Tragedy of Malaysia Airlines Flight 17 and the Future of BRICS

Malaysia Airlines Flight 17 was shot down in Ukraine yesterday. All 298 people on board the Boeing 777 were killed in the resulting plane crash. It is not yet known as to who is responsible but signs are pointing towards the Eastern Ukraine separatists. Russia supports the separatists in many ways including supplying them with military equipment.

Earlier this week the leaders of Brazil, Russia, India, China, and South Africa (BRICS) announced the formation of the BRICS Bank. The purpose of the bank is to provide funds in the manner of the World Bank and the International Monetary Fund. The hope is that the BRICS Bank will impose fewer conditions attached to funding. Moreover, it is felt that the Bretton Woods institutions are controlled by western governments and serve the interests of USA, Canada, Britain, Germany, France, Italy, and Japan.

BRICS is a loose grouping of emerging countries. They are considered emerging because they are experiencing tremendous economic growth despite having not achieved the development levels of North America, Western Europe, and Japan. Economic growth brings new challenges.

The relationship between BRICS and North America and Western Europe is nuanced. One of the reasons Western Europe is finding it difficult to punish Russia for interference in Ukraine is that Europe depends on Russia for energy supply. Similarly, USA criticizes China of human rights violations but American corporations are moving their manufacturing plants to China to reduce production costs. Further, American corporations are outsourcing technical support centers and software development to India. Western corporations are investing heavily in Brazil and South Africa.  

BRICS have a growing middle class that has an increasing appetite for consumerism. Resources are needed to feed this consumerism. BRICS are in full drive in developing countries befriending governments by funding projects in exchange for resources. Here are some examples.

Brazil is getting coal from Mozambique and building a railway through Malawi and Mozambique that will be used to transport the coal to the nearest Indian Ocean port en route to Brazil. India is extending credit to Malawi in exchange for exports from India to Malawi. China has built a parliament and a conference center in Malawi and is now building a football stadium and electricity generation stations. In exchange, China is getting different types of minerals from Malawi. South Africa owned companies are building shopping malls in Malawi. In exchange, Malawi buys many products from South Africa. Russia sells military equipment to many African countries including many that were friends of the Soviet Union. Similar relations are being established between the BRICS and many developing countries all over the world.

Developing countries have various leadership types ranging from very democratic to dictatorial. Some of the governments have bad human rights records. Moreover, some of these governments mismanage their funds. BRICS funding is preferred by these governments because it has no strings attached. Funds are made available regardless of poor human rights records, rampant corruption, and currencies that are not aligned to actual trade.

But what is the future of BRICS? Economic growth rates in all BRICS countries have cooled down in recent years. Each of the BRICS countries has hosted major international sporting events recently that resulted in backlash. And now Russia seems to be linked to the shooting of a civilian aircraft. Is the shooting of this plane to Russia what the bombing of Pan Am 103 over Lockerbie was to Libya? These BRICS problems may derail the lofty goals of BRICS. And if BRICS are unable to achieve their goals then the rest of the developing world may go down with them.