The 13th BRICS summit is set to be held on September 9 in digital format under India’s chairmanship. This plurilateral grouping comprising Brazil, Russia, India, China, and South Africa is chaired by turn. India held the chair in 2012 and 2016 too.
The grouping is successful in moving towards the desire objectives for which it has come into existence. But currently, there are many challenges engulfing it. This is high time that it should look forward to resolving them and progress towards its desired objectives.
What is BRICS?
- BRICS is an acronym for the grouping of the world’s leading emerging economies, namely Brazil, Russia, India, China and South Africa.
- The BRICS Leaders’ Summit is convened annually. It does not exist in form of organization, but it is an annual summit between the supreme leaders of five nations.
- On November 30, 2001, Jim O’Neill, a British economist who was then chairman of Goldman Sachs Asset Management, coined the term ‘BRIC’ to describe the four emerging economies of Brazil, Russia, India, and China.
- He made a case for BRIC on the basis of econometric analyses projecting that the four economies would individually and collectively occupy far greater economic space and become among the world’s largest economies in the next 50 years or so.
How it has formed?
- The grouping was formalized during the first meeting of BRIC Foreign Ministers on the margins of the UNGA in New York in September 2006.
- The first BRIC Summit took place in 2009 in the Russian Federation and focused on issues such as reform of the global financial architecture.
Who are the members?
- South Africa was invited to join BRIC in December 2010, after which the group adopted the acronym BRICS. South Africa subsequently attended the Third BRICS Summit in Sanya, China, in March 2011.
- The Chairmanship of the forum is rotated annually among the members, in accordance with the acronym B-R-I-C-S.
- The importance of BRICS is self-evident: It represents 42% of the world’s population, 30% of the land area, 24% of global GDP and 16% of international trade.
- The five BRICS countries are also members of G-20.
Significant feats of BRICS
1. Johannesburg Declaration, 2018
- The 2018 summit saw the BRICS leaders come together and discuss various international and regional issues of common concern and adopted the ‘Johannesburg Declaration’ by consensus.
- The leaders jointly reaffirmed their commitment to the principles of mutual respect, sovereign equality, democracy, inclusiveness and strengthened collaboration.
- The BRICS leaders have used the summit to reject the growing unilateralism and instead reiterate their commitment to the strengthening of multilateral institutions, calling for stronger intra-trade within member states.
2. Focus on New Industrial Revolution
- The other big idea emanating from the summit is to help nations to prepare for the Fourth Industrial Revolution.
- Participants embraced it, articulating the need for a new strategy on employment, education and skill development as the digital revolution unfolds.
- The leaders commended the establishment of the BRICS Partnership on New Industrial Revolution (PartNIR).
- It aims to deepen BRICS cooperation in digitalization, industrialization, innovation, inclusiveness and investment and to maximize the opportunities and address the challenges arising from the 4th Industrial Revolution.
3. BRICS Plus
- The BRICS outreach to Africa began at the last summit hosted by South Africa, in 2013. It has picked up momentum now but African leaders want more.
- They need big loans from the New Development Bank (NDB) for their infrastructure projects.
- China introduced the “BRICS Plus” format at the Xiamen summit last year by inviting a few countries from different regions.
- South Africa emulated it, arranging the attendance of top-level representation of five nations of its choice: Argentina, Jamaica, Turkey, Indonesia and Egypt.
- The precise role of “BRICS Plus” countries will take time to evolve but an immediate benefit is the immense opportunities it provides for networking among leaders.
4. Brasilia outcome
- During Brazil’s chairmanship, the grouping reported 30 new outcomes, initiatives and documents.
- The latest summit needed a 73 para-long Brasilia Declaration to spell out the leaders’ shared worldview and spectrum of their work.
- Much to India’s satisfaction, the commitment of BRICS to counterterrorism seems to be getting strengthened.
5. New Development Bank (NDB) projects
- The NDB, the grouping’s flagship achievement, has 44 projects with its lending touching $12.4 billion, in just five years.
- This is not a small gain, but the bank needs to grow as “a global development finance institution”. A move is now afoot to open its membership selectively.
- NDB has opened its regional centers in South Africa and Brazil and will do so in Russia and India in 2020.
6. Local Currency Bond Fund
- With a successful Contingent Reserve Arrangement in the bag, BRICS governments are set to establish a Local Currency Bond Fund.
7. Business promotion
- The BRICS Business Council held a substantive dialogue to foster cooperation in areas ranging from infrastructure and energy to financial services, regional aviation and digital economy.
- Its cooperation with the NDB is being encouraged. The national trade promotion agencies signed an MoU on cooperation among themselves.
- A BRICS Women Business Alliance was also created, both as a women empowerment measure and as a tool to bring “a distinctive perspective on issues of interest for the business community.”
How relevant is the BRICS in today’s world?
New front against western dominance
- The BRICS is group of countries having total population of approximately 3.6 billion which makes 40% of world population.
- Also, the cumulative economy of the group members aggregate to around 17 trillion in nominal term which is 22% of world economy in current context.
