Last year, the hard-working staff here at Spoiler Alerts responded to the creation of the BRICS’s New Development Bank by posting a video of yawning cats. Which was a pithy way of suggesting that the BRICS grand efforts at revisionist global governance were neither terribly grand nor all that revisionist.
Still, the BRICS does exist as a political grouping, which is . . . something. And it’s worth remembering that the BRICS grouping originated as a Goldman Sachs marketing term. That is not to dismiss it out of hand — Jim O’Neill’s acronym was one heck of a marketing device. As the Financial Times’ Gillian Tett noted in 2010:
Even if Brics is self-interested spin, such spin — an idea in itself, really — can sometimes take on a life of its own, beyond what its creators expect or even hope for. By creating the word Brics, O’Neill has redrawn powerbrokers’ cognitive map, helping them to articulate a fundamental shift of influence away from the western world. And if you believe that the way humans think and speak not only reflects reality, but can shape its future path too, then this Brics tag has itself come both to reflect and drive the change
Of course, not everyone agreed with O’Neill’s cognitive map, and that chorus has grown louder in recent years. But the grouping still has its fans in international relations. And a big reason that the BRICS is talked about now is that O’Neill talked about the association in 2001.
Which is why Ye Xie’s story in Bloomberg News is so symbolic:
The BRIC era is coming to an end at Goldman Sachs Group Inc.
The bank’s asset-management unit folded its money-losing BRIC fund, which invests in Brazil, Russia, India and China, and merged it last month with a broader emerging-market fund. Goldman Sachs pulled the plug on the nine-year-old product because it doesn’t expect “significant asset growth in the foreseeable future,” according to a filing to the U.S. Securities and Exchange Commission.
Fourteen years after former Goldman Sachs economist Jim O’Neill coined the acronym that ushered in an unprecedented investment boom, the biggest emerging markets are now sputtering. Russia and Brazil have fallen into recessions. China, long an engine of the world’s growth, is poised for its weakest expansion since 1990.
The downfall of the BRIC fund, which had lost 88 percent of its assets since a 2010 peak, also underscores how the strategy of bundling disparate countries into a single investment theme is losing its appeal among investors.
If Goldman Sachs was the harbinger for the rise of the BRICS, will it also be the harbinger of its fall?
The grouping is not just losing its appeal among investors. CSIS has issued a report, “Do the BRICS Still Matter?,” which suggests that even Washington may be dawning to the realization that Something is Changing. The CSIS report by Marcos Degaut does not pull its punches:
Not many concepts have done more to muddle strategic and academic thinking about the global economy and international politics in the last decade than that of the BRICS. . . .
After six summit meetings and the incorporation of South Africa as the “S” of the acronym in April 2011, the mechanism has made little progress toward building a collective identity or an institutional apparatus. It has also failed to set up a strategic agenda, with concrete propositions and actions, or a new conceptual framework for trade negotiations. Beyond diplomatic rhetoric, the BRICS have not proved a very useful instrument for pursuing foreign policy objectives and interests.
Just as the BRICS was overhyped for the past 15 years or so, I’d be wary of dismissing the grouping entirely. The New Development Bank is a tangible accomplishment. And the BRICS does share a genuine resentment about under-representation in traditional global governance structures. That resentment can animate the group’s purpose for a while.
But if the BRICS has lost Goldman Sachs and the D.C. think-tank community, then I think it’s safe to say that its Golden Age has ended.
Rest in peace, fuzzy geoeconomic concept!