Information Bulletin of the BRICS Trade Union Forum
Issue 41.2017
2017.10.02 — 2017.10.08
International relations
Foreign policy in the context of BRICS
Samir Saran / The next ten years of BRICS - will the relationship last? (Самир Саран / Следующие десять лет БРИКС - будут ли эти отношения продолжаться?) / India, October, 2017
Keywords: expert_opinion
Author: Samir Saran

Over the years, many observers have expressed skepticism about the BRICS (Brazil, Russia, India, China and South Africa) initiative - and skeptics within the BRICS member states perhaps outnumber those outside.

The reason is a clear lack of traditional logic behind the coming together of these countries. They are dispersed geographically, their economies are in different stages of development and there is a fair degree of ideological dissonance between them. And unlike other economic associations, BRICS does not seek to set up any common political or security architecture.

However, this should not obfuscate the fact that the purpose of BRICS was clear from its inception: to form a convenient and pragmatic 21st-century relationship that pools the influence of its members in order to achieve objectives agreed to by all five countries. In a multipolar world in which economic and political power is rapidly diffusing, the BRICS nations seek to influence and shape the norms of global governance, which have been fashioned by the Atlantic system in the past. BRICS, then, is a coming together of nation states at a particular geopolitical moment to achieve a set of goals.

Each member of BRICS also has their own reason to sustain this plurilateral movement. Russia sees BRICS as a geopolitical counterweight to the eastward expansion of the Atlantic system. For South Africa, BRICS is a means to legitimize its role as a gateway to and powerhouse of the African continent. BRICS allows Brazil to collaborate in the shaping of the Asian century, despite its geographical location. China participates in the forum because it recognizes BRICS as an important vehicle for fashioning governance systems in which its political influence is commensurate to its growing economic heft. Finally, for India, BRICS is a useful bridge between its rising status as a leading power and its erstwhile identity as the leader of the developing world.

How do the BRICS nations sit within the global economy?

The first decade of BRICS

BRICS' first decade saw each of the members laying down groundwork for cooperation, from identifying areas of convergence on political issues to improving economic ties. The level of engagement between its members, ranging from high-level summit and ministerial meetings to various working groups and conferences, has only deepened over that time.

Today there is a fair degree of cooperation on issues such as trade, infrastructure finance, urbanisation and climate change. Moreover, the five members have made modest progress in people-to-people connections. Platforms such as the BRICS Academic Forum and Business Council have proved to be useful in improving their understanding of each other's industry, academia and government.

Undoubtedly, the two most notable achievements of the BRICS have been the institutionalization of the New Development Bank (NDB) and the Contingency Reserve Arrangement.

The importance of these institutions cannot be understated. For one thing, they mark a shift from political rhetoric to delivering concrete results, alleviating some of the skepticism surrounding the BRICS initiative. More importantly, they represent a partial fulfilment of BRICS' core raison d'être: to offer credible alternatives to the Atlantic system of global governance.

While such institutions are unlikely to ever replace the IMF or the World Bank, they represent a fundamentally different governance paradigm. By giving equal voting rights to its founding members and improving reliance on local currencies, the BRICS members are attempting to create a new, non-Bretton Woods template for the developing world to emulate.

The end of innocence

Despite achieving a moderate level of success over the last decade, two recent events have brought the divergence between the BRICS members into sharp focus.

The first is the recent military standoff between India and China on the Doklam plateau, which has effectively brought to an end the naive notion that a comfortable political relationship is always possible amongst the BRICS members. The second is China's efforts at creating a 'BRICS plus' model, a thinly veiled attempt to co-opt nation states, which are integral to its Belt and Road Initiative, into a broader political arrangement.

Both of these events highlight how the foundational principles of BRICS - respect for sovereign equality and pluralism in global governance - are liable to be tested as the five member countries pursue their own national agendas.

However, instead of derailing the BRICS project, these developments are likely to inject a level of pragmatism into the initiative. While BRICS itself is unlikely to form the lynchpin of foreign policy for any of its members, it will continue to be an important instrument in their toolkit.

Essentially, the BRICS members are now likely to realise that the group itself is a 'limited purpose partnership' in which political barriers will always limit the partnership's full economic potential.

The next decade?

If BRICS is to remain relevant over the next decade, each of its members must make a realistic assessment of the initiative's opportunities and inherent limitations.

BRICS did well in its first decade to identify issues of common interests and to create platforms to address these issues. However, new political realities require the BRICS nations to recalibrate their approach and to recommit to their founding ethos.

For one, they must reaffirm their commitment to a multipolar world that allows for sovereign equality and democratic decision-making. Only by doing so can they address the asymmetry of power within the group and in global governance generally. Only this approach will strengthen multilateralism.

Second, they must build on the success of the NDB and invest in additional BRICS institutions. It will be useful for BRICS to develop an institutional research wing, along the lines of the OECD, which can offer solutions distinct from western-led knowledge paradigms and which is better suited to the developing world.

Third, they should consider a BRICS-led effort to meet their commitments under the Paris Agreement on climate change and the UN's sustainable development goals. This could include, for example, setting up a BRICS energy alliance and an energy policy institution. Similarly, the NDB in partnership with other development finance institutions could be a potent vehicle to finance progress towards the sustainable development goals amongst the BRICS members.

Fourth, the BRICS nations can also consider expanding the remit of their cooperation to address emerging areas of global governance such as outer space, the oceans and the internet.

Finally, the BRICS members must encourage direct interactions between their constituents. In the digital age, seamless conversations amongst people, business and academia can foster relationships, which are more likely to cement the future of this alliance than any government efforts.

