The BRICS coalition has evolved from a mere economic concept to a platform for intergovernmental cooperation with significant political and economic influence. Now, it is a prominent force in the global economy, and its members, once seen as the fastest-growing economies, have now set their sights on reshaping global governance, expanding their platforms and activities, and welcoming new members. The upcoming 15th summit in Johannesburg this August marks a significant turning point for the BRICS nations – Brazil, Russia, India, China, and South Africa. These emerging economies are poised to establish themselves as a formidable alternative to the established international financial and political forums.
THE EVOLUTION OF BRIC
In a groundbreaking move back in 2001, esteemed Goldman Sachs banker Jim O’Neill devised a remarkable acronym, “BRIC,” to encapsulate the emerging economic powerhouses of Brazil, Russia, India, and China. With great foresight, O’Neill anticipated that these nations would swiftly exert a substantial influence on the global economic landscape. Goldman Sachs, the renowned multinational investment bank, made a significant move in the financial landscape back in 2006. The institution launched an investment fund specifically designed to capitalize on the growth potential of the BRIC nations. By establishing this fund, Goldman Sachs aimed to tap into the promising prospects offered by these nations, which were widely recognized as key players in the global economy.
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The moniker, which symbolized the worldwide enthusiasm surrounding the rise of emerging powers, underwent a significant transformation in 2009. This marked the moment when the leaders of the four nations convened for their inaugural summit, thereby solidifying their status as a political alliance. In a notable development, South Africa has officially become a member of the organization, albeit a year later than its counterparts. Critics argue that categorizing these countries under a single label is an oversimplification, given their vast diversity, suggesting that this classification may merely serve as a strategic maneuvre by Goldman Sachs for marketing purposes. What was once dismissed as a mere marketing tactic to attract investors has now evolved into a robust platform for fostering intergovernmental collaboration, rivalling the esteemed G7 and even surpassing it in significance.
In a recent statement, financial giant Goldman Sachs has boldly asserted that the global economy is set to witness a significant shift in power dynamics by the year 2050. According to their projections, the four emerging economies collectively known as BRIC (Brazil, Russia, India, and China) are poised to take center stage and dominate the global economic landscape. The group’s primary competitive edge lies in its ability to maintain low labor costs, benefit from favorable demographics, and capitalize on abundant natural resources during the global commodities boom.
HOW BRICS WAS OFFICIALLY FORMED?
Russia has taken the lead in establishing the renowned alliance known as BRICS. In a historic event that took place on September 20, 2006, the inaugural BRICS Ministerial Meeting was successfully convened. In a remarkable display of diplomatic initiative, former Russian President Vladimir Putin put forth a proposal for a meeting during his time at the United Nations General Assembly Session in New York. In a momentous gathering of global leaders, the foreign ministers of Russia, China, and Brazil, alongside the esteemed Defense Minister of India, convened for a highly anticipated meeting.
The Foreign Ministers of the BRICS countries met in Yekaterinburg, Russia on May 16, 2008, at Russia’s suggestion. After the meeting, they produced a Joint Communique outlining their shared views on pressing international issues.
During the G8 Summit in Toyako, Hokkaido, Japan, an important meeting took place between the then-Russian President Dmitry Medvedev and several prominent world leaders. Among them were the then President of Brazil, Luiz Inacio Lula da Silva, the Prime Minister of India, Manmohan Singh, and the Chinese President, Hu Jintao.
The first-ever BRIC Summit took place on June 16, 2009, with Russia playing host to this significant gathering at Yekaterinburg. In a promising development, a pledge was made to foster collaboration and facilitate dialogue among the BRIC nations.
It was announced that the collaboration among nations within the bloc would advance the shared interests of both developing countries and emerging market economies. it has been highlighted that the cooperation and dialogue among the BRIC countries not only bring about economic advantages but also contribute to the establishment of a global order stamped by peace, tranquilly, and mutual success.
HOW DOES BRICS OPERATE?
On the premise of the UN Charter, BRICS partners build their relationships. They comply with recognized principles and international law standards. During their 2011 Summit, all member states reached a consensus on the following principles.
THOSE PRINCIPLES WERE: –
- Solidarity
- Openness
- Pragmatism
- Neutrality (regarding third parties)
- Non-bloc nature
The research institutes and business organizations of the bloc nations collaborate within the BRICS framework, according to plans approved at annual summits since 2010.
A POWERHOUSE BRIDGING DIFFERENCES FOR DIPLOMATIC AND ECONOMIC STRENGTH
The combined landmass of the BRICS countries is 39,746,220 square kilometers, and their combined population is around 3.21 billion. This constitutes roughly 26.7% of the total land area and 41.5% of the world’s population. In terms of population, land area, and GDP (PPP), four of the world’s ten largest countries are located in Brazil, Russia, India, and China.
Even without expansion, 25 percent of world GDP, 18 percent of global commerce, and more than 50 percent of the global growth occur in BRICS countries. The aggregate GDP (PPP) of these five countries is about US$56.65 trillion.
In terms of PPP, the aggregate GDP of the BRICS nations last year surpassed that of the G7 nations led by the United States for the first time.
