In April, the conferences of two international groupings – BRIC (Brazil-Russia-India-China) and IBSA (India-Brazil-South Africa) – brought some of the world's highest-profile heads of state to Brazil. Amidst all the fanfare, Brazilians reserved their heartiest handshakes, and largest front-page news spreads, for Prime Minister Manmohan Singh. It is no secret that business between India and Brazil is booming. Both governments recently committed to doubling bilateral trade to USD 10 billion in the near future; and with Indian firms sinking serious money into ambitious long-term projects in Brazil, such as offshore drilling, that number is looking attainable.
Of late, India and Brazil have been poking into each other's ambit in several interesting ways. The letters i and b have been popping up in several new acronyms floating to the top of the alphabet soup of geopolitics: in addition to BRIC and IBSA, there are now rumblings of a BASIC (Brazil, Africa South, India and China). Beyond the high-profile conferences and photo-ops, however, it is worth examining the basis of genuine partnership, what each constituent really stands to gain from these new alliances, and whether these groupings of vastly different countries are cohesive enough to last. BRIC, the most prominent of the bunch, was the brainchild of a Goldman Sachs economist writing on emerging economies in 2001. In its early days, the primary purpose of the grouping was for investment bankers interested in buying into emerging markets. This was a nifty marketing ploy, since it meant that risky investments, such as those in oil-price-dependent Russia, could be bundled into a palatable package.
Over the past year, however, the Russian economy has taken a serious hit in the global financial crisis, while Brazil, India and China have emerged relatively unscathed. As such, the relative strengths and weaknesses of the BRIC economies have come under scrutiny, and the BRIC group does not look as logical an alliance as it once did. 'We are four large countries with abundant resources, large populations and diverse societies,' was about as much common ground as Prime Minister Singh could point to at the recent BRIC conference. Even in its present configuration, the BRIC group has not been much of a success as an economic bloc, with the vastly different economies having kept the group from formulating any collective economic agenda. One striking example of how these countries' interests fail to line up is with regard to oil prices. India and China would benefit from cheap petroleum to feed their growth, while Russia and Brazil, the latter of which recently discovered vast new offshore reserves, would want to see that price move higher.
Still, when it comes to one-on-one deals between individual member states, the BRIC countries do have a lot to offer each other. India specifically has a lot to gain. Acquisitions and partnerships in Brazil are a foot in the door for Indian IT and telecom looking to expand into the Latin American market. Indian petroleum firms, which in the past have been crowded out of participation in new oil fields, have been granted access to exploit Brazil's newly discovered oil. Such deals, though, can and have been cut without any involvement of the BRIC countries as a collective, thus elevating the importance of cultural and diplomatic ties between states.