(The article was originally published in OPEN Magazine on October 13, 2023. Views expressed are personal.)
TWENTY-TWO YEARS AGO, in 2001, when Terence James O’Neill, popularly known as Jim O’Neill, authored a paper titled ‘The World Needs Better Economic BRICs’ and predicted that the four emerging economies—Brazil, Russia, India and China—would register GDP growth that “would have important implications for global-governance arrangements”, everybody assumed that it was just a marketing ploy to direct investments into those countries.
In 2006, when the foreign ministers of Brazil, Russia, India and China met on the sidelines of the UN General Assembly, the acronym BRIC came into being. But the world largely ignored it. But in 2009, when Vladimir Putin took the lead in hosting a summit of BRIC countries in Yekaterinburg, Russia, the world was forced to sit up and take note. In 2010, when South Africa also joined the group, a new and influential bloc emerged on the horizon called BRICS.
Western pundits dismissed this five-member forum initially as an incompatible grouping. But as the group hosted its 15th annual summit on August 22-24 this year in Johannesburg, South Africa, that dismissive attitude turned into derision and concern.
Many countries in the Global South, on the other hand, see in BRICS a new inclusive and pluralistic arrangement to foster growth without interference and domination. While the Johannesburg summit admitted six new countries—Argentina, Egypt, Iran, Saudi Arabia, Ethiopia, and the UAE—into the group, making it BRICS+, many others are eager to join it as well.
In 2016, during India’s chairmanship, Prime Minister Narendra Modi defined BRICS as “Building Responsive, Inclusive and Collective Solutions”. After seven years, in his remarks at the Johannesburg summit this year, he reinterpreted the BRICS mission as “Breaking barriers, Revitalising economies, Inspiring innovation, Creating opportunities, and Shaping the future”.
The 11-member BRICS+ today caters to 30 per cent of the global GDP and 43 per cent of global oil production. The bloc represents over 41 per cent of the global population residing on 26 per cent of the global land surface, contributing about $26 trillion to global GDP and representing 18 per cent of the global trade. In PPP terms, BRICS contributed more to global GDP than G7 for the first time in 2020. BRICS’ share in incremental GDP in the decade ending 2022 was 42 per cent against 27 per cent for G7. The projected share in global GDP for BRICS is 32 per cent against 30 per cent for G7.
This demonstrates BRICS’ growing clout. The subservience of multilateral financial institutions to the Western political-economic agenda has been causing serious unease in the developing world which finds in institutions like the BRICS bank—the New Development Bank—a viable alternative. BRICS nations today talk about an alternative payments system and a new reserve currency.
There is palpable unease in sections of the Western politico-economic establishment over these developments. Attempts were made to derail the momentum during the run-up to the Johannesburg summit, prompting Naledi Pandor, the South African foreign minister, to publicly lament that “someone… is trying to spoil our summit… creating all sorts of stories”.
BRICS+ is not and should not be a threat to anybody. It is a unique non-Western grouping but need not consider itself anti- West. Nor should it become a forum for replacing one version of dominance with another.
Some BRICS member countries insist on building a new world order. Instead of arrogating that burden to itself, BRICS should focus on rebalancing, providing effective leadership to the non- Western world in shaping the new world order so as to ensure it will provide for genuine multilateralism and democratisation.
The 21st century world is described as multipolar or pluripolar. But in reality, it has become heteropolar. While it is acknowledged by all that several states have emerged as new poles, many minilateral groups of states too are rising as influential voices. National interest is guiding countries to become a part of more than one group.
Beyond this multipolar structure are non-state agents like the Big Tech companies, global MNCs, multinational NGOs, religious groups and even transnational terror networks. They have turned the world into a major battleground of competing interests and conflicts. Besides traditional challenges like wars, climate crises, etc, this heteropolarity is posing new challenges in the form of frontier technologies like artificial intelligence (AI) and blockchain, and societal vagaries like wokism.
Unfortunately, the UN and the Bretton Woods institutions, built in the post-World War II era, have become handmaidens of Western powers, fast losing their relevance. Their harsh regulatory style and efforts to impose a Western value system through the backdoor are causing consternation in the developing world.
It is in this context that BRICS+ is emerging as a new pillar of hope for all such nations and peoples.
At the BRICS foreign ministers’ meeting in Cape Town, External Affairs Minister S Jaishankar highlighted the role of BRICS in promoting economic decentralisation essential for political democratisation. He summed up the relevance of BRICS: “The global environment today demands that we, the BRICS nations, approach key contemporary issues seriously, constructively, and collectively. Our gathering must send out a strong message that the world is multipolar, that it is rebalancing, and that old ways cannot address new situations. We are a symbol of change and must act accordingly.”
As BRICS acquires its new avatar as BRICS+, its leadership has moved into the hands of Russia, a country facing severe military and economic challenges from NATO. Having been a target of crippling economic sanctions in the last 18 months, Russia is longing to use the chairmanship of BRICS+ to bring in certain fundamental reforms to global economic governance.
Through their harsh economic sanctions against Russia recently, but also against other countries like Venezuela, Iran, North Korea and Afghanistan in the recent past, willy-nilly, Western powers have created a sense of uncertainty among many nations about over-dependence on dollar-based global settlement mechanisms. Russian Foreign Minister Sergey Lavrov categorically stated that Russia would push for alternative payments systems as BRICS+ chair.
The chorus is growing for the same and also for ‘de-dollarisation’. In the run-up to the Johannesburg summit, a lot of debate was generated about the possibility of creating a single BRICS currency. Since the currencies of all BRICS countries start with the letter R—Real for Brazil, Ruble for Russia, Rupee for India, Renminbi for China and Rand for South Africa—some innovatively named the new currency R-5. For some reason, the issue couldn’t be taken up at the summit and many point fingers at India’s opposition.
There is no denying that the dollar is losing its influence. Eminent economists like Jeffrey Sachs predict that the “dollar domination will soon end.” They blame the US’ tendency to tamper with payments systems for geopolitical reasons and weaponisation of the dollar. Moreover, the US share in global goods trade has fallen below 10 per cent now. Trading in dollar has also seen a steep decline in the last couple of decades and stands at 59 per cent today. In that situation, questioning why two non-dollar states should trade in dollar sounds logical.
However, India needs to tread this path carefully. With its vast dollar reserves amounting to over $600 billion and growing trade relationships with G7 countries, it cannot completely dissociate itself from the dollar. There is no guarantee that the alternative currency would not be dominated by another country. Additionally, India is already trading in rupee with 18 countries and as the Indian economy grows bigger, that number will go up.
Duopoly in settlement systems may be a good option for India and many other countries. But in the long run, it should not lead to an economic version of the Cold War. Ideally, India’s efforts through BRICS+ should be to build an open international economic system where G7 and BRICS won’t be at loggerheads and multilateral financial institutions like the International Monetary Fund (IMF) and World Bank become truly global.
Jim O’Neill’s proposition, “What the world really needs is… a genuinely representative global economic governance”, should be the guiding principle for the BRICS leadership as it prepares to navigate the turbulent waters.