One of the key principles guiding the BRICS since inception is that member countries do not cross each other’s “red lines” and follow the general “club” principle of not publicizing members’ disagreements.
 |
| The BRICS leaders at the tenth summit held in South Africa in 2018 |
The main challenge ahead of the BRICS is not procedural nor bureaucratic, but to continue to lead with innovative thinking and practical responses to some of the most pressing development challenges of our time.
The 12th BRICS Summit on November 17 will be a test for the grouping under Russia’s helm. Since the creation of the BRICS in 2009, the five countries have strengthened their participation in the world economy. Pushed by China and India, the total BRICS GDP amounted to 25% of global GDP (US$21 trillion) and BRICS share in international trade stood at almost 20% (US$6.7 trillion) in 2020. Over the past five years, intra-BRICS exports grew by 45% and the share of intra-BRICS exports in total BRICS international trade increased from 7.7% to 10%. The GDP of the five countries also grew faster than global and G7 GDP at an average annual rate of 5.31% according to the IMF.
The costs inflicted by the COVID-19 pandemic on the society and the economic activity of the five countries, however, may halt this trend. At least temporarily. Among the ten countries most affected by the pandemic, four are BRICS members. The health crisis is also reflected in the economic indicators. In 2020, the BRICS are projected to grow -30.1% with Brazil, India and South Africa’s economies bearing growth rates below the world average. Changes in domestic and foreign policy orientation in Brazil and South Africa and the deterioration of a crucial axis of BRICS cooperation—the India-China relationship — have further spearheaded scepticism on the breath of the BRICS as a political grouping in addition to an economic powerhouse.
Amid the turbulence, the BRICS Summit this year is expected to focus on practical measures to fight the pandemic and support the economic recovery of the five countries. Proposals include the creation of an early warning system for epidemiological threats and the development of regulations on medical products in order to improve BRICS ability to cope with COVID-19. Agreements to facilitate trade, investments and SMEs participation in international trade are also expected to be signed in support of the speedy recovery of the BRICS economies. Civil society groups have been pushing for the revival of the BRICS Vaccines Research and Development Centre and the strengthening the BRICS TB research network, originally proposed during the South African chairship in 2018.
Less impressive, however, has been the ability of the grouping to agree on groundbreaking ideas and live up to its potential as a global leader. Recently, Russia became the first country in the world to register a vaccine against the coronavirus. China is at the final stage of testing its vaccine and has announced its intention to make it a public good. Yet, the grouping is still far from reaching consensus on practical measures for the joint production and distribution of COVID-19 vaccines. Instead, the topic has been captured by a political-ideological debate that, thus far, has prevented collective action from materializing.
The disbursement by the New Development Bank (NDB) of US$10 billion in crisis-related assistance including US$4 billion in emergency program loan to fight the COVID-19 pandemic and its socio-economic consequences was received with enthusiasm in Brazil, China, India and South Africa. Yet, the bank has not yet signalled if or how it will support long-term recovery plans and the transition of member countries towards a more sustainable economy. Dubbed as ‘BRICS best card’, the NDB can go beyond its role as a financier to become a platform for the exchange of solutions and incubator of practices with the potential to catalyze BRICS collective leadership and response to contemporary development challenges.
In this regard, attention turns to the announcement of the BRICS Economic Partnership 2020-2025 during the Summit. As a major instrument within the BRICS economic track, the strategy aims to help the five countries to step into the new industrial revolution and promote shared interests in sustainable trade and investment without barriers and sanctions; advancing the digital economy in the interest of BRICS citizens in the context of the digital transformation; developing science, technology and innovation; and promoting sustainable growth and balanced development in the context of climate, energy, human capital development and food security. The strategy could pave the way for a new BRICS cooperation agenda.
In terms of conflict management, the India-China border standoff will not find a place in the Penta-lateral discussions this year. Instead, the BRICS is likely to accommodate differences and avoid the dominance of a single country’s interest, political view or ideology. One of the key principles guiding the BRICS since inception is that member countries do not cross each other’s “red lines” and follow the general “club” principle of not publicizing members’ disagreements. As such, there is a strong case for keeping the BRICS away from issues that touch upon conflicting interests of member countries. It will be on India’s hands to play responsible leadership and ensure this principle is followed through its chairship next year.
