Thursday, July 24, 2014

BRICS

The BRICS development bank would seem to be about dumping the dollar and creating an alternative to the IMF, European Union and Federal Reserve.  However, upon further examination BRICS is something far more interesting.

First let's look at the membership.  

Brazil has the seventh largest economy in the world and its economic reforms has the country on par with some of the fastest growing economies in the world.  Brazil has a huge supply of natural resources and contrary to what Juan Valdez would have you believe, is the world's largest producer of coffee.

Russia is the country with the largest land mass in the world.  The Russian economy is the ninth largest in the world.  Russia is one of the largest producers in the world of oil and natural gas.  Russia also has tremendous mineral and other natural resource reserves.

India is the tenth largest economy and like Brazil, has one of the fastest growing economies in the world.  Considered a newly industrialized country, much of India's wealth is based on hi-tech.  India has the second largest population in the world.

China is the second largest country (by land area) in the world.  China has the world's second largest economy both by gross domestic product (GDP) and purchasing power parity (PPP).  China's economy is primarily based on manufacturing and exporting goods but they are also a major importer.

South Africa is the smallest member of the BRICS.  South Africa is the 25th largest country by land area as well as the 25th largest by population.  Like India, South Africa is considered a newly industrialized country and has the world's 28th largest economy (but has the 2nd largest economy in Africa).  Most of South Africa's wealth comes from diamonds and gold but like Russia, it also has vast resources of other strategic minerals.

Given this first list, it would appear that BRICS is merely a collection of countries with fast growing economies.  Most has large land masses and large populations meaning a good supply of resources and large workforce.  But that's how things look through the eyes of an economist.  

The BRICS share one other thing in common, something that trumps even their economic power.  Russia has the second largest inventory of nuclear weapons.  China has the third.  India has the fourth.  While South Africa currently doesn't have any nuclear weapons, it is the only African nation to have successfully developed nuclear weapons.  Brazil is only BRICS member not to have nuclear weapons.  All of the nuclear weapons combined under BRICS outnumbers all of the nuclear weapons of the US, UK and France combined.

Conventional forces are not to be ignored either.  China has the world's largest standing army (funded by the second largest military budget).  Russia has the second largest combined military.  India has the fourth largest combined military.  According to Global Firepower.com, Brazil has the 14th largest military in the world.  South Africa has the 14th.

Granted the comparisons are not apples to apples since there are cast differences in technologies between countries.  But technology can only compensate so far over numerical advantages.  For example, regardless of the F-35 advantages in technology, there are only so many copies of it to go around.  The F-35 demonstrates an inherent weakness of advanced technology; when things break it takes longer to fix.  According to Defense-Aerospace.com, the F-35A experiences a critical failure after 4.5 flight hours requiring 12.1 hours to repair.  

Obama is determined to reduce the size of the US military.  He began with reducing the number of nuclear warheads and the followed by instituting sequestration.  The US military has been at war for 12 years without and opportunity to reset.  Readiness is diminishing and there is little in the way of budgets to update legacy systems.  The US is not alone.  The UK, France, Australia and New Zealand are also beginning to drawdown their militaries.

The conflicts in the Middle East and Ukraine continue to make the US look unable and unwilling to back up political rhetoric.  BRICS then stands as an unspoken threat to the former might of Western economic and military power. 

No comments: