BRICS, it is easier to paint flowers than to plant a garden

By: Hugo Marcelo Balderrama - 27/05/2024

Guest columnist.
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After the 2003 coup d'état, which Castro-Chavism militants call: "Gas War", Bolivia's geopolitical relations changed 180 degrees, since we went from being a country allied with Western democracies to a satellite of the dictatorial regimes (Russia, China, Cuba and Iran).

For obvious reasons, our leaders stopped being interested in expanding the markets that Bolivian products had secured in the United States, for example, by not renewing the ATPDEA, and, at the same time, they sold the idea of ​​joining the BRICS, which, in theory , would be the new engine of the world's economy.

However, there is one question that no one asked: what are the BRICS?

In 2001, Goldman Sachs economist Jim O'Neil coined the acronym BRIC (Brazil, Russia, India and China) to classify countries that, at that time, represented great investment opportunities.

Around 2006, the aforementioned countries began to talk about forming a bloc, but only in 2009, in the Russian city of Yekaterinburg, did they have their first summit.

In 2010, South Africa joined the group by adding the final S to the acronym that defines it. According to official data, the BRICS represent more than 42% of the world's population, close to 30%, and 18% of global trade.

With the numbers mentioned above, it would seem like a good idea to join that block. However, as the old saying goes: "All that glitters is not gold," let's see.

Boris Yeltsin, during his period in charge of the Russian government, carried out reforms in favor of the free market, private initiative, the reduction of state bureaucracy and the establishment of the democratic system.

Obviously, these reforms meant great advantages for the first investors to arrive in Russian lands, which is why Jim O'Neil included Russia among his possible investment options, since the possibilities of achieving high rates of return, the IRR, In financial jargon, they were very high.

However, the democratic mirage in Russia began to crumble very quickly. Vladimir Putin succeeded Boris Yeltsin at the end of the 20th century and his government extended until now, 2024. If he manages to finish his fifth term in 2030, Putin would become the second man who has held the position for the longest time, being surpassed only by by Joseph Stalin. However, Putin apparently plans to break the Soviet dictator's record,

With its latest war adventure, the invasion of Ukraine, the Kremlin moved forward with the nationalization of the electrical assets of the energy company Fortum (53% owned by the Finnish State), and the expropriation of most of the assets of the Unipro firm. JSC (whose main shareholder was the German company EON).

The above is in addition to the foreign companies that decided to suspend their operations in the country, including Ikea, Renault and McDonald's. Today, thirty years after the beginning of the democratic process, Putin officially inaugurated a second Soviet period.

For its part, China, which many naive people still consider to be the next great power, has been collapsing for several years as a result of the Keynesian policies that the dictatorship applied in the Asian giant. In this regard, Mauricio Ríos, economist and investment advisor, in his article: China reconfirms the problems of typically Keynesian global stagflation, states the following:

China has not grown in this quarter due (first of 2021), fundamentally, to the bottlenecks that interventionism has created on the supply side, that is, by having closed the economy and having prevented businessmen from finding solutions. to the problems that arose, and that still continue to prevent them from finding, and even more so for having made the mistake of thinking that to solve supply problems, demand must be stimulated. In other words, what is happening - although no one is willing to recognize it - is that, just as in the past at least since the 1930s, Keynesian policies have failed and have aggravated the situation that they were intended to solve from the beginning.

To the above we must add an aggravating factor: China, in its desire to consolidate the Silk Road and its geopolitical influence, has made the serious mistake of lending money to bankrupt nations, for example, my native Bolivia.

That is to say, the Red Dragon not only has to fix its internal economy, but also try to recover some of the capital it squandered in the dictatorships of 21st Century Socialism.

There is little to talk about India, because, despite the spectacular growth of its economy, the GDP per capita is barely 7,000 United States dollars (USD), compared to 39,000 in the European Union. Furthermore, India continues to be the country with the highest level of poverty in the world: 30% of the population lives below internationally accepted minimum levels.

Brazil, especially after Lula's return, exhausted all the primary surplus left by Jair Bolsonaro. After 15 months, even with the enactment of new taxes, IBGE Brazil recorded a primary deficit equivalent to 2.47% of GDP by the end of March 2024. There is a very simple reason, no country supports the socialist agenda of spending what you have, and even what you don't have.

In conclusion, if I had to use a term to define the BRICS it would be: It is easier to paint roses than to plant a garden.

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