For the first decade of its existence, the group was powered by a top-down approach with large investments of political capital. The second decade must ride on the energy and entrepreneurship of the citizens and communities that reside within the BRICS countries.
Dilma Rousseff Explains Why BRICS Emergence Is Fundamental Event of the Century (Дилма Руссефф объясняет, почему возникновение БРИКС является фундаментальным событием века) / Russia, October, 2017
Keywords: Dilma_Rousseff, expert_opinion

Former Brazilian president Dilma Rousseff claims that the BRICS club of emerging powers is a key achievement of this century as it created space for action as never seen before.

MOSCOW (Sputnik) — Brazil's former President Dilma Rousseff has praised the BRICS club of emerging powers as a key achievement of this century, in an interview with Sputnik.

Brazil, Russia, India, and China held the group's first summit in 2009 and were joined by South Africa the following year. Together they account for over one third of the world's population and a significant portion of the total output in goods and services.

"There are countries with a large population, vast territories and ample riches. They showed up and created large space for action as never seen before. I think the emergence of BRICS was one of the fundamental events of the 21st century," Rousseff said.

Brazil's impeached president called BRICs the proof that a multipolar world could exist at a time when the United States tried to force its will on the entire region and treated Latin America as its "backyard."

She also accused the administration of sitting President Michel Temer who took over in summer 2016 of blindly following orders of US President Donald Trump.
BRICS Face Internal Challenges as Global Role Grows (БРИКС сталкивается с внутренними проблемами, в то время как возрастает его глобальное значение) / China, October, 2017
Keywords: Expert_opinion, global_governance, internal_challenges
Author: He Wenping

Following the BRICS Summit in Xiamen, East China's Fujian Province, the question is how to build the second golden decade of the bloc. The BRICS (Brazil, Russia, India, China and South Africa) have expanded their "friends" circle with the "BRICS plus" mechanism so that a new cooperation partnership model with other developing countries can be built.

The bloc has entered a new "three-wheel driven" stage that involves economic cooperation, political trust and people-to-people exchanges.

Looking ahead to the next decade, the BRICS countries, as an emerging international actor representing emerging and developing countries, will need to participate in global governance on the international stage with new cooperation structures and concepts. The countries will also need to strengthen their coordination so that they can effectively respond to their domestic challenges involving the economy and society. In this situation, both internal and external high-quality governance is needed.

First, from the perspective of global governance, the BRICS countries play an increasingly important role in participating in and promoting the reform and restructuring of the global economic governance system. In the next decade, this initiative should be continuously pursued and its positive influence should be further spread.

In recent years, there have been adjustments to the world economy and global economic governance system. The BRICS have contributed to the improvement of global economic governance and the construction of international financial security through the establishment of the New Development Bank and the BRICS Contingent Reserve Arrangement.

This year, the BRICS Leaders' Xiamen Declaration adopted a number of concrete measures to promote reform of the global governance system, such as strengthening cooperation among the World Bank, the Asian Infrastructure Investment Bank and the commerce departments of the BRICS countries and improving the global tax system.

Since the BRICS evolved from a Wall Street concept into a diplomatic framework, their economic cooperation and participation in global economic governance has naturally become a priority for them. But the BRICS are increasingly the object of high hopes among the vast number of other developing countries, which hope the bloc can be more involved in global problem solving and creating checks and balances in terms of power politics.

China and Russia are permanent members of the UN Security Council. If the five countries (and if necessary, their dialogue partners) speak to issues related to international peace, security and development, that will be in line with the expectations of the international community. It will also contribute to the common interests of the BRICS themselves as well as other developing countries. Finally, it will help the BRICS set the international affairs agenda, including rule-making authority and the right to join international discourse.

Second, the BRICS must pay attention to their internal cohesiveness - that is, the governance of economic and social issues in and among the BRICS countries. The Sino-Indian Doklam border confrontation before the Xiamen summit chilled relations between China and India, and it raised many worries about the participation of India in the Xiamen summit. The unconditional withdrawal of India from the Doklam area erased the worries, but the incident demonstrated that to construct a peace and security dialogue among the BRICS countries is very important and urgent.

In addition, because the economic structures and development trends of the BRICS countries are very similar, it is inevitable that there will be economic competition and even conflicts. Therefore, it is necessary to establish an arbitration mechanism to resolve such conflicts.

The BRICS need to face these internal challenges and pursue structural economic reforms such as improving their infrastructure, supporting independent innovation and promoting the business environment to boost economic diversification. The future of the BRICS depends on making these internal and external adjustments.

The author is a senior research fellow at the Charhar Institute and a research fellow at the Institute of West Asian and African Studies, Chinese Academy of Social Sciences
BRICS-themed subway train debuts in Xiamen (В Сямэне запущен тематический поезд метро, посвященный странам БРИКС) / China, October, 2017
Keywords: culture, subway

A BRICS-themed subway train started test operations on Friday in the southeastern Chinese city of Xiamen.

The subway train has six carriages, including five carriages representing different cultures of the BRICS bloc -- China, Brazil, Russia, South Africa, and India.

The Chinese carriage is red and displays icons such as the Great Wall and Tian'anmen Square, while the Brazilian carriage is green and decorated with images of footballs and football stars.

The Russian carriage shows off the country's ballet and matryoshka dolls, while the South African carriage displays pictures of diamonds. The Indian carriage depicts elephants and yoga.

The sixth carriage combines cultural elements from all five BRICS countries.

The train has already proved popular among Xiamen residents. Zhang Chunqing, who is from Xiamen, said the train's design is unique and represents the cultures of the countries.

The 2017 BRICS Summit was held in Xiamen in September.

