Friday, July 12, 2024
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BRICS Marching Ahead

Asad Mirza

The 15th BRICS summit comprising Brazil, Russia, India, China and South Africa, was held at Johannesburg, S. Africa. This year’s annual summit was majorly focussed on two issues; first, admitting new members to the 5-nation organisation and boosting trade using the local currency of the member nations.

Reportedly, encouraged by BRICS success on the economic and geopolitical fronts, a growing number of countries in the Global South consider it as an attractive agent of multilateralism. More than forty nations - including Algeria, Egypt, Thailand, and the United Arab Emirates, including key G-20 countries such as Argentina, Indonesia, Mexico, and Saudi Arabia - had formally expressed their interest in joining the BRICS. But finally only six more were added to the original members’ list.

South African President Cyril Ramaphosa formally announced BRICS expansion, and now Iran, Saudi Arabia, Egypt, the UAE, Argentina and Ethiopia will join BRICS. Overtly this seems to be an attempt to reshape the global world order and provide a counterweight to the U.S. and its allies.

The Chinese president, Xi Jinping, described the expansion as “historic”. Xi had leading the demand admitting new members, thus shaping-up an enlarged BRICS as a way for the Global South to have a stronger voice in world affairs.

The Indian Prime Minister Narendra Modi, welcoming the expansion of the five-nation grouping said, “Through this step, the faith of numerous nations in a multipolar world order will become stronger.”

Media reports prior to the summit cited Chinese officials furthering the view that the bloc should be a rival to the G-7. But they were silent on plans to enhance the group’s clout on the global stage. It would depend on how far it will be able to act in unison, as the addition of new members has made it even more disparate.

The Guardian quoted the director of the Asia and Latin America programme at the Inter-American Dialogue, Margaret Myers, as saying that this move is more symbolic than anything – it’s an indication of wide-ranging global south support for a recalibration of the global order.

The decision to admit Iran represented a win for both Putin and Xi, giving the group a more anti-western nuance. Iran, which has been looking for ways to sidestep the U.S. sanctions, was indeed elated and same could be said about Putin, who’ll be hosting the next summit and addressed the Jo’burg summit virtually.

While India had not opposed the expansion of the BRICS, it did push for rules and procedures to be laid down, which would govern which countries could enter the bloc. China's push to incorporate Pakistan into the BRICS alliance earlier stirred a diplomatic conundrum, but ultimately it was not amongst the lucky six.

For Argentina, facing dire economic problems, membership may provide a lifeline to escape from the deepening crisis. Its president, Alberto Fernández, said it represented a “new scenario” for the country. Ethiopia became the only low-income country in the group. Its prime minister, Abiy Ahmed, described it as “a great moment” for his country.

Al Jazeera quoted Ayham Kamel, the head of Eurasia Group’s Middle East and North Africa research team, as saying that in one move, the Middle East and North Africa region could have four members in an expanded BRICS organisation. This will structurally enhance their leverage regionally and globally.

A strengthened region would further pave the way for a multipolar world, Al Jazeera quoted Trita Parsi, vice president of the Quincy Institute for Responsible Statecraft, as saying, “As the world moves away from unipolarity, the U.S. is also losing its ability to act as a gatekeeper, no one single state can any longer decide who is in the Community of Nations and who is a pariah.

However the most important takeaway from the summit was described by Ryan Berg, the head of the Americas programme at the Centre for Strategic and International Studies, quoted by The Guardian as saying that “For China and Russia, this is a win. They have been pushing for this for five plus years now. For China, it allows them to continue to build what they hope is a Beijing-centric order. For Russia, who is hosting it next year, it sees this as a tremendous opportunity in its current moment of significant isolation.”

In addition, BRICS members also discussed sustainable development in the climate change era, global governance reform, and an orderly process of increasing trade in local currencies., which many emerging economies are exploring and where India is pushing for trade in the Indian rupee.

Hippolyte Fofack, chief economist and director of research at the African Export-Import Bank (Afreximbank) told The Atlantic magazine that the dollar remains the global reserve currency, and the pace at which other currencies have chipped away at its dominance has been incremental. But a growing number of experts, including senior U.S. government officials, recognise that the aggressive use of economic and financial sanctions to advance U.S. foreign policy could threaten the dollar’s hegemony in the years ahead.

There were also rumours that the Summit may announce a BRICS-issued reserve currency to be used by members in cross-border trade. Though the member nations collectively enjoy a comfortable balance of payment surplus, they don’t have the financial wherewithal, Hippolyte opined to establish such a currency as they lack the institutional architecture and the scale to sustainably achieve this end.

Reflecting on these challenges, Anil Sooklal, South Africa’s ambassador-at-large to BRICS, had reiterated in July earlier that a BRICS currency will not be on the agenda during the summit, though expanding trade and settlement in local currencies will be. According to Hippolyte BRICS countries are already making strides in the use of local currencies in cross-border transactions. Their use is helping to sustain and boost cross-border trade between members, even amid a challenging operating environment of heightened geopolitical risks. It is also loosening the balance of payments constraints associated with dollar funding, bolstering local economies.

Lastly, the Jo’burg summit served as a new foundation in advancing cross-border payment systems and embracing local currencies to fortify international trade, besides sending a warning light to U.S.-led western democracies that the concerns of developing nations shouldn’t be ignored any further.

(Asad Mirza is a Delhi-based senior political and international affairs commentator)

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