Internal Issues and Threats to Brazil:
1) Poor Institutions / Policies: Brazil is a flawed democracy, and needs to reform its political and judicial institutions. It has a big government, that borrows way beyond its means – has low savings and investment rate. Its high tax rates, high interest rates and high cost of labor have resulted in a very high cost of doing business in the country.
2) High Crime Rates: It need advances in the rule of law to keep the high crime rate and poverty under control . Violence due to the drug cartels and mafia gangs is rampant and growing. Brazil is also becoming a supply chain for the drug flow from Latin America to Africa and Europe. Hence, its crucial that the government crack down on crime – crucial for Brazil’s future political stability.
3) Fall in Commodity Prices: Brazil has greatly benefited from favorable external conditions in recent years (high prices of the commodities it exports and high demand for them from China). It is thus very vulnerable to the commodity prices.
4) Education: Poor quality of education has led to lack of skilled labor, and low productivity. It also needs to have mechanisms to incorporate a growing share of the population into the formal economy.
Threat Posed by Brazil: With its rich biodiversity, water resources, and new oil finds, Brazil is increasing becoming more natural resources oriented. The Amazon deforestation can have a major impact on the global environment, and is increasingly becoming an international issue. It will need a strong political will and a strong leadership, to manage Brazil’s resources and control the increasing levels of carbon emissions. But overall, Brazil is in a good position in terms of its location, with no real threat from its neighbors in terms of security.
Internal Issues and Threats to Russia:
1) Hybrid Democracy: Russia has a strong Presidency, and under Putin started drifting towards an authoritarian regime. It has poor institutions with weak checks and balances, high rate of corruption and a lack of accountability. The crime rates are very high, due to the weak judicial system. Also, the high cost of doing business due to burdensome and complicated tax policies, have led to low foreign investment.
2) Heavy Dependence on Natural Resources: World Bank estimates oil and gas accounts for 20-25% of GDP, and energy dominates the industrial sector. Also, it is heavily dependent on the EU for trade (50% of its trade). Thus, Russia’s vulnerability is in its heavily dependence on the volatile international commodities market (hydrocarbons account for more than 60% of all exports).
3) Declining population: Russia’s demographically aging and declining population is projected to drop
below 130 million (currently 141 million) by 2025. In addition, he Muslim minority share of Russia’s population will rise from 14 percent in 2005 to 23 percent in 2050, which will likely provoke a nationalist backlash. The aging population will also be a huge burden on its economy.
4) Terrorism:There is a growing threat of an Islamic fundamentalism movement in the northern region, and a growing nationalist movement in the nation. These ethnic tensions can prove to be a major threat to Russia’s internal security.
5) Threat of Russia itself: Overall, one of the biggest threats to Russia is Russia itself. It has its own way of doing things, and still has a cold-war, anti-US mentality. It doesn’t trust anyone, and everyone else in the global community finds it difficult to trust Russia. Hence, it needs an attitude adjustment, needs to adapt to the new/changing world, and realize with the rise of regional powers like China and India, the United States is no longer its biggest rival.
Threat Posed by Russia:
1) A large number of the Russian nuclear weapons from the Soviet era are missing or unaccounted for. This has been worrying the international community for the fear of these weapons falling into the hands of the terrorists or Islamic fundamentalists. This is not the doing of the Russian government, but still is a big issue when its comes to international security.
2) Due to its geographical position, Russia will gain from global warming, and hence it is sitting in a better position than most countries. It is the world’s third largest carbon emitter, and has no political will to work on the climate change issue, which is bad news and an environmental threat for the rest of the world.
3) The rise of China has started to worry Russia. China is not only gaining an economic edge and influence in the region, but also gaining influence in the Russian region of Siberia, which has a scarce Russian population and an increasing Chinese population. This might lead to increasing tensions between Russia and China…and is something to keep an eye on.
Internal Issues and Threats to India:
1) Weak Governance: India is a flawed democracy. Due to its rich diversity, large number of political parties, and the burden of federalism, it is a very difficult country to govern. Its judicial system is weak, and corruption is rampant. Strong interest groups and deadlocks make it very difficult to address key reforms in India.
2) Education: India will be the largest single positive contributor to the global workforce over the next three decades. It has a very young demography and with 10 million people expected to enter the Indian workforce every year in the coming decades, there is an immediate need to reform the Indian education system, which is poor at all levels. Illiteracy rates are high, and teacher absenteeism rates are the highest in the world. Failing to reform the education system, there will be a huge uneducated young disgruntled population in India, which could lead to social unrest; and the blessings of a young demography could turn into a curse and a disaster for India.
