The 16th BRICS Summit, hosted by Russia, recently concluded in Kazan. It was also the first summit-level meeting of the expanded BRICS+, which saw participation from leaders of the newly added BRICS countries- Egypt, Ethiopia, UAE, Iran, and Saudi Arabia. A special BRICS outreach conference was attended by around 30 Global South leaders.
| Key Outcomes of the 16th BRICS Summit 1. Kazan Declaration- Kazan Declaration was adopted, which emphasized the need for a more equitable global governance structure and peaceful resolutions of international conflicts through dialogue. 2. BRICS Pay- An alternative payment system to SWIFT was introduced in Kazan. It aims at facilitating trade among member countries while reducing reliance on Western financial systems. 3. BRICS Grain Exchange- The establishment of BRICS Grain Exchange aims to enhance food security and agricultural cooperation among the BRICS members. 4. Cross-Border Payment System- The feasibility of a BRICS Cross-Border Payment System to further integrate member economies, was also explored by the members. 5. Political and Security Cooperation- The summit also advocated for reforms in global institutions like the UN and IMF for equitable representation of developing countries. |
What has been the history of evolution of BRICS as a multilateral grouping?
| 2001 | The term ‘BRIC‘ was coined by Jim O’Neill, a Goldman Sachs economist, to describe the emerging economies of Brazil, Russia, India, and China. According to Jim O’Neill, these emerging economies were poised to dominate the global economy by 2050. |
| 2006 | The BRIC nations held their first informal meeting on the sidelines of the G8 Outreach Summit in St. Petersburg, Russia. This meeting marked the beginning of diplomatic engagement among these countries. |
| 2009 | The inaugural BRIC summit took place in Yekaterinburg, Russia, where leaders discussed global governance and economic cooperation. |
| 2010 | South Africa was invited to join the group. This led to the rebranding of the institution from BRIC to BRICS. |
| 2014 | New Development Bank (NDB) was officially launched with an initial capital of $100 billion, to provide development finance. |
| 2023 | BRICS was expanded to BRICS+ with the admission of six new member states– Saudi Arabia, Iran, Egypt, Ethiopia, Argentina, and the United Arab Emirates. |
What is the significance of BRICS as a grouping?
1. Representative of Multipolar Global Order– BRICS promotes the creation of multipolar world order with political and economic parity. The expanded BRICS comprises major emerging economies that collectively represent approximately 41% of the world’s population and around 28% of global GDP.
2. Representative of new world order- BRICS represents the idea of New World Order decoupled from the hegemony of western powers. It serves as a counter to groupings like G-7 which are dominated by the west.
3. Representative of the ‘Global South’- BRICS gave countries from the global south a platform to present their opinions on international issues and set an international agenda. The expansion of BRICS has expanded the geographical footprint of global south countries. For Ex- Recent inclusion of Egypt, Ethiopia, Argentina in the grouping.
4. Alternative to Bretton Wood Institutions- World Bank, IMF which were a post WW II creation of the west represented the western economic agenda. The New Development Bank (NDB), Contingency Reserve Agreement and BRICS pay represent the economic concerns, priorities, and agenda of the developing and underdeveloped economies.
5. Forum to achieve economic Decoupling from the West- As BRICS represents around 23% of Global GDP and 18% of world trade, it aims for de-dollarization of world trade through increased use of domestic currencies in economic transactions.
6. Alternative Platform of engagement for Oil Trade- BRICS-Plus represents close to 45% of the world’s oil production capacity. It has six of the top 10 oil-producing countries of the world- Saudi Arabia, Russia, China, UAE, Brazil, and Iran. This can create an alternative platform for engagement of oil exporting countries apart from OPEC+.
7. Enhanced cooperation for achievement of SDGs- BRICS as a forum serves to reduce poverty, alleviate hunger-malnutrition and achieve the sustainable development goals set up by the United Nations.
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What are the challenges faced by BRICS?
1. Chinese push for favourable expansion- China is pushing for inclusion of countries like Belarus which are under heavy debt trap influence of China. India views this push for expansion as an attempt by China to make BRICS a China centric platform.
2. Nature of Grouping- BRICS faces a challenge of either retaining its core nature as a group that is largely focused on financial and south-south challenge or becoming a bigger geopolitical coalition by admitting more nations.
3. Political Division among the member nations- There are disagreement among the member nations over key issues such as UNSC reforms. Also, the group has drastically different political systems, ranging from active democracy in India to entrenched oligarchy in Russia to communism in China.
4. Economic Disparity among the member nations- BRICS economies differ in their magnitude of economic size with countries like China and India leading in the economic ladder and countries like Brazil Russia languishing in the economic ladder.
5. Chinese Dominance- Chinese economy has the largest share among the member countries, and it accounts for 38 percent share in the total export of BRICS. This has resulted in dominance of China in the BRICS bloc and in turn has stoked the economic nationalism in other member countries.
6. Failure to bring impactful reform- BRICS has so far not succeeded in bringing reform in Bretton wood institutions like IMF and WB and has not been able to de-dollarize their economies.
7. Lack of Consensus on contentious issues- BRICS has faced consensus challenges on important international issues such as Russia-Ukraine war. While China is leaning towards Kremlin, India relied on its Non-Alignment Strategy.
What should be the way forward?
1. Rule based Order– BRICS-Plus should be based on rule-based order and the forum should not leave any room for ‘economic hegemony’ and ‘anti-West agenda’.
2. Reducing the Dominance of RIC in BRICS- The marked dominance of big three Russia-China-India is a 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.
3. Clear rules for expansion of membership- There must be a clear definition of principles and criteria for membership for further addition of countries to BRICS grouping.
4. Containing Chinese Dominance- India must find creative ways of blunting Chinese strategy in BRICS grouping to ensure equitable distribution of power in the group.
5. Institution of a permanent secretariat- The BRICS group must decide on a permanent secretariat for smooth functioning of the group.
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