The health and the economic crises, the domestic policy shifts, and the intra-BRICS contention have led critics to believe the BRICS would be rendered dysfunctional or even split apart. The main challenge ahead of the BRICS is not procedural nor bureaucratic, but to continue to lead with innovative thinking and practical responses to some of the most pressing development challenges of our time. No other grouping has set such an ambitious goal for itself. Building a collective strategy and identifying priority processes to implement it can ensure that BRICS cooperation deepens and becomes self-reinforcing. This is the main expectation for the Russian chairship this year.
About 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.
Structure
- BRICS does not exist in form of organization, but it is an annual summit between the supreme leaders of five nations.
- The Chairmanship of the forum is rotated annually among the members, in accordance with the acronym B-R-I-C-S.
- BRICS cooperation in the past decade has expanded to include an annual programme of over 100 sectoral meetings.
Salient Features
- Together, BRICS accounts for about 40% of the world’s population and about 30% of the GDP (Gross Domestic Product), making it a critical economic engine.
- It’s an emerging investment market and global power bloc.
Genesis
The acronym "BRICS" was initially formulated in 2001 by economist Jim O'Neill, of Goldman Sachs, in a report on growth prospects for the economies of Brazil, Russia, India and China – which together represented a significant share of the world's production and population.
In 2006, the four countries initiated a regular informal diplomatic coordination, with annual meetings of Foreign Ministers at the margins of the General Debate of the UN General Assembly (UNGA).
This successful interaction led to the decision that the dialogue was to be carried out at the level of Heads of State and Government in annual Summits.
Timeline
The first BRIC Summit took place in 2009 in the Russian Federation and focused on issues such as reform of the global financial architecture.
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.
Objectives
The BRICS seeks to deepen, broaden and intensify cooperation within the grouping and among the individual countries for more sustainable, equitable and mutually beneficial development.
BRICS takes into consideration each member’s growth, development and poverty objectives to ensure relations are built on the respective country’s economic strengths and to avoid competition where possible.
BRICS is emerging as a new and promising political-diplomatic entity with diverse objectives, far beyond the original objective of reforming global financial institutions.
Areas of Cooperation
1. Economic Cooperation
There are rapidly growing trade and investment flows between BRICS countries as well as economic cooperation activities across a range of sectors.
Agreements have been concluded in the areas of Economic and Trade Cooperation; Innovation Cooperation, Customs Cooperation; strategic cooperation between the BRICS Business Council , Contingent Reserve Agreement and the New Development Bank.
These agreements contribute to realisation of the shared objectives of deepening economic cooperation and fostering integrated trade and investment markets.
2. People-to-People exchange
BRICS members have recognised the need for strengthening People-to-People exchanges and to foster closer cooperation in the areas of culture, sport, education, film and youth.
People-to-People exchanges seek to forge new friendships; deepen relations and mutual understanding between BRICS peoples in the spirit of openness, inclusiveness, diversity and mutual learning.
Such People to people exchanges include the Young Diplomats Forum, Parliamentarian Forum, Trade Union Forum, Civil BRICS as well as the Media Forum.
3. Political and Security Cooperation
BRICS member political and security cooperation is aimed at achieving peace, security, development and cooperation for a more equitable and fair world.
BRICS provides opportunities for sharing policy advice and exchanges of best practices in terms of domestic and regional challenges as well as advancing the restructuring of the global political architecture so that it is more balanced, resting on the pillar of multilateralism.
BRICS is utilised as a driver for South Africa’s foreign policy priorities including the pursuit of the African Agenda and South-South Cooperation.
4. Cooperation Mechanism
Cooperation among members is achieved through:
- Track I: Formal diplomatic engagement between the national governments.
- Track II: Engagement through government-affiliated institutions, e.g. state-owned enterprises and business councils.
- Track III: Civil society and People-to-People engagement.
Impacts of BRICS on global institutional reforms
The main reason for co-operation to start among the BRIC's nation was the financial crises of 2008. The crises raised doubts over sustainability of the dollar-dominated monetary system.
