BRICS: Time to create an OECD-type structure?

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AMRO

Will the BRICS institutionalize, and will BRICS-related initiatives proliferate? Most observers focus on highly symbolic security issues, like the crisis in Ukraine or UN Security Council Reform. Yet potential for enhancing intra-BRICS cooperation is mostly in the technical realm and of little visibility to the general public. One example is the creation of an OECD-like institution. The Organisation for Economic Co-operation and Development, created in the 1960s, provides a platform to compare policy experiences, seeking answers to common problems, identify good practices and coordinate domestic and international policies of its members.

Over the past years, the BRICS have established a series of initiatives in this sense -- discussing issues such as statistics, tax administration and public health, yet they are largely uncoordinated and do not produce systematic and openly accessible information. An OECD-type umbrella could create a guiding narrative to these activities and produce a useful exchange of best practices. This, naturally, would not preclude BRICS members from joining the OECD -- as Russia attempted to do prior to the crisis in Ukraine.

One interesting example to follow is the ASEAN+3 Macroeconomic and Research Office (AMRO), which started its operation in Singapore in May 2011. The office performs a key regional surveillance function of the US$120 billion Chiang Mai Initiative Multilateralisation (CMIM) currency swap facility. Three years later, member states (ASEAN, China, Japan and Korea) established AMRO as an international organization.

As the Bank of Thailand announced back then,

The Agreement aims to enhance the effectiveness of the AMRO’s function as an independent surveillance unit to monitor, assess and report macroeconomic stability and financial soundness of members. Indeed, the roles on identifying regional risks and vulnerabilities as well as providing timely policy recommendations have also been described.

The AMRO is supposed to underpin regional financial stability together with a strengthened Chiang Mai Initiative Multilateralisation (CMIM) -- an institution that can best be compared to the BRICS' Contingency Reserve Agreement (CRA). In that sense, the set-up of a BRICS-led research office (which could also be situated within the New Development Bank's structure) could be an important step to institutionalize and support the CRA.

NDB

Such an OECD-type structure led by the BRICS would not exist in opposition to the OECD. Quite to the contrary, they should cooperate systematically. In the same way, the AMRO frequently engages with the OECD. In 2012 in Singapore, a workshop was co-organized by OECD and AMRO, in co-operation with the ASEAN Secretariat (see the program here), and ways to create joint projects were proposed. As the ASEAN+3 Finance Ministers declared in 2013,

We appreciated the progress made by AMRO in cooperation with relevant International Financial Institutions (IFIs), such as frequent exchanges with the IMF and ADB on macroeconomic developments in the region, hosting joint seminars, and conducting joint studies. We encouraged AMRO to further strengthen such cooperation in order to enhance its institutional capacity and to establish strategic partnerships with other IFIs to this end.

A BRICS-led research office should, in the same way, seek to cooperate broadly with existing structures to avoid that Western observers interpret their initiative as a threat.

The challenge, naturally, would be to assure complete independence of such a structure to assure its international credibility. A similar concern applies to discussions about a BRICS-led rating agency. Still, considering the growing need to share economic data between the BRICS in the context of both the BRICS-led New Development Bank and the BRICS Contingency Reserve Agreement (CRA), AMRO could serve as a useful model.

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Photo credit: Der Welt-Leuchter - Shanghai, China