Brazil, Russia, India, China and South Africa (BRICS) are leading emerging economies and political powers at the regional and international level.
When? 2008. They had their first official meeting in 2009
- The acronym, BRIC, was coined by Jim O’Neill of Goldman Sachs way back in 2001
- He predicted that by year 2050, Brazil, Russia, India and China would become bigger than the 6 most industrialized nations in dollar terms and would completely change the power dynamics of the last 300 years
- It was pointed out that high growth rates, economic potential and demographic development were going to put BRICS further in a lead position
Why is BRICS suddenly so important?
- The idea of development bank (NDB) and Contingency Reserve Arrangement (CRA) has strengthen BRICS as a grouping
- Both of these concepts were formalised over in 2015 (@BRICS summit at Fortaleza and Brasilia) and this was seen as a strong signal to the challenge of western dominated discourses in some forums (IMF, WB)
- We will get to these details in a short while but since these developments happened in 2015, the IAS aspirants from 2016 onwards are required to sweat blood in order to be on top of this theme (kidding!)
What prompted the need for emergence of BRICS?
- Most multilateral institutions were designed in the era when the West dominated the world. The US and Europe are over-represented in the IMF and the World Bank. Together with Japan, they control most regional development banks as well! That’s a big bad bully in making, right?
- The main reason for co-operation to start among the BRICs nation was the financial crises of 2008
- The crises raised scepticism on the dollar dominated monetary system and the need for participation by non-G7 countries became evident. If you don’t know about G7, click thiswiki page to know the countries involved
What reform did BRICS want out of the multilateral institutions?
- Since their inception in 1944, the Bretton Woods institutions (IMF and World Bank) had not reformed their governance structure, to give more voting and voice to emerging economies. Both dominated by USA and developed countries. Both were out of sync with the new dynamics of world economy
- The BRICs called for the “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
- BRICS managed to push for institutional reform which led to International Monetary Fund (IMF) quota reform in 2010 (although, it met with limited success as United States Congress did not ratify)!
Three new terms? Bretton Woods, Quota reforms, 2008 financial crisis. We will get to them later.
So, essentially, BRICS opened up a possibility for countries of the global South to challenge the global North. When the quota reforms were quashed in 2010, BRICS moved towards enlarging their spheres of cooperation. We will talk about the BRICS bank at a later stage.
Now that NAM (Non-alignment) is almost defunct and very little wealth is left in the Commonwealth, BRICS provide a great alternate for India to build its global profile.
But don’t we have a G 20 group to further India’s interest in the global arena? Yes, that’s another big one (besides UN).
G 20 is a bloc of developing nations established on 20 August 2003. The G-20 accounts for – 60% of the world’s population, 70% of its farmers and 26% of world’s agricultural exports.
India has tried to use BRICS as a forum to engage China as the latter has become the largest market for the fast-industrializing countries of East Asia. India wants to resolve the age-old mis trust and complicated relationship between the two countries since the 1962 war between them.
What are the factors that will bolster co-operation among BRICS members?
- Firstly, the common need among developing countries to construct economic order that reflects current situation will drive the BRICS’ efforts. In this matter, the idea of NDB and CRA are defining and will have a huge geo-economic and geopolitical impact
- Secondly, the BRICS alternative idea in the landscape of global governance will attract support from other countries. There have been suggestions by political analysts that BRICS may expand its member quota
- Thirdly, the expansion of BRICS interaction to other sector will make it more strong partnership
- Lastly, Chinese support to BRICS will make sure that group remains a force to reckon with in the future
Chinese support – interesting point. Some would say that a lot depends on how China carries its might behind BRICS for the time to come.
Some concerns regarding the future of BRICS
- Competition within themselves – The BRICS countries aspire to be regional powers and hence at some point will compete with each other
- Different forms of governance – They have different political systems with Brazil, India and South Africa being democracies while Russia and China having authoritarian characteristics. It would be interesting to see how policy consensus is brought about!
- Trade conflicts, maybe? Brazil and Russia are commodity exporting countries and thus benefit from high commodity prices while India and China are commodity importers that benefit from low commodity prices
- Territorial Issues – China and India have outstanding territorial issues to resolve and India looks askance to any institution that has Chinese domination. Russia looks suspiciously at China’s interest in its sparsely populated far eastern of Siberia
- The big daddy China – China spearheads three other major initiatives in this region – One Belt One Road (OBOR), Asian Infrastructure Investment Bank (AIIB) and SCO. You should know that the 7th BRICS summit was held as a joint summit with SCO.BRICS has to find a reckoning space among them to keep china’s interests alive!
Parting words on BRICS (more mirch masala)
All that UPSC want from an IAS aspirant is: Analysis, analysis, analysis. These are some of the fodder points that you can use in any answer involving BRICS and world arena.
Engaging China has been one of the important components of India’s foreign policy in recent years, considering that co-operation and negotiations with China is imperative to clearing the mistrust between the two countries.
Geostrategically, BRICS are now represented on all continents of the global south. In bilateral and regional agreements, the BRICS emphasize south-south solidarity and horizontal cooperation in contrast to western dominance.
Yet, in global fora such as G20, UN Security Council or World Climate Conferences, BRICS claim to speak on behalf of the developing world (whether they actually do represent these countries is disputable) and gradually challenge western supremacy in international politics.
Phew. This was a long one! Did we cover everything? Nope. We will cover later
- Latest BRICS summit
- All about the BRICS Bank (NDB) & Contingency Reserve Arrangement (CRA)
- Comparison of BRICS Bank with AIIB (another master stroke by China)
Want to read more?