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An economic axis of the future

AN UNUSUAL ECONOMIC formation is taking shape in the global economy, which, if successfully established, will threaten Northern hegemony in economic policy formulation. India, Brazil, China and South Africa are in the process of forging closer economic relations with one another, raising the tantalising prospect of a coalition that will challenge the dominance of the United States and the European Union in the world economy. A trade pact stretching across three continents is a long way off from negotiation. But the four developing countries have already experienced the benefits of working closely with one another. At the Cancun meeting of the World Trade Organisation, these developing country giants were able to protect their individual interests in agriculture only because they formulated a common position. In the weeks since the Cancun meeting, they have shown their enthusiasm to cement cooperation in trade, investment and global economic diplomacy.

Since developing country unity at international economic fora began to fade in the 1980s and with the downfall of socialism in East Europe and the Soviet Union between 1989 and 1991, U.S. economic hegemony has gone largely unchallenged. This has been expressed in the growing power of global capital and a corresponding loss of autonomy by national governments in economic policy-making. An economic alliance among India, Brazil, China and South Africa will create the largest economic grouping in the world after the U.S. and the European Union. It will also share, with Japan, the third rank in the league of the world's exporters and importers. Such a large economic formation among the four countries of Asia, Africa and South America will provide a measure of counter-weight to the current dominance of the U.S. and the E.U. in the global economy. The intellectual vision of this coalition is being drawn up by Brazil, which, under President Luiz Inacio Lula da Silva, has been seeking out new partners in the South as part of its strategy to restore a measure of national autonomy. Cancun was the most visible sign of cooperation among the members of the nascent coalition, but it has not been the only significant development so far. Earlier this year, India, Brazil and South Africa formed a "trilateral forum" to facilitate economic cooperation. Separately, these three countries have been exploring bilateral and regional trade agreements with one another. All these developments have prompted Alec Erwin, South Africa's Trade Minister, to predict that they would eventually lead to a free trade agreement among India, Brazil, China and South Africa. And contrary to motivated predictions by the U.S. and the E.U. that the larger G-20 alliance that was formed on the eve of the Cancun meeting would soon collapse, the core group of the four most important countries has remained in place and is now acknowledged as a force to be reckoned with in global trade negotiations.

India has much to gain from the growth of the new coalition. At Cancun, it was India's willingness to join hands with Brazil that saved it from being forced to agree to negotiations that would effectively have opened Indian agriculture to a flood of imports. The recent visit of Celso Amorim, the Brazilian Foreign Minister, has highlighted the importance Brazil attaches to India's presence in the coalition. President Lula's visit during the 2004 Republic Day celebrations will be an occasion for the two countries to demonstrate that they are serious about closer bilateral relations and about the long-term plan to build an economic axis among four of the biggest countries in the developing world. There is more at stake here than the creation of a grouping of four large economies. The alliance will give these countries and the developing world in general greater space in global economic decision-making.

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