Business, Finance & Economics

Brazil: time for a new world order

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New world leaders: Brazilian President Dilma Rousseff, Indian Prime Minister Manmohan Singh (center) and Russian President Dmitry Medvedev

Credit:

NELSON CHING

Brazil's finance ministry calls it like it sees it: it's time for a new world order. 

This one involves no wacky symbol stuff, just a lot about shifting economic power. 

In the Brazilian ministry's most recent economic outlook report, according to Reuters, Brazil said that it sees "high probabilities" that some euro zone countries will default — they're looking at you, Greece and Italy — and that means a further emphasis on the BRICS nations. Brazil, of course, being one of them. Russia, China, India and South Africa make up the rest. The report spelled it out:

"In short, the world is undergoing an economic rearrangement that might culminate in a new balance of power, with increase in the importance of the most dynamic emerging market economies like Brazil, China and India."

Of course, this has been a long time coming. The BRICS have been demanding a greater voice at the table for years as their economic clout has grown. Brazil, in particular, has tried to step up its foreign-policy engagement and influence on the global economy.  

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Amid the global economic crisis, which the BRICS neither caused nor suffered from intensely, those calls for global economic reform have become more insistent. Why, they have argued, should the United States and Europe continue to dominate the political and economic agenda when their economies are in free fall?

It's a fair question. It's also one that's becoming irrelevant, as these countries have simply begun to wield more influence by default. They have the money, and increasingly the power. China and Russia, of course, are too big to be ignored. They already hold permanant seats at the United Nations' Security Council, allowing them to veto measures. China holds heaps of U.S. debt. When they speak, people listen.

Now, the crisis offers these smaller nations, and Brazil in particular, a chance to show that they shouldn't be ignored, either. BRICS nations are already buying some European debt, according to the Brazilian press. Reuters also said that one Brazilian official said that Brazil would propose that they and the other BRICS lend money to the International Monetary Fund to help rescue the euro zone. This official said Brazil could only offer about $10 billion, which is little compared to the euro zone's GDP, which was around $13 trillion at last count, but that it could persuade China and Russia to boost that sum.

Brazil's finance minister Guido Mantega said that wasn't likely, although he has suggested the BRICS buy European bonds before. The Russians are also open to bailing out euro zone nations, Reuters said. The BRICS are meeting in Washington, D.C. later this week for a chat, so we'll see what happens.