Although, the five BRICS nations disagree on a wide range of issues. In contrast to commodity-exporting nations such as Brazil and Russia, China is a net importer of basic materials. Brazil, India, and South Africa, as opposed to autocratic countries like China and Russia, have thriving democracies and robust civil society. Brazil and South Africa, unlike China, India, and Russia, do not possess nuclear weapons. The most important issue is the continuous border war between China and India.
Although there is much difference between the BRICS nations, not a single leader has previously missed an annual summit. (During the COVID-19 epidemic, meetings were held online.) The relationships between the BRICS countries have deepened diplomatically and economically, and being a member of the BRICS has become an integral part of the foreign policy identities of all five countries. Right-wing populist leaders’ elections, such as that of India’s Narendra Modi in 2014 and Brazil’s JairBolsonaro in 2018, have not appreciably impacted countries’ commitment to the club.
GDP OF BRICS COUNTRIES
SHAPING THE GLOBAL GOVERNANCE
Peace, economic cooperation, sustainable development, and cross-cultural interactions are all areas where the BRICS countries are making substantial contributions to world governance. These countries have gained significant prominence in the global economy, attracting attention and generating interest in recent years. Discussions regarding potential replacements for the current global financial system have been generated by the prospect of establishing a new international currency and the rise of alternative institutions like the New Development Bank.
To participate in global economic governance, BRICS countries have followed a general pattern of reforming existing mechanisms while keeping them stable, and constructing a new governance mechanism under changing objective requirements. Increasing GDP and clout in the economic sphere for the BRICS only strengthens their standing on the world scene. The BRICS’ increased openness and inclusivity, as shown by projects like BRICS+, have also received significant support, especially in the Global South. The BRICS’ growing popularity can be attributed in part to the sense of shared wealth among its members and to the demonstrative impact of successful BRICS countries in combating poverty and expanding the middle class.
Along with this, the BRICS nations share a desire to alter the unjust status quo of the current global governance structure, which includes historical remnants of colonialism and the hegemonic phenomena itself.
CHALLENGING THE WORLD BANK MODEL
The BRICS organization serves as more than simply a commercial bloc; in 2014, it launched the New Development Bank to finance environmentally friendly infrastructure projects and alternative energy sources around the world. It’s an alternative to the World Bank and the IMF with initial funding of $50 billion (approximately €46 billion). In addition, the Contingent Reserve Arrangement was established as a financial instrument to assist members with payment issues.
The BRICS nations and other developing and emerging economies that had been burned by the IMF’s structural adjustment programs and austerity measures were attracted to these proposals. Because of this, a lot of countries have expressed interest in joining the BRICS. New countries are welcome to join the BRICS bank. Shares were acquired in 2021 by Egypt, the UAE, Uruguay, and Bangladesh. However, these were significantly less than the founding members’ individual $10 billion investments in the bank.
BRICS HAS ALREADY SURPASSED G7’S GLOBAL GDP
According to a report published on countercurrents.org that cited data from Acorn Macro Consulting, the BRICS countries have surpassed the Group of Seven (G7) in terms of purchasing power parity (PPP)-aggregate gross domestic product (GDP). Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, and the European Union are members of the G7.
According to the report, the five BRICS nations contribute nearly 31.5% of the global GDP, compared to the G7 nations’ 30.7% share. It is anticipated that the BRICS will contribute over 50 percent of the global GDP by 2030, with the proposed expansion almost certainly bringing this forward. In 2015, China’s GDP surpassed that of the United States in terms of purchasing power parity.
The news comes as Western nations brace themselves for the oncoming storm of a recession. Europe has been hit hard by inflationary pressures and relentless rate hikes by central banks around the globe, which has worsened the Europeans’ situation. Moreover, the ongoing war between Russia-Ukraine has increased the cost of food and fuel globally.
ARE WE SEEING THE BRICS CURRENCY SOON?
With 88 percent of international transactions conducted in US dollars and 58 percent of global foreign exchange reserves held in dollars, the dollar’s global dominance is unlikely to be contested. Due to the widespread use of the dollar, the United States has held disproportionate influence over other economies. After Russia’s invasion of Ukraine, however, the trend toward de-dollarization has accelerated. In addition to the BRICS nations, many others are actively investigating dollar alternatives, and central banks have sought to increase their gold holdings.
Russia, China, and Brazil have increased their use of non-dollar currencies in cross-border transactions over the past year. All BRICS nations have criticized the dollar’s hegemony for various reasons. Russian officials have supported de-dollarization to alleviate the effects of sanctions.
The BRICS nations, notably Brazil under President Lula and China, are reaffirming their commitment to de-dollarization and investigating the possibility of establishing a new currency.
Although many options are being considered, a BRICS version of the Euro is unlikely in the immediate future. Instead, emphasis is placed on the creation of an integrated payment system for international transactions and the promotion of currency interoperability. The BRICS Interbank Cooperation Mechanism and initiatives such as “BRICS pay” have already paved the way for this. In addition, there are discussions regarding a BRICS cryptocurrency and the alignment of the development of Central Bank Digital Currencies to facilitate economic integration. With increasing interest from other nations, the de-dollarization agenda of BRICS is anticipated to grow.
