The four-nation BRIC comprising Brazil, Russia, India, and China, which later expanded to five members with the inclusion of South Africa in 2011, was founded in 2006 with a hidden agenda to counter Western economic practices in the international arena. But of late the group seems to have lost its momentum. The group riven by internal dissensions has not been able to effectively challenge Western dominance in the management of financial institutions. The group had pledged to focus on improving the global economic situation and reforming the world financial institutions. In fact, the group had taken a landmark step to set up its own New Development Bank to help the developing economies.
The group, which initially seemed to be an emerging geopolitical block, as diplomatic pundits started dubbing the BRICS as a rival to G7, a collective of the world’s leading industrialised countries dominated by the US. Other significant moves to set up the BRICS payment system, the Contingent Reserve Agreement and the BRICS basket reserve currency attracted the world’s attention. These were serious measures announced to end the monopoly of US-led financial institutions, during the middle of the last decade, but have not yet been able to make their mark. The initial successes seem to have evaporated as two of its member- economies India and China are no longer on talking terms.
With this background, and in the backdrop of the Russian military invasion in Ukraine, the 15th Summit of the Heads of States will be held in August in South Africa. To lay the groundwork for this summit, the foreign ministers of five BRICS members concluded their meeting in Cape Town on June 1-2.
After the meeting, they issued a joint statement, which is indicative of the expected outcome of the forthcoming 15th BRICS Summit, during which Prime Minister Narendra Modi would come face to face with Chinese President Xi Jinping. In the joint statement issued after the meeting, the member countries (Brazil, Russia, India, China, and South Africa) expressed their intent to trade in local currency, tackle climate change, collectively fight the menace of terrorism, and stated their individual positions on the situation in Ukraine while wishing for peaceful resolution of the conflict in Eastern Europe.
Grappling With Fragmented Unity
Like previous years, the joint statement came out with rhetorical resolutions on various world issues, especially impacting developing economies, acting as a voice of the global south. But one of the members and a leading proponent of the interests of small, poor, undeveloped countries, which has emerged as the biggest moneylender of the world, continues to exploit their miseries. The statement, without naming any country, said: “…impact on the world economy through unilateral approaches is the breach of International law. The situation is further complicated by unilateral economic coercive measures, such as sanctions, boycotts, embargoes, and blockades."
In fact, what the five-nation BRICS group proposes collectively is disposed of unilaterally by member countries.
Currency Clash And Expansion Dilemma
Currency and terrorism are the two prime examples of member states taking contradictory stands. The forum exhorts its member countries to shun the US Dollar, dominating the world currency market, and use their own currencies for bilateral trade. A recent example is Russia declining to accept Indian Rupees for payment of Russian exports to India. The Chinese too want to trade in their own currencies but refuse to accept other countries’ currencies. China wants to monopolise and internationalise its currency Yuan, which would not be acceptable to India, which aims to popularise Rupee. Similarly, India also is not ready to accept Russian Rouble either. Though, since the beginning of Russia Ukraine war, member countries have started a little trade with Russia in their own currencies, to evade the US sanctions on the use of US Dollars, Russia has of late stopped accepting payment in Indian Rupees, as the Indian currency is not respected by the rest of the BRICS members. If this would have been the case, the five-member countries would have been exchanging their currencies and goods freely.
The joint statement said, “ministers underscored the importance of encouraging the use of local currencies in international trade and financial transactions between BRICS as well as other trading partners”. The Russian leaders say that this will be the first step towards a joint BRICS currency. But the member countries also differ on its exact shape and valuation. Naturally, China would like to take control of the BRICS currency, as the dragon country holds the largest trade share among BRICS partners, about 84 percent, whereas India’s share is just 2 percent.
No consensus was announced either on the extent of expansion or inclusion of new members in BRICS, as China wants to stunt the Indian voice to counter the Indian narrative on various issues like terrorism, currency, development issues, etc. By welcoming new countries into the group, China could lose majority support. Besides the contentious issue of induction of new members, the foreign ministers discussed energy security, climate change, Ukraine and Sudan situations.
The BRICS foreign ministers’ statement also committed to combatting terrorism in all forms, including financial networks. The joint statement clearly exhorted the nations to reject the double standards in countering terrorism and extremism. Yet, China, a prominent founder member, continues to give shelter to Pakistan-based anti-India terrorists on the floor of the United Nations Security Council. Earlier, in his address, External Affairs Minister S. Jaishankar had said: “All nations must take resolute measures against this menace, including financing and propaganda. It must be combated in all its forms and manifestations and never be condoned in any circumstances.”
Addressing the BRICS foreign ministers’ meet, Jaishankar also expressed disappointment with the progress of reforms in multilateral institutions. Though the joint statement, like previous years, reiterated China and Russia’s “explicit support for India, Brazil, and South Africa’s aspirations to play a greater role in United Nations Security Council”, when the issue comes up for discussions in various UN bodies, China plays games to counter any meaningful parleys on the subject. China plays a similar role in other multilateral institutions like the Nuclear Suppliers Group etc to block India’s entry.
The BRICS foreign ministers failed to recommend the exact shape and size of the proposed expansion of the five-member BRICS. According to Russian Foreign Minister Sergei Lavrov, around 20 countries want to join BRICS. Ten countries — Afghanistan, Algeria, Argentina, Bahrain, Egypt, Indonesia, Iran, Mexico, Saudi Arabia and United Arab Emirates — have already applied. In addition, Bangladesh, Kazakhstan, Nicaragua, Nigeria, Thailand, Tunisia, Turkey, Uruguay, Venezuela and Zimbabwe have also expressed their desire to join the group. The dilemma before this supposedly anti-West grouping is to what extended BRICS can be expanded and who all can be admitted. Until this is resolved, the expansion issue will continue to dog the group’s deliberations.
The author is a senior journalist and strategic affairs analyst.
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