The BRICs called for the “the reform of multilateral institutions in order that they reflect the structural changes in the world economy and the increasingly central role that emerging markets now play”.
BRIC managed to push for institutional reform which led to International Monetary Fund (IMF) quota reform in 2010. Thus the financial crises had momentarily reduced western legitimacy and briefly let the BRICs countries become “agenda setters” in multilateral institutions.
New Development Bank
- NDB is headquartered in Shanghai.
- At the Fourth BRICS Summit in New Delhi (2012) the possibility of setting up a new Development Bank was considered to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies, as well as in developing countries.
- During the Sixth BRICS Summit in Fortaleza (2014) the leaders signed the Agreement establishing the New Development Bank (NDB).
- Fortaleza Declaration stressed that the NDB will strengthen cooperation among BRICS and will supplement the efforts of multilateral and regional financial institutions for global development thus contributing to sustainable and balanced growth.
- NDB’s key areas of operation are clean energy, transport infrastructure, irrigation, sustainable urban development and economic cooperation among the member countries.
- The NDB functions on a consultative mechanism among the BRICS members with all the member countries possessing equal rights.
Contingent Reserve Arrangement
Considering the increasing instances of global financial crisis, BRICS nations signed BRICS Contingent Reserve Arrangement (CRA) in 2014 as part of Fortaleza Declaration at Sixth BRICS summit.
The BRICS CRA aims to provide short-term liquidity support to the members through currency swaps to help mitigating BOP crisis situation and further strengthen financial stability.
The initial total committed resources of the CRA shall be one hundred billion dollars of the United States of America (USD 100 billion).
It would also contribute to strengthening the global financial safety net and complement existing international arrangements (IMF).
Challenges
The marked dominance of big three Russia-China-India is challenge for the BRICS as it moves ahead. To become a true representative of large emerging markets across the world, BRICS must become pan-continental. Its membership must include more countries from other regions and continents.
The BRICS will need to expand its agenda for increasing its relevance in the global order. As of now, climate change and development finance, aimed at building infrastructure dominate agenda.
As BRICS moves forward foundational principles of BRICS i.e. respect for sovereign equality and pluralism in global governance are liable to be tested as the five member countries pursue their own national agendas.
The military standoff between India and China on the Doklam plateau, which has effectively brought to an end the naive notion that a comfortable political relationship is always possible amongst the BRICS members.
China’s efforts to co-opt nation states, which are integral to its Belt and Road Initiative, into a broader political arrangement has potential to cause conflict among BRICS members especially China and India.
Importance for India
India can benefit from collective strength of BRICS by way of consultation and cooperation on economic issues of mutual interests, as well as topical global issues, such as, international terrorism, climate change, food and energy security, reforms of global governance institutions, etc.
India remains engaged with the other BRICS countries on its NSG membership.
The NDB will help India to raise and avail resources for their infrastructure and sustainable development projects. The NDB has approved its first set of loans, which included a loan of US$ 250 million in respect of India for Multitranche Financing Facility for Renewable Energy Financing Scheme’.
Way Forward
BRICS did well in its first decade to identify issues of common interests and to create platforms to address these issues.
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 nations need to recalibrate their approach and to recommit to their founding ethos. BRICS must reaffirm their commitment to a multi-polar world that allows for sovereign equality and democratic decision making by doing so can they address the asymmetry of power within the group and in global governance generally.
They must build on the success of the NDB and invest in additional BRICS institutions. It will be useful for BRICS to develop an institutional research wing, along the lines of the OECD, offering solutions which are better suited to the developing world.
BRICS should consider a BRICS-led effort to meet their commitments under the Paris Agreement on climate change and the UN's sustainable development goals. This could include e.g. setting up a BRICS energy alliance and an energy policy institution.
NDB in partnership with other development finance institutions could be a potent vehicle to finance progress towards the sustainable development goals amongst the BRICS members.
Idea of setting up a BRICS Credit Rating Agency (BCRA) as proposed by India, opposed to Western agencies like Standard & Poor’s, Moody’s etc can be on BRICS future agenda.
Comments
Post a Comment