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Urvi Khaitan

Should We Be Upbeat About Ufa?

By Urvi Khaitan, IInd History

The eyes of the Indian media were drawn more towards the meeting between Modi and Nawaz Sharif, Prime Minister of Pakistan, than to the actual summit. “The meeting was held in a cordial atmosphere,” say Pakistani Foreign Secretary Auzaz Ahmad Chaudhry and Foreign Secretary Subrahmanyam Jaishankar of India in a joint statement. “They agreed that India and Pakistan have a collective responsibility to ensure and promote development. To do so, they are prepared to discuss outstanding issues,” it continues, in the usual style of diplomatic hogwash. However, a five point agenda was stressed on: a meeting to discuss all issues linked to terrorism; meetings on border security; releasing fishermen in each other’s custody; religious tourism, and expediting the Mumbai case trial.


Barring the rhetoric, this meeting harbours far more for India’s government. Foreign policy is supposed to be the baby of the Ministry of External Affairs(MoEA), with bilateral talks carried out between the countries’ foreign secretaries. Talks between the foreign secretaries had been abruptly called off on August 19 last year because the Pakistani High Commissioner met Kashmiri separatists. However, Modi insisted at Ufa that talks must now take place between National Security Advisers – signalling that the Prime Minister’s Office will have control of foreign policy rather than the MoEA.


The PMO’s desire to control foreign policy is not new and not without reason. When Natwar Singh was External Affairs Minister in 2004, he was deliberately kept out of the loop over talks between then PMs Manmohan Singh and Pervez Musharraf, over fear that he would attempt to subvert them. The agenda was decided not by the Ministry, but by the National Security Advisers, and a decision of sorts was reached on the Kashmir dispute. The present PM too seems to have finally established a firm grip over something other than his fashion sense.


Modi espoused the merits of collaboration and cooperation. He spoke of “Dus Kadam“, or 10 steps for boosting cooperation including a BRICS trade fair, railway and agricultural research centres, cooperation among supreme audit institutions, a digital initiative, a forum of state/local governments among the BRICS nations, cooperation among cities in the field of urbanization, a sports council and an annual sports meet, the first major project of New Development Bank to be in the field of clean energy and a film festival. This received lukewarm praise, with teen of the dus being agreed to. India, the BRICS chair for 2016, will be hosting the first BRICS trade fair, a film festival and an under-17 football tournament. One assumes that the spirit of healthy competition and a shared appreciation of popcorn will bind the nations closer together.


Apart from this, there were developments on the Ukrainian front, with the BRICS declaration expressing deep concern about the deadly conflict in eastern Ukraine which is pitting government forces against pro-Russian separatists. It called on both sides to abide by a cease-fire signed in February by Ukraine, Russia, the rebels, and the Organization for Security and Cooperation in Europe (OSCE). Putin said BRICS nations stood united in countering terrorism, battling drug trafficking, piracy, and what he called the “revival of Nazi ideology,” construed by many as a veiled jab at the pro-Western leadership that came to power in Ukraine following protests that toppled Russia-friendly President Viktor Yanukovych last year. The BRICS declaration urged the international community to avoid what it described as “political approaches” in fighting terrorism, a rather nebulous term as it gave no further details. This seems to be a diplomatic victory for Russia, as the BRICS bloc opposed the Western sanctions placed on her in view of the Ukraine issue.

The Iranian nuclear issue was also on the agenda. Negotiators from Iran, Britain, China, France, Germany, Russia, and the United States are currently working in Vienna to strike a deal to curb Tehran’s controversial nuclear program in exchange for sanctions relief. The declaration said a nuclear agreement with Iran “is meant to restore full confidence in the exclusively peaceful nature of Iran’s nuclear program.” It signals increasing friendliness to Iran, who has previously exressed interest in joining BRICS. Iran’s close ally, Russia, has long insisted that Tehran’s nuclear program poses no threat despite Western concerns that it is a cover up to build nuclear-weapons capability. (NB. The Vienna talks resulted in a landmark nuclear deal struck yesterday aiming at reining in Iran’s nuclear programme while removing her from isolation, and Israeli PM Benjamin Netanyahu has called it a historic mistake.)


The most momentous development was the outlining of the functioning and stakeholdership of the BRICS Bank, or the New Development Bank(NDB). The NDB was first agreed to in 2013, and came into being in 2014. K.V. Kamath of India has been appointed its first President this year. The reason for the NDB’s importance lies not just in the collective economic clout of the BRICS nations but also in the fact that the Bank’s rules are a sharp break from those of the International Monetary Fund(IMF). The IMF is based on a principle of giving voting and borrowing rights to its member countries on the basis of their share in the Gross World Product about twenty odd years ago. Thus most of the clout is wielded by the USA and the OECD and it fails to take into account the phenomenal rise of economies like India and China.


This summit slammed the USA for blocking IMF reforms. The NDB, on the other hand, is based on a principle of equality and will give its first loan on April 1, 2016. The initial capital of $50 billion has been created by equal contributions. A contingency reserve fund of $100 billion will be set up to meet currency crises and balance of payments contingencies. The NDB may not insist on conditions like those imposed on Greece. Significantly, it will work to promote trade between member countries in their respective currencies instead of the dollar. With the entry of China and Russia into a 30-year gas sharing arrangement denominated in their currencies, some feel that the dollar could gradually lose its pre-eminence.


However, one must not be fooled by this egalitarian façade, as China is clearly the dominant partner. She hopes to earn a better return on her reserves than she is currently making through her investments in US treasuries. Chinese Premier Xi Jinping spoke of China’s Belt and Road initiatives, the establishment of the Asian Infrastructure Investment Bank (AIIB) and the $ 40 billion Silk Road Fund. China is the key player in the AIIB, and ensured that it would not compete with NDB. India, the second largest stakeholder in AIIB, must beware of China’s expanding financial footprint and movement towards hegemony. Nevertheless, it is a good opportunity for the Reserve Bank of India to diversify its currency holdings, most of which are firmly plonked in US treasuries. The larger number of multilateral financial associations will help India obtain better credit, but we must also be guarded and careful about where we lay our eggs.

All in all, the VIIth BRICS Summit saw a greater focus on mutual cooperation between member nations, with a token consideration given to problems of the environment and a burgeoning world population. The construction of new efficient transport and logistics chains to link the rapidly growing markets in Asia and Europe’s economies was stressed on. The biggest takeaway would be the decisions regarding the NDB and the use of national currencies in mutual trade transactions between the BRICS countries. The issue of the Greece crisis was addressed only by Putin, who questioned the European Commission for not taking adequate measures to salvage the situation during the previous Greek government. Putin deserves a pat on the back for his performance at Ufa.

In comparison to Russia and China, India fared poorly as she received nothing she wanted when it came to terrorism, as the BRICS declaration ignored the vital UN Resolution 1267 dealing with suppression of financing and other forms of supporting terrorists and principles of respect for the sovereignty of the states.


India’s efforts in this direction were blocked by China, though she was more successful when it came to bilateral relations with Pakistan. Modi and Sharif’s meeting could promise a period of bonhomie, coming after the former’s acrimonious comments in June 2015 about the “nuisance” which “promotes terrorism”. Sharif seems committed to bettering ties with India, and Modi has the backing of a strong mandate, which indicates that they are in a better position than their predecessors. There is hope. If that doesn’t brighten your day, Mr. Modi’s selfies will. Not.


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