BRICS Likely To Take Crucial Decisions This Year On Expansion, African Agenda, National Currencies

The upcoming BRICS Summit from August 22-24 is going to be crucial for many reasons. But the most important agenda will be membership expansion and raising BRICS Bank's corpus to $100 billion.

File photo of PM Modi with South African President Cyril Ramaphosa.

Source : PTI

BRICS Summit: The BRICS leaders are expected to take some crucial decisions this year when they meet in Johannesburg, South Africa, from August 22-24. These decisions will concern BRICS's expansion by adding new members, such as Saudi Arabia, opening the doors for the African Union, as well as boosting business transactions and trade in local currencies, multiple sources told ABP Live.

The Summit, which will be attended by the leaders of Brazil, India and China, will see some major steps to be taken in terms of laying down rules for expansion based on which new members will be added to the group, according to a top-ranking official.

Brazilian President Luiz Inácio Lula da Silva, Prime Minister Narendra Modi and Chinese President Xi Jinping will be attending the meeting with the host, President of South Africa Cyril Ramaphosa. Russian President Vladimir Putin will not attend the Summit, but he will be represented by Foreign Minister Sergey Lavrov.

According to the sources, the leaders are expected to clear the path for Saudi Arabia, Egypt, and Argentina to formally become members of BRICS during the summit. However, it will be done in a phased manner wherein the countries will be first added as observers or dialogue partners and then will be granted full membership. As many as 22 countries have officially requested to join the bloc.

On Thursday, the Chinese government confirmed that President Xi Jinping will attend the BRICS Summit. However, Xi has also turned it into a state visit and hence, he will be reaching Johannesburg on August 21 and will hold a bilateral meeting with President Ramaphosa. Both of them will also co-chair the China-Africa Leaders’ Dialogue.

South Africa and China share a strategic relationship. South Africa was also the first country to join Beijing’s Belt and Road Initiative (BRI). Although these meetings will take place on the margins of the BRICS conference, the outcomes will have an impact on the bloc, said another source.

“South Africa is China’s comprehensive strategic partner and the first African country to join BRI cooperation. Bilateral relations have seen leapfrog growth since the establishment of diplomatic ties 25 years ago. China will work with South Africa to further advance the partnership,” said a statement by the Chinese Foreign Ministry.

BRICS Bank Eyeing $100 Billion Corpus

Saudi Arabia’s entry into BRICS is considered to be highly crucial for the survival of the grouping. Having Riyadh on board would mean having a member with “deep pockets” and positioning the bloc’s New Development Bank (NDB) as an “alternative” to the World Bank or the International Monetary Fund (IMF), the official quoted above said.

According to the official, BRICS members are in agreement that the NDB would need enhanced corpus so that they can effectively support developing countries when they witness economic catastrophe, similar to what had happened in Sri Lanka. 

The China-led NDB, also known as the BRICS Bank, has a corpus of $50 billion at present. But for it to finance large-scale projects in the Global South, or developing countries, it would need a much larger base. The bank would also be instrumental in managing trade among member countries with the use of national currencies, said the source.

Rajiv Bhatia, Distinguished Fellow at Gateway House and author, said, “The BRICS leaders want NDB to have a larger corpus of $100 billion to truly make it a multilateral development bank. Also, on the issue of having a common currency, it is not true. BRICS is unlikely to create a common currency. This is not on the agenda. Members will resort more  to the use of national currencies to settle bilateral trade transactions.”

The Shanghai-based NDB has already spent over $30 billion on several development projects and Russia is reeling under the weight of Western sanctions. This is the reason why it now needs a member who can boost the bank’s funding capacity. That will be possible only if Saudi comes into the picture.

African Union May Also Join BRICS

Host South Africa, which became a member of the bloc in 2010, is leaving no stone unturned to ensure that African countries get a footing within the BRICS. With expansion being the main agenda for this year’s summit, President Ramaphosa has invited all African countries to the summit, either formally or informally, sources said.

This is also one of the reasons why President Ramaphosa made sure that all leaders of BRICS, with the exception of President Vladimir Putin, wholeheartedly participate in the 15^th BRICS Summit. The African countries are eager to join BRICS as most of them do not want to rely on the IMF and World Bank. They are looking for a multilateral bank that addresses the issue of the Global South.

“The primary thrust of the Summit will be developing a programme that will promote the African agenda. It will be interesting to see how BRICS attends to it. This is one issue that unites all the members while they plan to minimise the role of the US and the West,” added Bhatia, who has served as India’s High Commissioner to Kenya, South Africa and Lesotho.

He also said that the African Union will get unanimous support to even join the G20 at the BRICS Summit, but the funding capacity of some of the countries remains a concern.

“There is a rift between Russia and China on one hand, and Brazil and India on the other on the issue of expansion. But South Africa is trying to find a solution. They will agree on certain criteria and may also announce the names of shortlisted countries, which may make the cut in terms of consensus, geographical balance. They will essentially be the ones willing to move into the family in a gradual manner,” he said.

The last BRICS Summit was held on June 24, 2022, under the chairmanship of China in virtual format where the ‘Beijing Declaration’ was adopted under the theme ‘Foster High-quality BRICS Partnership, Usher in a New Era for Global Development'.