Europe has been courting key leaders from emerging nations of late, aimed to get away from the debt crisis as soon as possible.

There was the EU-South Africa summit hosted by South African President Jacob Zuma a few weeks ago. On Tuesday, Brazilian President Dilma Rousseff held talks with EU leaders including European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso.

At the EU-Brazil summit held in Brussels, Rousseff had soothing, if not reassuring, words for beleaguered European leaders dealing with a snowballing sovereign debt crisis.

"Our region, which was synonymous with crisis, is today one of the fastest-growing regions in the world," she remarked.

"Brazil, and here I'm quite certain I also express the view of the developing economies, is ready to take on its responsibilities in a cooperative spirit. We stand as partners of the EU and you can rely and count on us," she added.

Rhetoric or not, the debate is on whether feel President Rousseff's words reflect the growing aspirations of the world's emerging nations – Brazil, Russia, India and China. Formally established in June 2009, BRIC became BRICS when South Africa was inducted into the grouping during a summit held in Sanya, China in April 2011.

With reported joint reserves of over 4 trillion U.S. dollars, BRICS in theory has the money required to bail out crisis-hit Europe, more specifically the co-called PIIGS or Portugal, Ireland, Italy, Greece and Spain.

So can Brussels hope for help from BRICS and can the latter genuinely offer Europe substantial debt relief?

Brazilian Finance Minister Guido Mantega certainly seemed to think so. Prior to a recent meeting of BRICS finance ministers and central bank governors in Washington, he was quoted as saying the EU needs help. "We are going to meet next week in Washington and we are going to talk about what to do to help the EU get out of this situation," he said.

Indeed, global markets gained temporary relief from extreme volatility last month whenever there was talk of BRICS nations buying bonds of EU nations. One such example was when markets were briefly buoyed by speculation that Beijing was looking at purchasing Italian bonds.

Mantega said the incentive to buy Europe's sovereign debt is "to appear publicly as contributors to market stability and thereby demonstrate to what extent the balance of the global economy is changing."

Experts say, however, BRICS nations, many of whom are battling inflation and consolidating their economic progress, are unlikely to work as a bloc to help Europe. If steps are taken, they are expected be done by individual nations to diversify their reserves and be largely symbolic.

They insist that it is in BRICS' own interests to help Europe. Over the years, the global production network that centres around China has significantly raised the welfare of developing countries, especially through capital goods that greatly improved the efficiency of their industries and everyday life, said Hosuk Lee-Makiyama, co-director of the European Centre for International Political Economy.

"Countries in regions such as South East Asia, Asia-Pacific and Latin America are now firmly a part of the production chain," he stated.

If the eurozone gets into long-term trouble, BRICS exports will plummet. Therefore, it would make sense for businesses in Brazil, for instance, to seize the opportunity to set foot in Europe, export more value-added products and take advantage of foreign direct investment (FDI), according to Alfredo Valladao, president of the EUBrasil Advisory Board.

"While EU economies are in need of investment and growth, Brazilian FDI in Europe is still low and irregular. But many Brazilian firms are starting to look more seriously at how to take advantage of the huge EU market," he said.

Some find it more difficult to envision South Africa, the EU's largest trading partner in Africa, substantially contributing to any possible European bailout given that the EU currently provides 70 percent of all of South Africa's external assistance funds.

According to Eurostat, the EU has channelled an average of 125 million euros (165 million U.S. dollars) a year into development projects in South Africa over the last 16 years, with another tranche of 980 million euros being earmarked for 2007 to 2013 to reduce poverty and inequality.

Since China also has a big stake in the global stability of financial markets, it can help restore confidence to a certain extent by purchasing bonds of troubled European economies, said Fabian Zuleeg, chief economist at the European Policy Centre.

"But a permanent solution has to come from Europe itself. China can help, but only Europe can definitively help itself," he added.

Even if BRICS countries consider buying bonds in Europe, EU leaders would need to take concrete steps towards a fiscal union to make the prospect more worthwhile.

"It would be more attractive for China and other nations if there were eurobonds instead of national bonds denominated in euros," said Prof Iain Begg, research fellow at the European Institute of the London School of Economics.

European Commission President Jose Manuel Barroso has said he expects the eurozone to be stronger in five to ten years as globalisation continues to drive integration.

But lots remains to be done in terms of the EU liberalizing trade with the BRICS countries, say experts.

"Given the moribund state of EU's economies, and the populist temptations politicians are facing, we are lucky that there hasn't been a pronounced moved towards more protectionism," said Dalibor Rohac, deputy director of economic studies at the Legatum Institute.

He said whether or not the European debt crisis has had a clear effect on bilateral relationships with BRICS, one lesson emerging nations should draw is that the European welfare state is not a model to be followed.

"Europe might still be wealthier than the BRICS, but it is evident that this wealth might not last forever, especially if it pursues ill-advised, conceited policies, regardless of their economic costs," Rohac added.

SOURCE: Xinhua News
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