Chartwell. www.chartwellpartners.co.uk