In case you missed it...and unless you were in Lente, Italy this weekend you probably did...the G8 Finance Ministers met to reassure one another of their relevance. By this metric alone, they were not very successful.
Not only has the G8 been rightfully eclipsed by the G20 as the relevant forum for addressing the current financial crisis, but many of the reasons for past G8 meetings seem to have faded or been overtaken by developments. First, the European members of the group only have one monetary policy between them and that one doesn't seem to be going so well. Next, European leaders have effectively opted out from anything other than rhetorical interventions in world markets in the wake of the crisis. Third, even on the rhetorical front there is precious little consensus among the leaders of these countries.
This last point is ironic since the reason G8-ophiles give for continuing to operate the group even given the absence of the key emerging economies is that we need to gather "like-minded" countries. But the Europeans want big change in the international system. And the Americans seem to want as little change as possible.
No meaningful addressing of the "too big to fail" issue. No meaningful addressing of executive compensation. No meaningful regulatory reform. (Just strengthened coordination which, without new global rules and enforcement mechanisms, is just a page from the "what I said before only louder" policy playbook, a favorite for the governments everywhere. For another example see again the recent U.N. "sanctions" against North Korea.) The whole approach to the financial crisis seems to be: "What? There's no wizard? There's a man behind the curtain?! Shit. Give me a drink of stimulus. In fact, give me enough shots of stimulus that I can forget that there's no man behind the curtain and get back to believing in the wizard. Gosh, I loved that wizard. Wizard...wizard...where are you wizard?")
If because you missed the relevance of the G8 gathering then you may be forgiven for not recognizing that the session's irrelevance is being underscored by the relative importance of the meeting in a couple days of leaders of the BRIC countries in Ekaterinberg in Russia. This site was no doubt offered up the Russians because of its rich, resonant irony. That's because it was near Ekaterinberg that the last of the czars and his family finally met their end, and it is at this location the BRICs hope to realize the promise of Fareed Zakaria's Post-American World by cutting down to size the closest thing to an imperial power the world has these days...which sadly, fellow Americans, would be us.
The not-so-secret weapon of this group, besides their size, their resources, their power and, most importantly, their growing significance, is their ability to coordinate their policies. This is not so easy, their interests often conflict (example: Brazil and India want in to the U.N. Security Council, Russia and China are not so enthusiastic about their joining). But try to imagine our arriving at a solution to the problems in North Korea or with Iran's nuclear program, containing threats in Pakistan, stability in Central Asia, or from climate change, or running the world trading system without them and you see the potency of the group...if they stick together. This is particularly true with the one issue that no doubt will be central to this week's discussions -- their effort to assert significant influence over the future value of the dollar. In recent months, BRIC leaders have argued for the adoption of a new international currency (not so realistic), they have shown a willingness to purchase/use IMF SDRs (standard drawing rights, a kind of currency equivalent) instead of dollars, and they have talked about their doubts about the dollar.
It is often said that it would hurt the Chinese and the others for the dollar to collapse given their currency holdings and their dependency on trade with and investment from the United States. And while this is true, that doesn't minimize the leverage they gain from proving to the world that they can play a role in establishing the price of the dollar and that they are not unwilling to use this power. In fact, their recent statements and actions prove this but I think it's fair to speculate that they will, at some point, rattle the saber even louder to enhance the leverage they already have. (It's a power they've used increasingly. The Chinese called the U.S. Treasury during the Fannie Mae crisis to demand action with the more than implicit "or else" being the sell off of U.S. government securities.)
Having said all this...and despite the importance of Russia's oil and nukes, India's billion people and promise and Brazil's continental size, ag export leadership, and recent oil discoveries...there is one critical fact to remember about the BRICs:
Without China, the BRICs are just the BRI, a bland, soft cheese that is primarily known for the whine that goes with it. China is the muscle of the group and the Chinese know it. They have effective veto power over any BRIC initiatives because without them, who cares really? They are the one with the big reserves. They are the biggest potential market. They are the U.S. partner in the G2 (imagine the coverage a G2 meeting gets vs. a G8 meeting) and the E2 (no climate deal without them) and so on. And so while the Russians have been the most eager of organizers of the BRICs because they want to create a counterbalance to U.S. power (not a terrible thing, I think for the world or for the United States given what we've seen of our tendencies when we do when being the sole superpower goes to our head), we should see the emergence of the BRIC bloc for what it is at its heart, a major amplifier of the influence of the country at its heart, China.
As an aside, I don't think we should see the rise of a counterbalancing bloc as a terrible thing either for the world or even for America. While having enemies is to be avoided wherever possible, having rivals is essential. It promotes reevaluation and growth. Imagine what computing would be like if we lived in an all Microsoft, Apple-less world. They make each other better. (Which in that case means Microsoft forces the smaller Apple to be innovative and Apple forces the Microsoft behemoth to be less awful.)
That said, we should also recognize how far the bloc has come in its development and consider that in the future they are -- strengths, weaknesses, imbalances, tensions and all -- the most likely counterbalance to U.S. influence...and for that matter to the influence of more radical voices like those of rogue states or of extremist Islam somehow united (which is much less likely than the BRICs keeping their act together.)
Having said that, I have to emphasize that they are not a direct threat to the United States and we should not view them as an enemy. Their efforts to align themselves actually is likely to diminish the tendency that any one of them may have (I'm talking about you, Vladimir) to stray into more confrontational postures. And so long as they responsibly play the voice they assert they seek -- as an effective counterbalance to the U.S. representing the equities of major populations worldwide -- they actually have a very constructive and useful role to play in global affairs.
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