- The relevance of the group increases when it is considered as rival of western dominated institutions of World Bank and IMF.
Future power centers of the world
- India and China are today the fastest growing economies and they are considered as future super power of world.
- The group also has Russia the former USSR as a member which was one of the two super power until 1991 when it was disintegrated for various political and economic reason but still retain the hegemony of western, US led military dominance.
A step towards a more democratic world order
- In subsequent summits since its inception the group has taken various initiatives which have changed the world economic order.
- The group pledged a corpus of $75 billion to IMF on precondition of voting rights reform in June, 2012 which is not only the end of US hegemony in institution but also a start of more democratic world order.
New Development Bank
- During its fifth summit at Durban, South Africa in 2013, the member countries agreed to create a new global financial institution which finally came into existence as New Development Bank in 2015.
- It has a head quarter at Shanghai with initial capital of $50 billion and subsequently increased to $100 billion.
- The bank is today considered as rival of World Bank and the bank’s primary focus is to lend for various development projects in member and other developing countries.
Contingent Reserve Agreement
- To save members from immediate economic shocks the group has also agreed to Contingent Reserve Agreement.
- The agreement provide protection to member countries against global liquidity pressure as all the members are developing economies and prone to increased economical volatility in current globalized scenario and is considered as rival of International Monetary Fund.
A bridge between North and South
- The grouping has gone through a reasonably productive journey. It strove to serve as a bridge between the Global North and Global South.
Assuring global peace and security
- The US unilateral withdrawal from Intermediate-Range Nuclear Forces (INF) Treaty and Iran deal has posed a great security threat to global peace.
- BRICS, being a pillar of fairer polycentric world order, can play a significant role in assuring world peace by playing an active role in dispute resolution based on principle of fairness.
Sustainable and inclusive growth and development
- Structural imbalances caused by the global financial crisis of 2008 and new threats to the global economy posed by trade war and unilateral economic sanctions are yet to be resolved.
- The growing contribution of the BRICS to the world economy and the rising importance of the economic relations between the BRICS and other Emerging Market and Developing Countries (EMDCs) create an opportunity for new initiatives.
- This would better help to support sustainable and inclusive growth and development.
- The BRICS contribution to world poverty reduction has been sizeable.
- Continued BRICS growth remains important for poverty reduction as well as for reducing international inequalities.
Issues in its consolidation
- Common ground for the members was built by ensuring that no bilateral issues were brought up, but the contradictions remained.
- Many economists soon grew tired of “emerging” economies that didn’t reach the goals they had predicted.
- Others saw India’s closer ties with the US after the civil nuclear deal as a sign its bonds with BRICS would weaken.
- Meanwhile, Russia, which had hoped to bolster its own global influence through the group, had been cast out of the G-7 order altogether after its actions in Crimea in 2014.
- China, under Xi Jinping, grew increasingly aggressive, and impatient about the other underperforming economies in the group, as it became the U.S.’s main challenger on the global stage.
- China’s decision to launch the trillion-dollar Belt and Road Initiative in 2017 was opposed by India, and even Russia did not join the BRI plan, although it has considerable infrastructure projects with China.
- South Africa’s debt-laden economy and the negative current account have led some to predict an economic collapse in the next decade.
- Brazil’s poor handling during the Covid-19 crisis has ranked it amongst the world’s worst-affected countries, and its recovery is expected to be delayed.
- India’s economic slowdown was a concern even before Covid-19 hit, and government policies like “Aatmanirbhar” were seen as a plan to turn inward.
Issues with BRICS nations
- Concerns about aggressions from Russia in Ukraine and Eastern Europe and China in the South China Sea, the border with India and internally in Hongkong and Xinjiang are clear visible.
- There is creeping authoritarianism in democracies like Brazil and India have made investors question long-term prospects of the group.
- In the market, BRICS has been mocked for being “broken”, while others have suggested it should be expanded to include more emerging economies like Indonesia, Mexico and Turkey, called the “Next-11”.
Importance of BRICS for India
- Global geopolitics today represents the case of a tug of war and India finds itself in the middle of it.
- This has made difficult for India to carve a middle path for balancing its strategic interests between the U.S and the Russia-China axis.
- Therefore, BRICS platform provides an opportunity for India to balance Russia-China axis.
Global Economic Order
- BRICS countries shared a common objective of reforming the international financial and monetary system, with a strong desire to build a more just, and balanced international order.
- To this end, BRICS community plays an important role in the G20, in shaping global economic policies and promoting financial stability.
Voice of Developing Nations
- As the western countries are raising challenges on issues ranging from World Trade Organization to climate change, the developing countries are crippling under the onslaught of these policies.
- In recent period, BRICS has emerged as the voice of developing countries, or the global south and playing a significant role in protecting the rights of developing countries.
- BRICS also provides a platform for India to galvanize its efforts against terrorism and has worked within the grouping to take a strong stand against terrorism and bring about focused consultations on specific aspects relating to terrorism.
- India is actively pursuing its membership for United Nation Security Council (UNSC) and Nuclear Supplier Group (NSG).
