Academic journal article Global Governance

The Financial Crisis, Contested Legitimacy, and the Genesis of Intra-BRICS Cooperation

Academic journal article Global Governance

The Financial Crisis, Contested Legitimacy, and the Genesis of Intra-BRICS Cooperation

Article excerpt

The rise of the BRIC grouping (Brazil, Russia, India, China) is one of the most commented on phenomena in international politics of the past years. Yet little is known about how and why institutionalized cooperation between the BR1C countries began. This article makes two arguments. First an unprecedented combination in 2008--a profound financial crisis among developed countries, paired with relative economic stability among emerging powers--caused a legitimacy crisis of the international financial order, which led to equally unprecedented cooperation between emerging powers in the context of the BR1C grouping. The BR1C countries were able to use their temporarily increased bargaining power to become agenda setters at the time--culminating in the International Monetary Fund quota reforms agreed on in 2010. This shows that even short periods of reduced legitimacy in global governance can quickly lead to the rise of alternative institutions--such as, in the case of the crisis that began in 2008, the BRIC platform--which now forms part of the landscape of global governance. Second, intra-BR1C cooperation in the area of international finance enhanced trust among the BR1C countries and led to a broader type of cooperation in many other areas, suggesting the occurrence of spillover effects. Intra-BRICS cooperation (Brazil, Russia, India, China, South Africa) is therefore likely to continue, even after the conditions that facilitated its genesis--the crisis in the West--have disappeared. KEYWORDS: BR/C, BR/CS, G-20, global governance, legitimacy.

It is time to start reorganizing the world in the direction that the overwhelming majority of mankind expects and needs.

--Celso Amorim, "BRICs and the Reorganization of the World" (1)

When the finance ministers and central bankers of the BRIC countries (Brazil, Russia, India, China) (2) met on 7 November 2008 in Brazil, less than two months had passed since Lehman Brothers's bankruptcy. The financial crisis seemed to make things so unpredictable that the Brazilian government had decided, at the last minute, to change the location of the summit from Brasilia to Sao Paulo, close to the international airport to allow the participants to quickly return to their home countries to monitor the crisis. In times of globalization, the financial crisis at the heart of the global economic core was widely thought to have profound consequences for all countries that participated in the international market.

Yet as The Economist wrote at the time, the largest emerging markets were "recovering fast and starting to think the recession may mark another milestone in a worldwide shift of economic power away from the West." (3) As the BRIC finance ministers stated, "We recognized that the crisis has to some extent affected all of our countries. We stress however, that BRIC countries have shown significant resilience." (4) As the meeting in Sao Paulo made clear, the BRIC countries not only had discussed ways to protect themselves against the crisis, but also how they could use it as an opportunity to adapt global structures in their favor. Within the following four months, BRIC finance ministers and central bankers met four times--in contrast to their weak ties prior to the crisis. The results were palpable: prior to the Group of 20 (G-20) summit in London in April 2009, the BRIC countries were able to act as agenda setters and considerably influence the final G-20 declaration (5)--all by making use of the BRIC grouping, a vehicle that had, in its political dimension, barely existed before the crisis.

The rise of the BRIC grouping is one of the most commented on phenomena in international politics of recent years. Yet little is known about how and why institutionalized cooperation between the BRIC countries began. In this article, I make two arguments. First, I contend that an unprecedented combination in 2008--a profound financial crisis among developed countries, paired with relative economic stability among emerging powers--caused a legitimacy crisis of the international financial order, which led to equally unprecedented cooperation between emerging powers in the context of the BRIC grouping. …

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