At the 15th BRICS summit, which will be held in South Africa later this year, discussions on the viability of introducing a common currency are expected to reach a new peak. These discussions will center on the replacement of the US dollar in international trade.
MORE BRICKS AT BRICS?
Since 2009, the key to BRICS’s success has been its ability to sidestep internal disagreements and focus on unifying themes, such as the desire in creating a more multipolar world and strengthen south-south relations. The objective is to further establish itself as a representative of the “Global South” and offer an alternative model to the industrialized economies of the Group of Seven (G7) countries.
More than 20 nations are currently pursuing membership in the group at least. Saudi Arabia, the United Arab Emirates, Egypt, Algeria, Argentina, Mexico, Nigeria, Bangladesh, Iran, Venezuela, Syria, Indonesia, Ethiopia, and Bahrain are among these countries. The membership of Iran, Syria, Venezuela, and a few other nations could steer the coalition toward an unambiguously antiWestern stance.
“Discussions continue what could be the criteria for joining BRICS, and South Africa has intensified this work,” Russian Deputy Foreign Minister Sergey Ryabkov said, adding that an in-depth conversation on this subject took place at a meeting of BRICS foreign ministers in Cape Town in early June and that additional contacts are expected to take place before the summit of BRICS leaders in August.
The senior diplomat said that South Africa’s accession to the bloc was a “successful experience,” recalling that the decision was made based on the agreement of other participants.
“Discussions continue what could be the criteria for joining BRICS, and South Africa has intensified this work”
“I think that strong candidates … can turn to this experience too, predicting for themselves what can and cannot happen,” he said. Ryabkov urged other BRICS participants to be “open” when determining whether to accept new members, noting that Russia favors the inclusion of Arab and Asia-Pacific nations because the economic bloc “lacks” their representation.
The USA and other Western nations will see their GDPs fall below that of the BRICS as a result of this development.
BANGLADESH HAS FORMALLY APPLIED FOR BRICS MEMBERSHIP
Bangladesh has officially expressed its desire to join the BRICS coalition, which includes Brazil, Russia, India, China, and South Africa. During a meeting between Prime Minister Sheikh Hasina and South African President Matamela Cyril Ramaphosa, the request was made.
Bangladesh has sent a formal letter of inquiry to South Africa’s Foreign Minister Naledi Pandor, the current BRICS chair. The August BRICS summit may include discussions on new membership. Joining BRICS would aid Bangladesh in diversifying its foreign relations and currency, and could yield medium- to long-term benefits as the bloc seeks to challenge the U.S. dollar’s dominance. Bangladesh is presently recognized as a “Friend of BRICS” and its foreign ministers participated in the Friends of BRICS Foreign Ministers Meeting on June 16.
Experts view Bangladesh’s membership in BRICS as a positive development that would enhance the country’s relations with these nations, provide access to funds from the BRICS New Development Bank, and create opportunities for increased foreign investment and bilateral trade.
“Joining BRICS will deepen Bangladesh’s relations with these countries. It will also help Bangladesh diversify its foreign relations,” Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD).
China and India are Bangladesh’s top two trading partners, accounting for almost 40 percent of its imports.
As Bangladesh has already joined the NDB in 2021, according to Professor Mustafizur, joining BRICS would enhance Bangladesh’s voice and access to funds from the bank. However, there are concerns regarding the difficulties of a unified monetary policy and the potential geopolitical repercussions of dedollarization, and the introduction of a BRICS common currency.
15TH BRICS SUMMIT DUE IN AUGUST 2023
South Africa is scheduled to host the 15th BRICS Summit at the prestigious Sandton Convention Centre in Sandton, Johannesburg, from 22 to 24 August 2023. This will be the first summit to be conducted inperson in four years; the last three were held virtually under the leadership of Russia, India, and China due to the Covid-19 pandemic.
The theme of this highly anticipated event is “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism.”
The 15th BRICS Summit is anticipated to attract a wide variety of world leaders, policymakers, and influential figures, making it an ideal venue for media professionals to gain insight into vital discussions regarding global economic development, financial services, trade, and cooperation.
The summit will highlight the collective efforts of the BRICS nations to promote inclusive and sustainable development in their respective regions and globally.
Earlier, there were rumors that the summit may be relocated to China so that Russian President Vladimir Putin can attend in a country that is not obligated to detain him on war crimes charges. (As a signatory of the International Criminal Court (ICC), South Africa is obligated to arrest Putin if he attends the discussions between the leaders of Brazil, Russia, India, and China due to an arrest warrant for the deportation of Ukrainian children.)
End of last month, South African officials reported that the BRICS nations were considering moving the summit to China, which is not a member of the international court. They could still alter the venue at the eleventh hour.
The upcoming summit in South Africa is expected to be the most significant, as the decisions made at the summit will determine the group’s future trajectory and its role in global strategic and economic development.
To conclude, as the gravity center of the global economy shifts toward the Global South, BRICS is poised to play a larger role in setting regional and global development goals.