3) Unequal growth: The recent economic growth in India has been impressive but unequal – Southern/Western States are economically booming, while Northern Indian states have high illiteracy and fertility rates, and are economically backward. This inequality and the lack of flexibility in the Indian labor force, are fueling the rise of Maoist insurgency movement in central/northern India. This is becoming a serious problem for India and needs to be dealt with immediately.
4) Environment: India will be directly impacted by the consequences of global warming. According to the World bank, warming of 2 deg C, could result in a 4-5% reduction in annual income per capita in South Asia due to decreased agricultural production, depleted freshwater resources, and threatened biodiversity.
Threats Posed by India:
Instability in the Region: India’s stability is crucial for maintaining a calm in a volatile South-Asian region. India’s historical dispute with Pakistan over the region of Kashmir, and its border disputes with China are causes for concern.
Internal Threats to China:
1) Inequality: There is rising inequality in China (Gini coefficient has increased from 30 in 1990 to 41.5 in 2005) not only between the rapidly growing coastal provinces and the poor Western provinces, but also between urban and rural population. Unless this inequality is controlled, this issue will likely become very explosive.
2) Heavy Dependence on Exports and Imports: Trade is 66% of the GDP (as of 2008), which is a vulnerability.
3) Aging Demography: After 2035, China’s high dependency ratio will start to be a drag on its economy.
4) Authoritarian Form of Government: Tensions between the centralized state and the people could explode if China fails to maintain its high economic growth, or reduce its internal inequality and high rates of corruption.
Threat Posed by China:
Regional instability: Border disputes with India, maritime disputes in the South China sea, and instability due to Taiwan and North Korea, could escalate into larger wars involving the United States. Also, growing tensions and distrust with Russia is something to keep an eye on.
Common Threats Posed by China and India:
1) Natural Resources War: China and India are natural-resource poor and import many raw materials and commodities. Their large appetite for natural resources is worrying the developed countries, and these rising tensions could lead to a resource war. Water scarcity is becoming a serious problem for India and China. Increased friction over sharing water resources (both are dependent on the Himalayan glaciers) could lead to a military confrontation between the two.
2) Environment: China already has the highest total energy consumption, and CO2 emissions; and by 2035, India will consume as much energy as the EU, but with higher CO2 emissions due to its higher proportion of carbon-based fuels and lower energy efficiency. Thus China and India will be putting a lot of negative pressure on the global environment.
3) Increasing Technological Capability: Large labor forces and increasing skills/technological capabilities of China and India are putting a strong restructuring pressure on the world. Along with the technological capability, the increasing military buildup of China and India could lead to their neighbors feeling threatened, resulting in an regional arms race.
4) Increased Competition: Low cost Chinese goods and Indian services are creating increased competition, and are driving down prices/profits for the other global players. Also, due to their lower production costs and expanding markets, China and India are attracting a lot of the global FDI (24% of all FDI going to developing/transition countries in 2008).
What Can/Should the United States Do?
The United States needs a strong cultural shift, and needs to wake up to the new demanding international environment. Americans are used to a high standard of living, and are not willing to pay the price. Any politician who proposes raising taxes or the price of energy, or a cut in spending to deal with the county’s growing fiscal deficit is voted out of office. The United States thus needs a strong leadership, that is willing to make some painful and critical changes, for the country’s long-term prospects, by getting financial stability to maintain its global competitive strength and leadership, applying the Powell Doctrine and reducing the military overextension, supporting multilateral diplomacy and pushing for improving the multilateral institutions, seeking alliances with other developed and developing nations, and forcing engagement with rising powers like China and India to create a safe, fair and efficient global system.
An increasing power vacuum in global governance and outdated multilateral institutions are causing problems in the global governance system. The United States is a declining hegemon, and needs help from other nations to share global responsibilities, for maintaining global security/stability. The rise of the BRICs is recent, and they are still not willing to take on the global leadership role. Reforming the outdated multilateral institutions like the UN, WTO, IMF, and the World Bank, to reflect the current economic powers, is needed to bring the BRICs on the global stage. As for the environment, the U.S., China and India have high stakes, and should lead the way in developing an effective mechanism to address global warming – by pushing hard on technological development, and developing a global pricing mechanism for CO2 emissions.
Some Food for Thought: Will the recent tragic events in Japan have a negative impact on investments in nuclear energy? If yes, how will this impact the BRICs, and more importantly, impact the global environment in the future?