The Brics are lecturing Europe. Roles have clearly changed
In a rare show of unity, China and India yesterday officially summoned the European Union to get its act together. Their fear is that the escalating fiscal and financial woes of EU, already putting strain on growth prospects within the Western world, will end up causing trouble at home.
The announcement, published by Beijing’s finance ministry, shows the crisis is entering a new phase. Emerging markets have expressed concerns over the EU crisis before, but so far they were only raised sporadically, often tempered by implicit trust that problems would be solved, and, most importantly, rarely pronounced in a single voice. But now two countries pictured as arch-rivals in the race to economic greatness are uniting their efforts to lecture Europe - and more, including Russia and Brazil, will undoubtedly join in the rallying cry.
The Brics have reasons to be worried. Whilst domestic factors play their part, the uncertainty created by months of financial drama has reached their shores, and their economies are slowing down. The G20 and its inconclusive outcome, along with the political cacophony Europe displayed in its preparation, have added to their concerns. The joint statement conveys this renewed sense of alarm.
Yet there is probably another message hidden between the lines. The statement is not just a lecture on the EU’s irresponsible policies, it’s a call for the West to stop speaking and agree on decisive action. Which means that China and India believe one thing: that Europe still has the time, and means, to solve the crisis.
They’ve also been debating whether or not to offer their help. But recently they said their contribution would come only through the IMF (India), be limited to small bond purchases (China), or is pending further evidence that Europe is getting its act together (Russia and Brazil) - so in the end they’re keeping their purse tight. Given the global tsunami an outright collapse of the Eurozone would trigger, this again shows a confidence, if only minimal, that the worse will not happen. Europe can sort itself out without their money.
What the Brics have rightly spotted, however, is that Europe’s pursuit of parochial interests, lack of co-ordination, and dysfunctional domestic politics make an orderly solution everyday harder to reach. And aware of the danger, they increasingly see the benefit of raising their voices together… Will Europe’s disunity end up uniting the emerging world?