The Xiamen Subway Line 1 launched another three themed trains during its test operations.

The subway's test operations will last until October 11.

Xiamen started construction on the subway line in April 2014 and it will begin trial run at the end of 2017.

Investment and Finance
Investment and finance in BRICS
What Are the BRIC ETFs? (Какие существуют БИФы в БРИКС?) / USA, October, 2017
Keywords: ETF
Author: Mark Kennedy

There are a good many foreign ETFs available if you want to give your portfolio international exposure. From broad-based foreign ETFs to country-specific ETFs to currency ETFs and international bond ETFs, you can invest in multiple ways overseas with ETFs that cover certain regions.

Region ETFs are a hybrid of broad market foreign ETFs and country-specific ETFs. They give investors exposure to regions like Asia, Latin America and the BRIC region, which covers Brazil, Russia, India, and China—thus the acronym.

Although specific ETFs are available for each of these countries, BRIC ETFs have become popular over the years. BRIC investing originated because the four countries are similar in size and economic status, and they're considered to be emerging markets. That's changed over the years, but this is still a popular grouping for investors and especially for ETF investors.

Here are some of the funds you might want to research and keep your eye on if you want to find out if BRIC ETFs are a good fit for your investing strategy,

List of BRIC ETFs

  • BKF - iShares MSCI BRIC Index ETF
  • EEB - Claymore/BNY Mellon BRIC ETF
For those who would prefer to invest in these countries individually, here are lists of those ETFs as well.

List of Brazil ETFs

  • BRAQ - Global X Brazil Consumer ETF
  • BRAZ - Global X Brazil Mid Cap ETF
  • BRF - Market Vectors Brazil Small Cap ETF
  • BRZU - Direxion Daily Brazil Bull 3X Shares ETF

  • BZF - Wisdom Tree Dreyfus Brazilian Real ETF
  • BZQ - Ultra Short MSCI Brazil ProShares ETF
  • DBBR - DBX Brazil Currency Hedged Equity Fund
  • EWZ - iShares MSCI Brazil Index ETF
  • EWZS - iShares MSCI Brazil Small-Cap Index Fund
  • FBZ - First Trust Brazil Alpha Dex Fund
  • UBR - Ultra MSCI Brazil ETF
List of Russia ETFs

  • ERUS - iShares MSCI Russia Capped Index Fund

  • RSX - Market Vectors Russia ETF
  • RSXJ - Market Vectors Russia Small-Cap ETF
  • RUSL - Direxion Daily Russia Bull 3x Shares ETF
  • RUSS - Direxion Daily Russia Bear 3x Shares ETF
List of India ETFs

  • EPI - WisdomTree India Earnings ETF
  • INCO - Emerging Global India Infrastructure ETF
  • INDA - MSCI India Index Fund
  • INDL - Direxion Daily India Bull 3x Shares ETF
  • INDY - iShares S&P India Nifty Fifty Index ETF
  • INP - iPath MSCI India Index ETN
  • INR - Market Vectors Rupee/USD ETN
  • INXX - EGShares India Infrastructure ETF
  • PIN - PowerShares India ETF
  • SCIF - Market Vectors India Small-Cap Index ETF
  • SCIN - Emerging Global Shares Indxx India Small Cap ETF
  • SMIN - iShares MSCI India Small Cap Index Fund
List of China ETFs

  • AFTY - CSOP FTSE China A50 ETF
  • ASHS - db X-trackers Harvest China A-Shares Small Cap Fund
  • ASHR - Deutsche X-trackers Harvest CSI 300 China A-Shares ETF
  • ASHX - Deutsche X-trackers CSI 300 China A-Shares Hedged EquityETF
  • CBON - The Market Vectors China AMC China Bond ETF
  • CHAD - Direxion Daily CSI 300 China A Share Bear 1X Shares ETF
  • CHAU - Direxion Daily CSI 300 China A Share Bull 2X ETF
  • CHIE - Global X China Energy ETF
  • CHII - Global X China Industrials ETF
  • CHIM - Global X China Materials ETF
  • CHIQ - Global X China Consumer ETF

  • CHIX - Global X China Financials ETF
  • CN - db X-trackers Harvest MSCI All China Equity Fund
  • CNXT - Market Vectors ChinaAMC SME-ChiNext ETF
  • CNY - Market Vectors-Renminbi/USDETN
  • CNYA - iShares MSCI China A ETF
  • CQQQ - Claymore China Technology ETF
  • CWEB - Direxion DailyCSI China Internet Index Bull 2x Shares
  • CSXE - WisdomTree China ex-State-Owned Enterprises Fund
  • CYB - WisdomTree Chinese Yuan Fund
  • DSUM - PowerShares Chinese Yuan Dim Sum Bond Portfolio
  • ECNS - iShares MSCI China Small-Cap Index Fund
  • FCA - First Trust China AlphaDex Fund
  • FXCH - CurrencyShares Chinese Renminbi Trust
  • FXI - iShares FTSE/Xinhua China 25 Index ETF
  • FXP - UltraShort FTSE/Xinhua China25 Proshares ETF
  • HAHA - CSOP ChinaCSI 300 A-H Dynamic ETF
  • HAO - Claymore/AlphaShares China Small Cap ETF
  • KBA - KraneShares Bosera MSCI China A Share ETF
  • KCNY - The Krane Shares E Fund China Commercial Paper ETF
  • KFYP - KraneShares CSI China Five Year Plan ETF
  • KWEB - KraneShares CSI China Internet ETF
  • MCHI - iShares MSCI China Index Fund
  • PEK - Market Vectors China ETF
  • PGJ - PowerShares Golden Dragon Halter USX China ETF
  • QQQC - Global XNASDAQChina Technology ETF
  • TAO - Claymore/AlphaShares China Real Estate ETF
  • XINA - SPDR MSCI China A Shares IMIETF
  • XPP - ProShares Ultra FTSEChina 50
  • YANG - Direxion Daily China 3x Bear Shares
  • YAO - Claymore/AlphaShares China All-Cap ETF
  • YINN - Direxion Daily China 3x Bull Shares
  • YXI - Proshares Short FTSE / Xinhua China 25 ETF
Available ETFs can change by the day as some drop off the list and others are added. But this list can give you a place to begin exploring the possibility of this type of an investment.
Interview: China makes impressive strides in innovation: WEF economist (Интервью: Китай делает впечатляющие успехи в инновациях: экономист ВЭФ) / China, October, 2017
Keywords: Expert_opinion, WEF, GCR

