Expansion of five-nation BRICS faces diverse challenges

The BRICS nations — Brazil, Russia, India, China and South Africa — will be holding their 15th summit at Johannesburg, South Africa, from August 22 to 24. Russian President Vladimir Putin will participate virtually in the summit rather than attending it in person so as to avoid being arrested on a warrant issued by the International Criminal Court.

The acronym BRIC was coined by Jim O’Neill, an economist working with American company Goldman Sachs, to highlight the strong growth potential of these countries and how they could dominate the global economy by 2050. Russia, India and China (RIC) started holding a dialogue in the early 2000s, expressing their interest in a shift from a unipolar to a multipolar world with a more sympathetic global governance system. The acronym RIC changed to BRIC with the induction of Brazil in 2009 and to BRICS in 2010 with the inclusion of South Africa.

Since then, the group has met on an annual basis at the level of heads of government along with meetings of their foreign ministers, national security advisers and senior officials. A key factor responsible for the group’s success has been its capacity to circumvent internal disagreements and focus on the unifying issues. The group has stood for its commitment to an equitable multipolar world, reforming the global governance system to make it more inclusive and representative, sustainable development, economic decentralisation and support for a rules-based multilateral trading system. The group also aims to strengthen the capacities of member states to better respond to new and emerging challenges to their security, such as terrorism, money laundering and cybercrimes.

The group’s achievements include the establishment of New Development Bank (NDB) in 2015 with a total capital of $100 billion and paid-up capital of $50 billion equally subscribed by the five members. The bank funds sustainable development and infrastructure projects in member countries; NDB-funded projects in India include the Mumbai Metro rail, the Delhi-Meerut Regional Rapid Transit System and a number of renewable energy projects. Former Brazilian President Dilma Rousseff is the current NDB president.

The group also agreed to set up a Contingent Reserve Arrangement in 2015 by committing another $100 billion to protect its members’ economies from financial instability and currency speculation. China contributed $41 billion and can withdraw up to $21 billion; Russia, India and Brazil contributed $18 billion each and can withdraw that much; South Africa contributed $5 billion and can withdraw up to $10 billion. In 2021, Egypt, the UAE, Uruguay and Bangladesh joined the NDB, but their subscribed capital was much lesser. By 2021, the NDB had disbursed total loans of $14.6 billion to members.

The BRICS comprise five big countries which represent about 41 per cent of the global population, 31.5 per cent of the global GDP as compared to 30.7 per cent of the G7 in terms of purchasing power parity (2022) and 16 per cent of the global trade; in market prices, their combined GDP was $25.913 trillion as compared to $43.766 trillion of the G7 (World Bank, 2022). The political and economic heft of the group has attracted about 40 developing countries, which are keen to join the BRICS. These include Argentina, Venezuela, Nicaragua, Iran, Saudi Arabia, the UAE, Algeria, Ethiopia, Senegal, Guinea-Bissau, Nigeria, Kazakhstan, Bangladesh, Thailand and Indonesia.

China has been trying since 2017 to expand the group by including other countries to constitute a BRICS Plus framework. Its main motivation seems to be the transformation of BRICS into a China-centric bloc, entrap the new members with loans under its Belt and Road Initiative, export manufactured goods for which its markets in the West are contracting and demonstrate to the West that it is a leader of the Global South. China perceives that the economic performance of Brazil, Russia and South Africa has deteriorated; Russia is besieged by the Ukraine war; India is getting closer to the US-led groupings; and unless the BRICS expands with the inclusion of big developing countries, its global influence will wane.

Russia has also lent support for the expansion of BRICS as it has attempted to counter western attempts to isolate it. Since the start of the Ukraine war, the BRICS countries have not supported the West-led sanctions against Russia and have continued their trade with it. South Africa, whose economy has been severely hit (its GDP in 2022 was $405 billion), is also supportive of the BRICS expansion, hoping that this would enable it and other African countries to get more weight in global decision-making and raise economic assistance from several sources.

Brazil has been much more cautious as it believes that BRICS has demonstrated a good brand value — its membership has conferred enhanced status, legitimacy, stronger investment and trade ties. It has argued that the admission of new members should be transparent, based on a balanced approach and consensus-based decision-making.

At the BRICS Foreign Ministers’ meeting in June, External Affairs Minister S Jaishankar had said that there were a couple of aspects of the group’s expansion: one, consolidation of cooperation between existing BRICS members; two, BRICS’s engagement with non-BRICS countries. BRICS Sherpas have been tasked to work on the guiding principles, standards, criterion and procedures for the admission of new members; the group should wait for their recommendations.

The BRICS is a relatively young group; there are wide disparities in size, outlook and perceptions of its members about a multipolar world and restructuring of the global organs of power. The group has so far taken a non-confrontational stance and stayed away from the rivalry between the West and the China-Russia-Iran axis. Making the group too big would make decision-making more complicated and time-consuming. Expansion should be gradual and based on how the new countries would contribute to mutual complementarities, strengthening and long-term functioning of the group without deepening ideological and other divisions.