- China forms the major roadblock in pursuing such goals.
- Therefore, BRICS provides an opportunity to actively engage with China and resolve the mutual disputes. It also helps in garnering support of other partner countries.
What are the challenges with the BRICS?
- It is claimed by critics that heterogeneity (variable/diverse nature of countries) of the BRICS nations with its diverse interests possess a threat to the viability of the grouping.
China Centric nature of the group
- All the countries in BRICS grouping trade with China more than each other, therefore it is blamed that as a platform to promote China’s interest.
- Balancing trade deficit with China is huge challenge for other partner nations.
Global Model for Governance
- Amidst, global slowdown, trade war and protectionism, the critical challenge for the BRICS consists in the development of a new global model of governance which should not be unipolar but inclusive and constructive.
- The goal should be to avoid a negative scenario of unfolding globalization and to start a complicated merging of the global growing economies without distorting or breaking the single financial and economic continuum of the world.
Not Been Effective
- The five-power combine has succeeded, albeit up to a point.
- However, China’s economic rise has created a serious imbalance within BRICS.
- Also the group has not done enough to assist the Global South to win their optimal support for their agenda.
Contentious issues between India and China
- However, the future of the group seems little gloomy as the two biggest economy India and China of the group are having various contentious issues between them.
- The two countries are often seen as rival on various global forums which degenerate the confidence between each other.
- China is opposed to the entry of India to group like NSG and also a staunch supporter of Pakistan which has a demeaning record fuelling terrorism in India.
- China has also opposed to UN resolution of declaring Masood Azhar a global terrorist who is a mastermind of various terrorist attack in India and globally.
- At the same time India is also opposed to the China’s aggressive policy in South China Sea where various countries like Vietnam, China, Philippines and others in the reason have territorial disputes.
Sanctions on Russia
- In recent times the global slowdown, sanction on Russia since it annexed Crimea and political instability in Brazil has also added burden on BRICS economy.
Priorities/Immediate goals of BRICS
1. Reform of multilateral institutions
- The first is to pursue reform of multilateral institutions ranging from the United Nations, World Bank and the International Monetary Fund to the World Trade Organization and now even the World Health Organization.
- This is not a new goal. BRICS has had very little success so far, although strengthening multilateralism serves as a strong bond as well as a beacon.
- Reform needs global consensus which is hardly feasible in the current climate of strategic contestation between the U.S. and China and the devastation caused by COVID-19 to health, lives and livelihoods.
- BRICS emerged from the desire to challenge dominance (by the U.S.) in the early years of the century. The “counter-dominance instinct and principled commitment to multipolarity in all forms” is “written into the DNA of BRICS.”
2. Resolve to combat terrorism
- Terrorism is an international phenomenon affecting Europe, Africa, Asia and other parts of the world. Tragic developments concerning Afghanistan have helped to focus attention sharply on this overarching theme, stressing the need to bridge the gap between rhetoric and action.
- China, for example, feels little hesitation in supporting clear-cut denunciations of terrorist groups, even as its backing of Pakistan, which is heavily enmeshed with a host of international terrorist groups, remains steadfast.
- In this context, BRICS is attempting to pragmatically shape its counter-terrorism strategy by crafting the BRICS Counter Terrorism Action Plan containing specific measures to fight radicalization, terrorist financing and misuse of the Internet by terrorist groups.
- This plan is expected to be a key deliverable at the forthcoming summit and may hopefully bring some change.
3. Promoting technological and digital solutions for the Sustainable Development Goals
- Digital tools have helped a world adversely hit by the pandemic, and India has been in the forefront of using new technological tools to improve governance.
4. Expanding people-to-people cooperation
- However, enhancing people-to-people cooperation will have to wait for international travel to revive. Interactions through digital means are a poor substitute.
- A close examination of India’s record in BRICS reveals that New Delhi has used its membership to make a substantial contribution to the global financial architecture, while also making efforts to address glaring gaps in areas such as counter-terrorism, the fight against climate change and UNSC reform.
- India is not a free-rider in a system of global governance dominated by the West, and continues to provide a vision of global governance.
- The BRICS needs to expand its agenda for increasing its relevance in the global order. As of now, climate change and development finance, aimed at building infrastructure must dominate its agenda.
- For BRICS to remain relevant over the next decade, each of its members must make a realistic assessment of the initiative’s opportunities and inherent limitations.
- BRICS should promote comprehensive development of all states — both big and small — and enhanced mutually beneficial cooperation among them on the basis of shared interests.
- Democratization of international issues i.e agreements on global agendas should be reached with the widest and equal participation of all stakeholders and be based on universally recognized legal norms.
- The principle of respect for cultural and civilization diversity of the world should be a top priority.
- BRICS nations should strive for peaceful and politico-diplomatic settlement of crisis and conflict in various regions of the world.
BRICS, being one of the pillars of the emerging fairer polycentric world order, plays an important stabilizing role in global affairs. In the storming ocean of world politics, BRICS can contribute significantly in maintaining international stability and ensuring global economic growth, and becoming a united center of the multipolar world.