GENEVA, Oct. 6 (Xinhua) -- China's economy has made impressive strides in innovation over the past decade and is punching above its weight, World Economic Forum (WEF) economist Thierry Geiger told Xinhua in an interview.

As WEF's head of analytics, quantitative research, global competitiveness and risks, Geiger spoke about China's position in the forum's latest Global Competitiveness Report published last week.

China ranked 27th in the latest global competitiveness index, as the highest ranking among the BRICS countries.

Among the 12 pillars of competitiveness calculated, China made prominent steady progress in terms of technological readiness, goods market efficiency and higher education and training.

"The progress observed in these areas suggests that the government is indeed focusing its efforts on the right priorities, but much remains to be done," said Geiger.

Geiger noted that since the 1980s, China has invested massively in basic education and infrastructure, which contributed to its rapid industrialization. But he said the gains from such investment are tapering off.

"New sources of productivity and growth are now to be found in more sophisticated areas: higher education, technological adoption, market reforms, among others," he said.

In this year's competitiveness index, China best-performing pillars are market size, macroeconomic environment and innovation. China ranks first in market size, considering the size of the domestic and export markets.

"Size matters because of economies of scale in production," noted Geiger, "On the demand side, the sheer size of China's increasingly affluent consumer base obviously lures investors."

Geiger also estimated that the macroeconomic environment remains favorable in China, with low inflation, a high savings rate and a level of debt that is still low.

On China's position regarding innovation, Geiger said, "This is very encouraging and fully in line with China's aspirations of 'upgrading' its economy under the new normal."

However, he noted that for innovation to spread and yield society-wide benefits, "bringing technology to the masses is critical".
How Africa can Benefit From BRICS Partnership (Как Африка может извлечь выгоду из партнерства с БРИКС) / South Africa, October, 2017
Keywords: BRICS_RSA, NDB, expert_opinion
South Africa
Author: David Simmonds

How Africa can Benefit From BRICS Partnership

While South Africa has been a permanent member of BRICS since December 2010, China invited Egypt and Kenya to the 9th BRICS Summit held in Xiamen at the beginning of September 2017. Guinean President Alpha Condé, representing the African Union, had the opportunity to attend as well. This means that more African representatives were present during the last summit than was normally the case.

BRICS is another multilateral platform where Africa can interact with other big developing countries to discuss economic issues and cooperation. With South Africa as a permanent member, Africa is not left out of major decisions made by other developing nations. Africa therefore has the opportunity to contribute to the decision-making process, and reap the benefits from the economic cooperation among the BRICS nations.

BRICS and the African continent

BRICS is mainly a group of developing countries and is an acronym to represent Brazil, Russia, India, China and South Africa. It also represents their growing importance within the global economy. While Brazil, Russia and South Africa have been recovering from economic difficulties, China and India are surging ahead with a relatively high growth. According to World Bank data, China grew at 6.9% and 6.7% during 2015 and 2016 respectively, while the economic growth in India was at 8% and 7.1% during that same period of time.

As for the African continent, it has been growing at a relatively fast pace since 2000. Hence South Africa, as the biggest economy within Africa in the early 2000s, was eventually admitted in late 2010 to have better representation with BRICS. Although South Africa has been facing economic headwinds lately, the overall African continent has been expanding steadily.

In 2013, South Africa hosted the BRICS summit in Durban. It will again have this privilege to organise the summit and host all the other BRICS members in Johannesburg in 2018, next year. This will be a great opportunity to focus global attention on South Africa and the continent as a whole.

Moreover, to enhance the South-South cooperation, the Chinese foreign minister, Wang Yi, put forward the idea of "BRICS Plus", whereby economic cooperation and integration among the main BRICS group can be extended beyond and to other potential countries. Although this initiative is still at its inception, there may be future possibilities of having more African countries joining the BRICS group. Not only will they then have greater opportunities to interlock with the bigger developing countries, but they may also have better access to funding for their economic development.

New Development Bank and financing for Africa

It was after the global financial crisis in 2008 and during the first 2009 BRIC summit that Brazil, Russia, India and China voiced the need for better cooperation among developing countries, since all the major international financial institutions are controlled by the developed nations. Unable to influence these institutions to support their interests, the then BRIC members discussed having greater recognition and strengthening their relationships.

During the 2012 summit in New Delhi, India mooted and pushed forward the idea of having a common bank to support and fund the economic development and infrastructure needs of the members. Eventually, in 2014, during the sixth summit in Brazil, all five members signed an agreement for the creation of the New Development Bank with a capital of US$100bn. Subsequently, it was agreed that the New Development Bank would be headquartered in Shanghai, China, while Kundapur Vaman Kamath from India was appointed as its president.

