The BRIC acronym for Brazil, Russia, India and China was created as a marketing initiative by a Goldman Sachs executive for the then four dominant emerging economies in 2001. However, after their four leaders launched the actual grouping in 2009, and were joined by South Africa in 2010 to form BRICS, they were touted as a challenge to G7 (Canada, France, Germany, Italy, Japan, UK, and the US) for influence in an evolving multipolar world.
G7 had been founded in 1975, and it was inevitably seen as a South versus the West matchup. Presently, the BRICS account for 42.5 percent of the world’s population, occupy 26 percent of the planet’s inhabitable territory, and account for more than 30% of the global GDP and 20% of international trade. However, while the early hype faded, there appears to be a new effort by the grouping to regain its momentum.
This was signalled by the March election of former Brazilian President Dilma Rousseff as head of the BRICS “New Development Bank” (NDB) and by the agenda of a summit in South Africa scheduled for this August. Expansion of its membership will be on the table, with resource-rich Argentina, Mexico, Nigeria, Indonesia, Iran, Turkiye and Saudi Arabia being among potential members. The NDB is an important initiative, since it provides an alternative source of funding through its Contingent Reserve Arrangement to the World Bank and the IMF.
These Breton Woods institutions, formed after WWII by the Western victors, have been accused of setting procrustean conditions for loans as a means of controlling the developing world. The NDB was launched in 2014 with US$50 billion in seed money to finance infrastructural projects in developing economies. In 2021 Egypt, UAR, Uruguay and Bangladesh acquired shares in the NDB.
The BRICS is now working to create a new reserve currency, based on a basket of currencies, to be an alternative to the US dollar. The initiative, which will be discussed at the August meeting, has been led by China and Russia, and evidently will be backed with gold and other commodities so as not to be at the vagaries of the BRICS economy, as is the case with the Dollar and the US economy. For instance, as is presently the case when the US Federal Reserve increases interest rates for domestic inflation, the effects spill across the world. The need for an alternative currency was recently supported by Brazil’s Lula, who visited the NDB in Shanghai for the election of Rousseff, who is noted for poor-friendly policies in Brazil. In the meantime, China, Russia, and Brazil have made arrangements to settle their transactions with each other’s currencies.
While the strategic interests of the BRICS members are not closely aligned, and may even clash, as with China and India, the Ukraine War gave a fillip to the grouping’s geopolitical reach. And even though it had not kept up its early promise of double-digit growth, its economic reach, albeit dominated by China and India, is still very significant. In the last decade, India almost doubled its GDP/per capita ratio. From 2015, its FDI indicator started converging with Brazil’s, and then overtook that country’s. It more than doubled in 2020 alone —putting India in second place within the group. None of the other members applied any sanctions on Russia, and, in fact, increased purchases of Russian oil in the face of US demands that sanctions be imposed on Russia for invading Ukraine, signalling the political heft implied by economic power. It was interesting that, last year, G7 invited India and South Africa to their summit in Germany.
From the perspective of the West, in whose sphere of influence we exist, China’s position is well known. As such, attention should be paid to India’s position, and whether the West will be able to meet its security and development needs, so that it could balance China’s dominance in the group. Up until now, they have managed to strike a solid middle course.