World should have its version of BRI: academic

Source:Global Times Published: 2019/7/2 20:18:42

Photo: VCG

Editor's Note:

As a result of the ongoing China-US trade war, tensions remain high. While Washington has revealed its unilateralist and protectionist designs, China is safeguarding globalization and promoting multilateral cooperation platforms. In an interview with Global Times (GT) reporter Xu Hailin, Cláudio Puty (Puty), an associate professor of economics at the Federal University of Pará, Brazil and a former Brazilian federal deputy, shared his views on BRICS, China's role in today's world, and of course, the trade war.

GT: In what areas can BRICS countries cooperate intensively? What does BRICS mean for today's global political and economic dynamics?

BRICS is crucial. We live in a world that has a "responsibility deficit" and a "trust deficit." We live in a world where the governing bodies, which don't represent the existing power correlation, are in crisis. 

There's rising nationalism and a crisis of identity in many nations. All of these things together create crisis. Hence, a bloc like BRICS is crucial to foster and promote different elements of governance at the world level. 

We have a good share of the world's population and trade. BRICS can do a good job in promoting reform for the world's system.

Why do we want reform? Because it's fair and important that China, Brazil, Russia, South Africa, India and other developing countries sit at the table with the decision-making bodies. Otherwise, we are more distant from solutions for the crucial development issues of the world.

GT: Will the China-proposed Belt and Road Initiative (BRI) provide a more pragmatic road map and opportunity for cooperation within BRICS? 

The BRI has a very good feature. When you talk to investors about the Western world, they only talk about capital markets and mobilizing financial flows to some investment. Then you need to fulfill so many preconditions but their investment never comes. 

On the contrary, China offers win-win opportunities. This is very different from what has been done in the Western world, or in Africa, or in Latin America in the past 50 years. The BRI handles infrastructure investment and public financing without micro-conditions. 

China could be very generous, but it is always going to be a Chinese initiative. The world should be inspired to have its own version of an initiative similar to the BRI. The G20 has talked about it. Europeans and Americans either don't have instruments - because they have destroyed their own public instruments for investment by relying only on private investment - or ideologically they don't want to do that. 

GT: What is the progress with regard to mechanism building and pragmatic cooperation of BRICS?

BRICS has progressed since its inception. It has shown that it's an important platform for change. We have created the BRICS New Development Bank and the BRICS Contingent Reserve Arrangement. It would have been unimaginable in the 1990s for China, Brazil, India and South Africa to create such a powerful new development bank or an agreement for the use of central bank reserves. 

I think BRICS should strengthen the bloc so that regime changes in one country or another shall not become a hurdle in the shining path of BRICS. 

GT: In 2017, the Xiamen Summit brought up the "BRICS Plus" cooperation. What are the prospects and challenges for BRICS to make more friends?

One consequence of US unilateralism is how it threw some countries out of their realm of influence. It would be unimaginable 10 years ago for a Mexican politician to show more interest in relations with China than with the US.

BRICS should carefully consult about who to invite to the BRICS Plus platform. Meanwhile, it's welcoming that we bring in more countries like Argentina, Mexico and African nations. I think we should mobilize this platform to be a movement of change. 

Of course, we'll have a trade-off. If we have fewer countries, we will have a much faster decision-making process. Therefore, we need to carefully see where we are going and what our objectives are.

GT: What's the role of China in BRICS? 

China's role is crucial. It has revealed a model of development proven to be very successful. It's probably the only developing nation of that size to climb the technological ladder and reach a level close to that of developed countries, which were the first to promote technological innovation. 

GT: The US has unilaterally provoked trade disputes, threatening to impose more tariffs on many countries. How will such moves influence the world economy?

US President Donald Trump needs to address internal problems by creating enemies like Mexico, China, and others. This is really bad for the world economy, which will stunt growth due to the US-launched trade war. 

The World Trade Organization hasn't said anything about the situation while unilateralism has taken an upper hand. This demonstrates the urgent need for a change at the global level. 

I hope we can reach a deal soon at the world level, because the situation reminds us that the crisis is getting stronger and we are heading toward conflict-prone relationships in the world.

GT: Will the US reduce its trade deficits with protectionist measures? 

In the medium term, world growth will decline due to the trade war. The US will face cost issues because many US companies depend on Chinese labor and manufacturing plants in China. The trade war would break the commercial balance and have very bad effects on the US economy.

The US has historical trade deficits and it compensates them with remittance of profits and investment in portfolio. But it is very difficult for the US to keep on doing so. It is not sustainable.

GT: The US has set bars for foreign investment in technology and pulled it away from many international organizations. What's the influence on other countries?

The US trade moves demonstrate a loss in hegemonic capability. To maintain a stable leadership, Washington had to show its followers their future prospects. Hence, the US was a promoter of postwar multilateralism, which served as the fundamental element for US hegemony. But now the US wants to have the table all to itself, because it sees others as threats. This won't work as there isn't a world where only one country can gain. 

The fear of the US tariffs is how much they will cost the rest of the world. It could lead to war or other serious problems. We need to find a quick solution that includes short-term measures to end this crisis. 

The ideal way out would be if Trump lost his re-election bid. In addition, we should promote changes in multilateral institutions. 

Posted in: VIEWPOINT

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