South Africa, being a founding member of the New Development Bank, will be represented on the board of the bank with the current appointment of Dondo Mogajane. It can now access bigger funds for its development. Furthermore, the first Africa regional office of the New Development Bank was launched in Johannesburg last month.

In 2016, the New Development Bank had disbursed $1.5bn to fund mainly green projects, like renewable energy generation. For 2017, the bank aims to provide up to $3bn in financing to the member countries. And by 2021, up to $15bn is targeted to be dispensed out on relevant projects. In the future, if other African countries have the possibility to be more involved with the BRICS group, the New Development Bank can be an alternative source for major project financing.

BRICS and China's engagement with Africa

China is the world's second-largest economy since 2010. Hence the Chinese leaders are finding that they must be more proactive to shape the global trends for the next stage of its development. It was not until 2012, when the Chinese President Xi Jinping came to power, that China started to be more assertive in global trends and geopolitical issues. This is to preserve its main economic interests and build ties with mutual benefits with all its partners. BRICS is one of the multilateral platforms where China holds talks and engages in dialogue with other countries.

From 2006 till 2016, according to the International Trade Centre, the China-Africa trade increased from $55.4bn to $144.6bn. As for its stock of foreign investments in Africa, it increased from $2.6bn in 2006 to $34.7bn in 2015, according to data from the United Nations Conference on Trade and Development (UNCTAD) and the Chinese National Bureau of Statistics.

South Africa is China's biggest trade partner in Africa and the biggest recipient of its investments. During the last BRICS summit, Egypt and Kenya were invited. Being China's third and seventh-largest African trade partners, Egypt and Kenya traded $11bn and $5.7bn in 2016 respectively. This means that not only do other African countries already have a foot in the door through the South African membership, but they are constantly increasing their engagement with BRICS' biggest member, China.

While Africa was previously mainly a source of natural resources for China, it is now becoming an attractive market for many Chinese companies. Moreover, at government level, China is getting more engaged in Africa's development by providing financial support and technical know-how to build major infrastructure badly needed on the continent. It also seems that China is willing to have other African countries involved within BRICS.

Africa and the future of BRICS

The developing countries of the world will be the engine for future global growth and there is a need to intensify the South-South cooperation. BRICS is a multilateral platform that Africa can use wisely to engage with the other big emerging economies. With the developed nations turning more inwards, the developing countries will have to turn and look after each other for support. While Africa has currently more significant links with China and India, BRICS provides an avenue for Africa to reach out to Brazil and Russia as well.

The two biggest BRICS members, China and India, have also big plans for the future. In 2013, Chinese President Xi Jinping launched the Belt and Road Initiative (BRI) with major projects in 65 other countries, including Africa. Recently, India collaborated with Japan to create the Asia-Africa Growth Corridor (AAGC). Both plans will only bring positive economic spillovers to Africa.

Overall, what this means for Africa is that while it is facing restrictions from the developed countries, it can now turn to the BRICS platform to engage more with like-minded developing countries. In the long term, this will only benefit the African countries.

Richard Li is a Singapore-based Partner with Steel Advisory Partners, a management consulting firm that serves clients across industries. Having spent his working career in strategy consulting, he worked with various global clients and covers themes such as Corporate Strategy, Transformation, Digital Innovation and Risk Management. He can be contacted via the Steel Advisory Partners site. This article was specifically written for the NTU-SBF Centre for African Studies.

BRICS Summit 2017: Another Step to Poverty Alleviation (Саммит БРИКС 2017: Еще один шаг к уменьшению масштабов нищеты) / USA, October, 2017
Keywords: poverty, social_issues, expert_opinion, Xiamen_summit
Author: Shivani Ekkanath

The BRICS nations—Brazil, Russia, India, China and South Africa—account for a massive 30 percent of world's GDP and a high proportion of international growth. These nations are key players on the world stage. The annual BRICS summit has helped galvanize a wide array of infrastructure projects, trade and poverty alleviation initiatives to ensure equitable and sustainable growth. BRICS is bolstering the capacities and capabilities of rising markets by tapping into their potentials.

The New Development Bank (NDB) and Contingent Reserve Arrangement is contributing much to improving social security nets, bettering infrastructure networks and regulating governance. Each country is dedicating a fixed proportion to the BRICS Development Bank. The NDB has allocated over $1.4 billion to support four projects each in China, Russia and India. Over the course of 2017, more than $30 billion will be channeled toward supporting projects in other key realms.

Similarly, the BRICS Business Council helps strengthen cooperation among BRICS countries in e-commerce, technical development and agenda-setting.

The BRICS bloc works to integrate a number of global, national and regional development projects and agendas together, like the U.N. Sustainable Development Goals and the African Union 2063 Agenda.

BRICS countries are capitalizing on their positions to encourage trade liberalization within the bloc, especially in regards to increasing efficiency and overcoming red tape and bureaucratic weaknesses often associated with free trade.

The BRICS bloc strengthens positions of countries in Eurasia. In 2017 alone, it was reported that levels of trade between BRICS nations increased exponentially. Shipments to and from countries are reaching record heights. The growth of the manufacturing sector and e-commerce has increased exponentially.

The bloc is also working collaboratively towards safeguarding the future by securing employment in the manufacturing sector and cushioning technology.

The recent 2017 BRICS Summit held in Xiamen, China covered issues ranging from employment, commerce and finance, innovation and technology to reforms of the United Nations Security Council and improving counter-terrorism measures.

As the BRICS bloc often invites many non-BRICs members to observe annual proceedings, it could possibly lead to the inclusion of more developing countries in future. For the recent BRICS summit, China invited countries such Tajikistan, Mexico, Thailand, Kenya and Egypt. The bloc wants to expand its potential and scope in future.

