Building BRICS for the future

General Studies Paper 2

Context:

• Recently in 2023, six new members were inducted into the BRICS grouping, in South Africa.
• 15th BRICS summit held in Johannesburg, 2023, led to the expansion of BRICS, making it BRICS-Plus. 6 new countries have been added to the grouping, i.e., Argentina, Egypt, Ethiopia, Saudi Arabia, Iran and UAE.

Other outcomes of the 15th BRICS Summit:

• Adoption ofJohannesburg II Declaration on matters of global economic, and political importance.
• The first ever in person engagement with leaders of BRICS with the members of BRICS Women’s Business Alliance.
• BRICS Finance Ministers or central bank Governors to consider the issue of local currencies, payment instruments and platforms etc.

BRICS Expansion

• While many believe that this meeting did not have productive results, we need to look at BRICS from the perspective of how it has evolved rather than the results of one meeting.

Economic significance

• First, it is important to note that BRICS emerged out of an economic compulsion. It does not provide military or security support to various countries, is not involved in the policing of nations, and does not provide peacekeepers.
• The GDP of BRICS is now 36% of the global GDP and the population of its members will be 47% of the world population by 2050. Therefore, it is important to look at the long term opportunities that this group presents.
• More members could be inducted, which means that BRICS could pose a serious challenge to the dominance of the G7 comprising Canada, France, Germany, Italy, Japan, the U.K., and the U.S.

Demographic significance

• Second, two members of BRICS are China and India, which together contain one third of the world’s population. The two countries are the fastest growing economies and are expected to be among the top three economies of the world by 2030.
• Both countries understand that globally, bilateral ties have seen a transformation following the formation of economic blocs such as the European Union or ASEAN, as such blocs accelerate trade and investment.
• While India and China have bilateral challenges at the political and diplomatic levels since their standoff at Doklam in 2017, trade between the two countries has continued to grow significantly.

Search for an alternative

• Third, there has been some polarisation between the U.S. and other parts of the world. Many countries have issues with the U.S.’s stance against China: the U.S. seems keen to impose tariffs and create other barriers to restrict China’s expansion in trade and investment. China has made strides in certain areas like communication infrastructure and electric mobility, too, which the U.S. would like to contain.
• This is expected to get worse. Therefore, countries want to be part of a grouping that involves China too. In the BRICS grouping, China is not a dominant player; democratic countries such as India, South Africa and Brazil provide the counterweight.

Refugee issue, trade and investment:

• Similarly, the way refugees are being treated in Europe do not give a positive perspective of a world that is getting increasingly globalised. Countries such as the U.S. have flouted World Trade Organization (WTO) rules and have not penalised for the same. This means that countries have to look for other arrangements.
• As BRICS grows, there will be many trade business and investment protocols created, much like what we see in different free trade arrangements or economic blocs.

Global currency and de-dollarisation:

• Fourth, the U.S. dollar has been the dominant global currency all this time. With digital platforms making inroads into many countries, digital currency is clearly the future. Both India and China have made great progress in this field; they are far ahead of the U.S. and Europe. Both India and China are pushing for more trade, investment, and business in their currencies and together, through BRICS, they can push their own currencies as alternative currencies to the dollar. Freedom from the U.S. dollar is a big reason for convergence of India and China’s interests.

Africa: the continent of the future

• Finally, the continent that promises economic growth this century is Africa. The way France has intervened in Niger or the manner in which migrants have been treated in Europe provide Africans with a negative image about Europe. Visa restrictions have pushed Africans to travel to travel to China and see its development more closely than to Europe or the U.S. This makes them believe in China’s potential.

Conclusion

African countries continue to talk about the freedom they need in choosing partners for investment or trade. India proposed full membership for the African Union at the G20 summit in New Delhi. It is trying to push its own reach within Africa. BRICS will again be out of the news until the next summit. However, each summit generates some spark that provides the building blocks for different networks of people for the future. This is a group for the long run.