At the invitation of Chinese President Xi Jinping, PM Modi is attending the 14th BRICS Summit hosted by China in virtual format.
Discussions during the summit are expected to cover intra-BRICS cooperation in areas such as counter-terrorism, trade, health, traditional medicine, environment, IT and innovation, agriculture, technical and vocational training, and MSMEs.
Why in news?
- China is keen for the grouping to explore expansion and include new developing country members.
- Under the “BRICS Plus” format, the forthcoming summit is also expected to be attended by leaders of invited emerging countries.
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.
Salient features of BRICS
(1) 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.
(2) Future power centres 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.
(3) New global 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.
(4) 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.
- 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.
(5) 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.
- They are prone to increased economical volatility in current globalized scenario and is considered as rival of International Monetary Fund.
(6) 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.
(7) 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.
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.
(2) 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.
(3) 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.
(4) Multilateral reforms
- 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.
(2) 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.
(4) Regional model
- 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.
- 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.
(6) Hostile members
- 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.
(7) 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.
- Russian participation has been seen through lens of its recent invasion of Ukraine aslo.
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.
(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.
(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 at 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.
- The BRICS needs to expand its agenda for increasing its relevance in the global order.
- 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.
- 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.
- 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.