However, even within BRICS nations, there are differences in aspects such as wealth distribution, growth rate and population control. China and India boast exponential growth rates, while countries such as Russia have been experiencing slower growth rates at present.

As a host to this year's BRICS Summit, China pledged $76.4 million for a BRICS economic and technology cooperation agenda. President Xi Jinping also pledged $4 million to the NDB. China's Belt and Road Initiative was an important part of the discourse, seeing as it has gained much traction globally since its inception.

South African President, Jacob Zuma, focused on the implementation of the U.N.'s Sustainable Development Goals 2030 to eradicate poverty at the 2017 BRICS Summit.

Zuma spoke about the work of the African Union (AU) in this realm. The AU recently announced the opening of the African Regional Centre. Moreover, Zuma is also confident about the progress of the 23rd Conference of the Parties to the U.N. Framework Convention of Climate Change.

At the BRICS Summit, Prime Minister Narendra Modi was particularly concerned with tackling poverty and corruption, bolstering clean energy sectors, and ensuring gender parity. India recently joined the Shanghai Cooperation to ensure more social stability and economic security.

Prime Minister Modi unveiled 10 "noble commitments" concerning key aspects like counter-terrorism, cybersecurity and disaster management. The BRICS commitment could also bring India closer toward normalizing relations with China, especially after the Doklam border conflict.

Russia and India agreed to collaboratively work toward easing the War in Afghanistan. The leaders also focused on fortifying energy efficiency, tourism and improving youth exchanges, bilateral trade, and boosting investment in an integrated manner.

Furthermore, Brazilian President Michel Termer aimed to secure more foreign investment during the course of the BRICS summit this year to possibly counter Brazil's current period of languid growth. Termer expressed his wish to channel investment toward infrastructure projects and diversifying markets.

Overall, future BRICS Summits will pave the way for pioneering global development initiatives and will be an important framework for governance and policymaking in the future, as it is essential that developing superpowers be immune to economic headwinds. It will also be the foundation for future agendas in the evolving world dynamic.

Shivani Ekkanath

BRICS Steering Committee on Antimonopoly Policy Approved Creating Working Groups on IT and Automotive Markets (Руководящий комитет БРИКС по антимонопольной политике утвердил создание рабочих групп по ИТ и автомобильным рынкам) / Russia, October, 2017
Keywords: Antimonopoly_Policy, Steering_committee, concluded_agreements

Representatives of competition authorities of BRICS member-states also studied an initiative to form BRICS Analytical Centre and reached arrangements to further analyze competition on the food markets and in the pharmaceutical sector

The 3rd session of BRICS Steering Committee on Antimonopoly Policy took place on 19 September 2017 at an International Event – the "Competition Week in Russia".

Representatives of FAS, competition bodies of Brazil, India, China and South Africa as well as the academic community discussed the efforts of the Working Groups on studying competition in the socially important sectors of BRICS economies and a further action plan.

Stats-Secretary, Deputy Head of FAS Andrey Tsarikovskiy said, opening the event: "We have achieved big success in our work, developing our cooperation on various markets. We conduct joint surveys of the state of competition in the pharmaceuticals, food products markets, we start analyzing the situation with automotive markets in our countries. Thanks to exchanging experiences and knowledge, we are improving out works and law designed to protect the interests of all market participants and support healthy competition".

Summing up the results of BRICS Working Group on global food products chains, Deputy Head of FAS Andrey Tsyganov pointed out that one of the main WG objectives is to devise joint, timely and constructive approaches to analyzing the relevant markets and economic concentration transactions on them. "For instance, FAS, investigating merger between "Bayer" and "Monsanto" drafted a document on approaches to analyzing food products markets and global food product chains. The draft is forwarded to BRICS competition authorities for familiarization, and we will be grateful for comments, proposals and additions", saidAndrey Tsyganov. He mentioned that the agenda of "Competition Week in Russia" included a detailed discussion of the final draft report on the state of competition on the seeds market.

Reporting about the outcome of BRICS Working Group for studying competition on the pharmaceutical markets, Head of FAS Department for Social Sphere and Trade, Timophey Nizhegorodtsev said that the level of influence of BRICS economies upon the content and development of the international standards for regulating the pharmaceutical industry does not match the scope and a potential growth of the market of medicinal drugs in these countries. He concluded: "I am confident that BRUCS countries have things to offer in order to develop the international standards for regulating pharmaceutical markets. We should also approximate national regulations over the pharmaceutical sector to make it more transparent and competitive. We must work out unified standards and approaches to the issues of intellectual property, regulatory practices for registration and circulation of medicinal drugs in BRICS markets". Such work may start with drafting a document on the basic principles of work on these areas for BRICS competition authorities and international pharmaceutical companies operating on the markets in these economies.

The Committee also discussed establishing BRICS Working Groups on studying competition in IT and the automotive markets.

"A Working Group on studying competition on the car markets in long overdue. We have had already several meetings with South African competition authority, where we exchange information that will be helpful in relevant investigations on the national markets", specified Andrey Tsarikovskiy. The first session of the Working Group may take place at the III Research-to-Practice Conference on "Antimonopoly Policy: Science, Practice, Education" on 5-6 December 2017 in Moscow.

Stats-Secretary, Deputy Head of FAS emphasized: "As for the BRICS WG on information-and-communications technologies, we propose to work on an extended agenda, being able to discuss markets not only on the IT market but also the general situation in the digital economy". The discussion on establishing the Group and its agenda will continue at BRICS Competition Conference in Brazil in November 2017.

