BRICS

BRICS is an acronym for 5 emerging economies of the world viz. – Brazil, Russia, India, China, South Africa. The BRIC idea was first conceived by economists of Goldman Sachs as part of an economic modelling exercise to forecast global economic trends over the next half century. The notion behind the coinage was that the nations’ economies would come to collectively dominate global growth by 2050.

The main reason for co-operation to start among the BRICs nation was the financial crises of 2008. The crises raised doubts over sustainability of the dollar-dominated monetary system.

Evolution of BRICS

The leaders of BRIC countries met for the first time on the margins of G8 Outreach Summit 2006.

The group was formalised as BRIC during the 1st BRIC Foreign Ministers’ Meeting in 2016.

After a series of high-level meetings, the 1st BRIC summit was held in Russia in June 2009.

BRIC group was renamed as BRICS (Brazil, Russia, India, China, South Africa) after South Africa was accepted as a full member in 2010.

BRICS cooperation in the past decade has expanded to include an annual programme of over 100 sectoral meetings.

BRICS does not exist in form of organization, but it is an annual summit between the supreme leaders of these five nations. The BRICS grouping aims to promote peace, security, development and cooperation in the world. It also aims at making a positive impact on the development of humanity and establishing a more equitable and fairer world.

Three Pillars of BRICS

1. Political & Security – To enhance cooperation and dialogue on issues of global and regional security, developments in the global political space, cooperation on counterterrorism, as well as the reform of the multilateral system to make it relevant for the 21st century.
   • Aims to pursue reform of multilateral institutions ranging from the United Nations, World Bank and the IMF to the WTO, and now even the World Health Organization.
   • BRICS is attempting to pragmatically shape its counter-terrorism strategy by crafting the BRICS Counter Terrorism Action Plan

1. Economic & Financial – To promote economic growth and development for mutual prosperity through expansion of intra-BRICS cooperation in sectors such as trade, agriculture, infrastructure, small and medium enterprises, energy, finance & banking etc.
   • BRICS cooperation under this pillar is aimed to promote collaborative approaches as well as innovative methods for the attainment of Sustainable development Goals.
2. Cultural & People-to-people exchanges – To enrich intra-BRICS people to people contacts in cultural, academic, youth, sports, business, through regular exchanges. 
   • Exchanges among Parliamentarians, young scientists etc. are also held under this pillar of BRICS cooperation.

BRICS countries have been the main engines of global economic growth over the years. Over a period of time, BRICS countries have come together to deliberate on several important global and regional issues.

Significance of BRICS – General

• Big Five Nations – it represents 42% of the world’s population, 27% of the land area, 23% of global GDP and 17% of international trade.
• North-South Bridge – BRICS strives to serve as a bridge between the Global North and Global South.
• Common Global Perspective – BRICS called for 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.
• Development Cooperation – developed a common perspective on a wide range of global and regional issues.
  • established the New Development Bank (NDB).
  • created a financial stability net in the form of Contingency Reserve Arrangement.

From the Indian perspective, BRICS has emerged as the voice of developing countries, or the Global South.

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Significance of BRICS for India

• Safe space to modulate rivalry – The grouping provides India and China the opportunity to decouple their strategic contest from the other dimensions of the relationship.
  • During the Doklam standoff of 2017 and the recent Ladakh standoff, both China and India remained engaged through BRICS throughout the entirety of the crisis.
• Providing a Transcontinental reach – With the presence of Brazil and South Africa in the group, it provides is a low-cost way for India to signal its aspirations as a global power.
  • India remains engaged with the other BRICS countries on its NSG membership.
• Boosting India’s demand for institutional reforms – BRICS’ repeated calls for reform of multilateral institutions, boosts India’s own assertions in this direction, acting as a multiplier to the country’s own demands for reform.
• Contribution in creating an Inclusive international financial architecture – India was the main BRICS country behind the establishment of the NDB and has remained the largest beneficiary of NDB loans so far.
  • NDB intends to provide non-conditional financing, unlike the WB and IMF and attempts to rectify the North-South divide to make it more inclusive
  • The NDB will help India to raise and avail resources for their infrastructure and sustainable development projects.
• Trade dependency – 34% of India’s total imports are from the other four BRICS nations.

Challenges faced by BRICS

• Heterogeneity – The grouping brings together a mix of democratic and authoritarian regimes, with very different societal structures, developmental trajectories, and historical traditions, posing a threat to the viability of the grouping.
• Internal Conflicts – Group has seen conflicts such as China’s aggression in eastern Ladakh last year which brought India-China relations to their lowest point in several decades.
  • The current pandemic has exacerbated pre-existing differences amongst the BRICS.
• Aggressive China – Suspicions among members about Chinese regional and global ambition may impact group’s functioning in future.
  • China’s Belt and Road Initiative; adventurism in the neighbouring seas and the passage of a new security law in Hong Kong have created suspicions.
  • China’s image at global level has also been tarnished due to the Covid-19. In this backdrop, it is questionable whether BRICS matter or not.
• Changing World Order – the growing US-China rivalry, the already complex dynamics between India and China, India’s balancing act with the US, the growing Russia-China linkages, Russia-US tensions — raise the prospects of an ‘internal split.’
• Lack of capital – BRICS do not have the funds to outcompete the Bretton Wood Institutions, the World Bank and IMF.
• Low Intra-country trade – Despite the opportunities and the potential, intra-BRICS trade and investment flows are very low.
• China Centric – All the countries in the BRICS group trade with China more than each other, therefore it is blamed as a platform to promote China’s interest.
  • Balancing trade deficit with China is a huge challenge for other partner nations.
• Less Effective – the group has not done enough to assist the Global South to win their optimal support for their agenda.

Way Forward

• Intra-BRICS Cooperation – BRICS need to shed the centrality from China and create a better internal balance, reinforced by the urgent need for diversification and strengthening of regional value chains, all exposed during the pandemic.
  • Strengthen cooperation in diverse areas like agriculture, disaster resilience, digital health, traditional medicine and customs cooperation.
• They must build on the success of the NDB and invest in additional BRICS institutions, like an institutional research wing, along the lines of 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.
• Agenda expansion – 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.
• Conflict Resolution – BRICS nations should strive for peaceful and politico-diplomatic settlement of crisis and conflict in various regions of the world.
• 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.
• Improving Citizen involvement – need to move towards a bottom-up approach to increasing private sector and citizen involvement. This could involve a single BRICS visa, removing visa requirements for member nations, inducing increased collaboration among researchers and orchestrating private sector collaboration.

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, which shall address the asymmetry of power within the group and in global governance generally.

The ongoing churn in the global order is especially relevant for BRICS and its future as a multilateral organisation. Building a collective strategy and identifying priority processes to implement it can ensure that BRICS cooperation deepens and becomes self-reinforcing.