Emerging BRIC countries may save the eurozone
India's Prime Minister Manmohan Singh, Russia's President Dmitry Medvedev, China's President Hu Jintao, Brazil's President Dilma Rouseff, and South Africa's President Jacob Zuma pose before a joint press conference during the BRICS summit in Sanya, on the southern Chinese island of Hainan on April 14, 2011.
Kai Ryssdal: Interestingly enough, not all the rescue talk is coming from Washington and the grand capitals of Europe. Some of the bigger developing economies -- Brazil, India and China in particular; the better part of the BRIC countries -- are talking about whether they might be able to help prop things up as well.
Riordan Roett's with the School of Advanced International Studies at Johns Hopkins University. Good to have you with us.
Riordan Roett: Thanks so much.
Ryssdal: I wonder what a better phrase might be to explain what's going with these developing economies: Is it ironic, or a curious twist of economic fate that they're now thinking about helping the Europeans?
Roett: I think it's the arrival of the BRICS. They are not global powers, but they do have far more reserves than any of the countries in southern Europe, first. Second, there isn't a great deal of skepticism about whether or not the BRICS could act together; this is going to be an interesting test. The Indians seem a little more skeptical than the Brazilians and the Chinese.
Ryssdal: Do the BRICS have the commonality of interest? Do they all want the same thing out helping the Europeans?
Roett: They do not want economic chaos. They do not want instability. And I think they have now come very recently to the understanding that Europe can't govern itself; the United States is paralyzed in terms of fiscal policy. They are the only countries that might be able to make a contribution. Important to say, they do not think -- and I do not think -- they are going to resolve this issue. What this is I think is a combination of symbolics, that is we have arrived, we are the countries with the surpluses, and a commitment either to work as the BRICS or to work within the G20 -- which was brought back to life in 2008/2009, to move forward with further changes in the financial architecture: greater voting rights at the IMF, those kinds of things.
Ryssdal: Yeah. This is an entirely subjective question, but do you suppose there's a bit of schadenfreude going on here among the Brazilians and the Chinese and the Indians?
Roett: No question about it. No question about it. Don't forget: President Lula very often said, 'All the crises always began in our countries 25 years ago -- why are all the crises now taking place in the developed industrial world?'
Ryssdal: President Lula of Brazil. I wonder if you can explain how it is that they are doing so well after a global recession -- not just the Brazilians, but the Chinese and Indians -- and the rest of us are still struggling?
Roett: I think a large part is a matter of regulation. It's a matter of transparency. The United States went through a long period beginning in 2000/2001, basically tearing up the regulatory framework that had been put into the place: the Securities Exchange Commission was hollowed out basically. Not much responsibility on the part of the private commercial banks. The same thing happened in Europe where countries year after year overspent, under-saved and then found themselves in a position where they had to be bailed out. The Brazilians, on the other hand, were fiscally responsible, as were the other BRIC countries.
Ryssdal: Assuming the European Union is around next Thursday, when the BRICS meet, will there be a joint statement at the end, do you think, that says 'we are going to go forward with this pledge of support'?
Roett: My sense is that there will be a lot of backroom conversations between now and next Thursday. Clearly, the BRICS are going to be in touch with Mrs. Merkel's government. There will no doubt be conversations with other members of the European Union; the ECB, the European Central Bank. Who will do that is not clear yet, it may well be that we're not going to know until next week. The Chinese and the Brazilians are out in front, they may well be the ones that are going to take the lead in terms of bringing South Africa and India, and we don't know the position of Russia is going to be.
Ryssdal: Might next Thursday be too late?
Roett: It could be, if indeed things go as badly as the markets seem to indicate they are going. But even if it is too late, it's a sign once again that the BRIC countries, in various ways, are beginning to arrive in terms of having to be listened to and to need to be part of the dialogue and conversation moving forward.
Ryssdal: Riordan Roett directs the Western Hemisphere program at the School of Advanced International Studies at Johns Hopkins. Professor, thank you.
Roett: You're welcome.