New Players, New Game?

Abstract

The growing economic and financial momentum of many larger emerging economies, including China, raises serious questions for Western decision makers. Of central strategic concern is whether (several of) the emerging economies are likely to coalesce into an economic or political bloc (be it formal or informal) that might promote alternative approaches to global economic, diplomatic or security issues and develop a counterbalance to Western influence in existing economic, financial and political institutions. In the event that this counterbalancing results in the formation of a bloc of emerging countries, including coordinated challenges to limit Western influence or the development of alternative economic-financial regimes, European interests stand to suffer. The first decade of the 21st century has indeed been a period of rapid economic growth in many large emerging economies, especially China. This has brought about substantial changes in the relative power balance between the emerging economies and the West. While the U.S. and many European economies are weighed down by sovereign debt and austerity measures that could condemn them to several years of slow growth, many emerging economies are in much better fiscal shape and have recovered quickly from the global recession. The emergence of a de facto bipolar world with ‘the West against the Rest’ could increase the costs of doing business, severely complicate reaching agreement on transnational problems such as climate change or resource security, potentially challenge the promotion of Western values and human rights, lead to increased diplomatic or military tensions and potentially jeopardize the ongoing process of economic globalization. This report summarizes the results of a study undertaken by The Hague Centre for Strategic Studies (HCSS) on behalf of TNO (Dutch Organization for Applied Scientific Research) to address some of the political, economic and security issues related to rapid growth of eight emerging economies, which we group as the BRICS+ in this study. Questions this study addresses include: could the BRICS+ (Brazil, Russia, India, China, South Africa, Indonesia, South Korea and Turkey) pave the way toward a new economic or political bloc? What are the sources of influence of the emerging countries? In what ways has the rise of emerging economies affected the international power balance? To what extent are the emerging economies cooperating strategically on economic, diplomatic and security matters? And, how could bloc formation impact on economic opportunities for European firms in these emerging economies?