The Steering Committee also considered a possibility to form BRICS Analytical Centre and discussed a draft Toolkit on international cooperation between competition authorities to counter restrictive business practices of transnational corporations and cross-border violations of the competition rules at regional events of BRICS competition bodies, for instance, African, Latin American Competition Forums. FAS carries out such discussions at the events on antimonopoly policy with the CIS member-states.

Summing up, Andrey Tsyganov invited representatives of BRICS competition authorities to take part in the events organized and supported by FAS as well as Research-to-Practice Conferences in Russia on competition policy. He expressed the readiness for continued productive fruitful collaboration between BRICS competition authorities.

"Already in November 2017 Brazil will host the next BRICS Competition Conference, where we will be able to discuss a lot of important issues. FAS intends to put forward a number of initiatives aimed at further intensifying cooperation between BRICS competition authorities, that should be online, in the real-time mode in spite of distances", concludedAndrey Tsarikovskiy.

FAS was represented at the Committee by: Stats-Secretary, Deputy Head of FAS Andrey Tsarikovskiy, Deputy Head of FAS Andrey Tsyganov, Head of the Department for International Economic Cooperation, Lesya Davydova, Head of the Department for Social Sphere and Trade, Timophey Nizhegorodtsev and others. The speaker from Brazil competition authority was a Commissioner, Brazil's Administrative Council for Economic Defence (CADE), Cristiane Alkmin Junqueira Schmidt. Other participants included: Commissioner, the Competition Commission of India, Shri Bunker; Deputy General Director, Anti-Monopoly and Unfair Competition Enforcement Bureau, State Administration for Industry and Commerce, the People's Republic of China, San Lin; Deputy Commissioner, South African Competition Commission, Hardin Ratshisusu, and Yungama Njisane, Director, International Relations Department, Competition Commission, South Africa. The academic community was represented by Director, Institute of Law and Development, High School of Economics – Skolkovo, Alexei Ivanov.

* - III Research-to-Practice Conference on "Antimonopoly Policy: Science, Practice, Education", December 2017, Moscow

- St Petersburg International Legal Forum, May 2018, St Petersburg

- St Petersburg International Economic Forum, June 2018, St Petersburg

- International Event – the "Competition Week in Russia", September 2018

- IV Research-to-Practice Conference on "Antimonopoly Policy: Science, Practice, Education", December 2018, Moscow

- etc.

Amazon Buys Stake In India-Based Retailer: These 3 BRICS Acquisition Targets Could Be Next (Amazon покупает долю у индийского ритейлера: эти 3 цели приобретения БРИКС могут быть следующими) / India, October, 2017
Keywords: Amazon_investments
Author: Ridhi Khaitan

Amazon buys 5% stake In Shoppers Stop

Global e-commerce retailer Amazon (AMZN) is buying a 5% stake in India (INDA)(NSEI) listed retailer Shoppers Stop, as part of a broader effort to establish a lasting foothold in the country. Shoppers Stop will issue 4.4 million shares to Amazon for 407.78 rupees each, equating to a deal value of approximately $27 million. As part of the agreement, Amazon experience centres will be set up at each of Shoppers Stop's 80 stores across the country. Shoppers Stop, which sells cosmetics, clothing and home appliances at its outlets, will have an exclusive flagship store on Amazon India's site where it will retail its entire 400 brand portfolio. This deal would aid Shoppers Stop to boost revenues and add 25% stores to its existing network.

This move is Amazon's first investment in a publicly traded retailer in India and follows Jeff Bezos' announcement of a $5 billion investment in India. The major allocation to India was earmarked as Amazon seeks to gain an edge over local rivals in the fast growing consumer market. This deal would provide Amazon strategic access to smaller second and third-tier cities in India where Shoppers Stop already has an established store network. Amazon is said to be playing it safe in India, after getting washed out from China (MCHI)(FXI) by Alibaba (BABA) and other local players.

Shares of Shoppers Stop surged nearly 20% after the deal was made public, its highest intraday gain since 2009. Shares of the retailer have gained 55% this year, outperforming broad-based benchmark indices. Comparatively, Amazon's shares are up 27% in 2017 to date.

BRICS retail leaders

Deepening Internet penetration and widespread adoption of smartphones has brought exponential growth to e-commerce retail in BRICS countries. BRICS nations provide online retailers a huge opportunity for inorganic growth through strategic acquisitions. Alibaba research estimates online shoppers in these countries to grow to 1.35 billion by 2022, which would then constitute 61% of global online shoppers. In 2016, BRICS nations accounted for 47% of global online retail sales, a number which is expected to grow to 59% by 2022.

BRICS economies boast of many large retailers that could become strategic acquisition targets for Amazon and other global e-commerce giants. In Indonesia, one of the most populous countries in the world, e-commerce is largely dominated by Alibaba-owned Lazada. This may result in Amazon focusing on other ASEAN countries at first to gain regional market share.

The three largest retailers in Brazil (EWZ), South Africa (EZA), and Russia (ERUS) by revenues are Magnit, Shoprite Holdings, and CIA Companhia Brasileira de Distribuição. In 2016, these companies reported revenues of $16 billion, $10.4 billion and $12 billion respectively.


Magnit is Russia's largest retailer with 14,059 stores as of December 2016, which includes 10, 521 convenience stores, 237 hypermarkets, 194 "Magnit Family" stores and 3,107 "Magnit" Cosmetic stores. Magnit operates in 2,495 locations in Russia and is among the world's largest retailers by market capitalization. The company has market cap of $16 billion, comparable to market cap of large retailers like Carrefour and Kroger.

Shares of the company are publicly listed on the London and Russian Stock Exchanges with tickers MGNT.IL and MGNT.ME respectively. The company's Russia listed shares have declined 8% in value in 2017 so far.

