BRIC summit

When future generations look back at the current financial crisis, they'll almost certainly take notice of an important shift in the balance of world power. Because with wealthy Western nations - and particularly the United States - still reeling from the hits they took, the road has suddenly opened for emerging nations to make a grab for a greater share of economic power, and with it, global influence.

For many observers, it's no coincidence that at this critical juncture, the group of emerging nations known under the acronym BRIC (Brazil, Russia, India and China) held their first-ever summit.

The acronym was coined in 2001 by an analyst for Goldman Sachs, who argued that by 2050, the combined economies of the BRIC nations would eclipse the combined economies of the current richest countries in the world. The bank never posited that BRIC would organize itself into an economic bloc, although recently there have been signs that the acronym has come to represent much more than was originally intended.

"The economic crisis is what pushed them together," said Thomas Renard, a research fellow at Egmont, Royal Institute for International Relations in Brussels. He notes that last March, the BRIC nations issued their first joint communiqué during a G-20 meeting, calling essentially for a "reform of international financial institutions." Still, he maintains that BRIC is far from being a political entity.

"The term BRIC wrongly implies that they are actually a bloc in any concrete way," Renard said. "They are more of an informal group within the international forums who meet sometimes to exchange their points of view and who, when they reach common agreement, will defend their position. But while they have many things that unite them, there is also a lot that divides them."

Pressing for economic change

Combined, the BRIC countries currently have a 15-percent share of the world economy and a 42-percent share of global currency reserves. The countries' leaders have argued that this warrants a greater say in global decisions.

Their increased economic power was underscored recently when Brazil and Russia joined China in announcing they would shift some $70 billion (50 billion euros) of reserves into multicurrency bonds issued by the International Monetary Fund. The move was interpreted by some as an attempt to topple the dollar; in part because the Russian president said at the time that his proposal to create a new world currency could be discussed at the summit.

But fiscal experts say that BRIC will tread carefully where the dollar is concerned, as triggering a dollar crisis would be akin to shooting themselves in the foot.

"The BRICs are putting the US on notice that there has to be a cutback on spending and that they need to get their house in order," Mark Mobius, emerging markets expert at Templeton Asset Management, told Bloomberg. "Any attack on the dollar will hurt them. But they want to make sure this kind of mess doesn't happen again."

Clearly though, BRIC is using its new influence to put pressure on the IMF to reshape its voting structure to better reflect the shift in economic power. Brazil, for example, is the world's 10th largest economy, but has just 1.38 percent of the IMF board's votes, compared to 2.09 percent for Belgium, an economy one-third the size.

China as a superpower?

China, too, is well-positioned to become a greater actor on the world stage, despite its past preference for playing a supporting role.

"China has realized that it might become a global power much faster than it thought," said Renard. "And the US is realizing that now, too. It is treated as a de facto global power by the US, at least with regard to economic matters, with the two countries for all intents and purposes forming a 'G2'."

But while the thought of China as a superpower is perceived by many in the West as a threat, Renard says that it's an unfounded fear.

"The world today is characterized by interdependence," he said. "Even for China, it's not a time to think about individual gains, rather it's about minimizing the damage that we all suffer."

The "rise of the rest"

While Renard is certain that the current trend is from a unipolar world to a multipolar one, he says we're unlikely to witness the emergence of a new superpower to rival the US anytime soon.

"To be a world power, you need more than money," Renard said. "You need military power and soft powers, such as cultural power. And in these respects, the US is still the leader."

Instead, Renard says it's more accurate to talk about bad US policies that have damaged American influence abroad coinciding with the "rise of the rest."

The "rest" not only includes new emerging powers, such as the BRIC nations, but also "non-state actors such as transnational organizations like al Qaeda and supranational institutions like the EU, all of which are increasingly challenging American predominance."

Author: Deanne Corbett
Editor: Rob Mudge