Shoprite Holdings

Shoprite Holdings (SHP.JO) is South Africa's largest food retailer with 2,689 stores in 15 countries across Africa and Indian Ocean islands. Shoprite Holdings operates through the following subsidiaries:

  • Shoprite Checkers – consists of supermarkets under the Checkers and Shoprite brands, Checkers branded hypermarkets, furniture outlets, Hungry Lion-branded fast food outlets, liquor shops and pharmacies.
  • Computicket – this is Shoprite's ticketing business that operates through various counters within its stores and free-standing outlets
  • OK Franchise – procures and distributes goods to various supermarkets, grocers and wholesale stores operating under the OK brand, including liquor shops.
In 2016, the company reported revenues of $10.4 billion. Currently, it has a market cap of $8.9 billion, and is among the largest stocks on the Johannesburg Stock Exchange. The company also has secondary listings on the Stuttgart (HY7.SG) and Frankfurt Stock Exchanges (HY7.F) and OTC Markets (SRGHY). The company's Johannesburg listed shares have gained 18.8% in value to date in 2017.

CIA Companhia Brasileira de Distribuição

CIA Companhia Brasileira de Distribuição, also known as CBD, operates supermarkets, hypermarkets and home appliance stores in Brazil. The company is also involved in general merchandising, retailing of food, electronics, and home appliances through its various stores across Brazil.

It is currently the largest Latin American retailer by revenue and the second largest online-retailer in Brazil. In 2016, the company generated revenues of $11.9 billion and operating margins of 4.4%. The company operates its e-commerce portal through Cnova Brasil. Grupo Exito, Brazil's largest food retailer, owned 18.7% of the company while French retailer Grupo Casino owned 22.8%.

Currently, the company has a market cap of $6.3 billion. It has secondary listings on the New York Stock Exchange with ticker CBD. The company's Johannesburg listed shares (PCAR4.SA) have gained 38% in value to date in 2017.

"BRICS, SWIFT, Currencies… A GEAB reader's comment on our last bulletin!" ("БРИКС, SWIFT, валюты... Комментарий читателя GEAB по нашему последнему бюллетеню!") / France, October, 2017
Keywords: BRICS_world, SWIFT, currency_usage

It goes without saying, that there are several prerequisites for national currencies usage: reliable economic and financial developments, economic demand of the currency, ability of the national currency to perform as the money abroad (payments, savings, exchange base, etc.), low level of transaction costs (favorable conditions for relations), legislation, that supports the access of foreign investors to financial markets of integrated groups, the image of the country. Actually, Chinese RMB is one of such currencies of BRICS integrated alliance. At the same time all national currencies of member countries, backed by economic requirements are widely used according to malty-national agreements.

In BRICS expert community active debates on the possibility and feasibility of alternative BRICS banking system are in progress; consultations on the establishment of a multilateral system of information similar to SWIFT are held. Finance Ministers and Central Bank Governors of the countries BRIC are discussing the whole range of issues, including the organization of payment systems and the prospects for increase transition to payments in national currencies. The purpose of the establishment of such a system is care in international payments from the control of the United States and the EU. This would result in greater independence and, more accurate, creates a certain guarantee for countries from the risks associated with arbitrary decisions in this area, which could be taken by the countries in whose jurisdiction the current payment system is located.

During anti-Russian sanctions war, it became clear that SWIFT could become one of the levers of pressure upon any developing country. Russia was one of such an example. When the West addressed packages anti-Russian sanctions, there has been a lot of talk that Russia could be disconnected from the SWIFT system, as in 2012 it was done with Iran. Such deactivation and now is considered in predictions of Russian analysts as a possible measure to reinforce sanctions pressure on Russia. Disconnecting Tehran West happened because there was a UN Security Council resolution imposing sanctions against Iran, which was supported by the majority of UN member countries. SWIFT joined the resolution. In the case of Russia, this is not possible, because the Russian Federation is a member of the UN Security Council with veto power. However, risks remain for us. For example, disable from SWIFT can separate Russian banks. This can happen if the EU and the United States include these banks on sanctions lists, and then would require SWIFT to terminate their service. These risks have resulted in over 4 years of sectoral sanctions while Russia has established a national payment system "Mir" (Peace) and overcome the threat of disconnection from international payment systems. Now we are talking about the expansion of the independent interbank space to the scale of BRICS. More importantly, the "Mir" system is part of a future single financial space in the Eurasian Economic Union, because without such a system it is difficult to establish integration of currency policies of the Eurasian Union, and subsequently move to a single currency system.

In recent years, the idea of creating a similar system for the BRICS is discussed. Moreover, in July 2014 Summit in Brazil BRICS countries leaders signed an agreement on a new Development Bank BRICS, as well as an agreement that involves the mutual opening of credit lines in the national currencies of the central banks of the BRICS countries to each other. As a result, the BRICS have arisen purely technological need for SWIFT's analogue.

SWIFT currently works mostly with reserve currencies. The share of the dollar payments going through the system is approximately 68%. Dollar is followed by the Euro, Japanese yen, Swiss franc, British pound, Australian and Canadian dollars. Chinese currency (RMB) took around 2% of the SWIFT operations, the ruble is 1.7%. We can say that SWIFT has certain problems with transactions in the Indian rupiej, the Brazilian real, South African rand. In this regard, it is intended to establish a new system of financial telecommunications and information exchange for the BRICs, which focused primarily on financing and crediting of projects Development Bank BRICS. An alternative system to facilitate mutual settlements will play a role as a backup platform on which you can optionally go. In the long term, this will lead to further de-dollarization netting in member countries the BRICS and other developing countries as well as their economic alliences.

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