BRICS and its relevance in today’s world

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Context: The 13th BRICS (Brazil, Russia, India, China, South Africa) Summit under the chairmanship of the Indian Prime Minister took place virtually. The theme for the Summit was '[email protected]: Intra-BRICS cooperation for continuity, consolidation and consensus'.

Relevance:
Prelims: Current events of national and international importance.
Mains: GS II- Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

 

BRICS

Origin and formation:

  • BRICS is an acronym for the grouping of the world’s leading emerging economies, namely Brazil, Russia, India, China, and South Africa.
  • In 2001, the British Economist Jim O’Neill coined the term BRIC to describe the four emerging economies of Brazil, Russia, India, and China.
  • The grouping was formalized during the first meeting of BRIC Foreign Ministers in 2006.
  • South Africa was invited to join BRIC in December 2010, after which the group adopted the acronym BRICS.

BRICS important summit and its institutions

The BRICS leader summit is convened annually and some of the major summits are as follow:

YEAR HOST    Important  Declaration
2014  Fortaleza, Brazil   New development bank and contingency reserve    arrangement 
2016 Goa, India   Mou on trade 
2018

Johannesburg,
South Africa 

  Partnership on the industrial revolution.
2019 Brasilia, Brazil    Brasilia declaration 

New Development Bank:

  • During the sixth BRICS Summit in Fortaleza, Brazil (2014), the leaders signed the Agreement for establishing the New Development Bank (NDB).
  • Fortaleza Declaration stressed that it will supplement the efforts of multilateral and regional financial institutions for global development thus contributing to sustainable and balanced growth.
  • NDB has successfully worked as one of the most promising multilateral development institutions. Since its inception in 2015, it has approved 42 investment projects worth over $11 billion.  

Contingency Reserve Arrangement:

  • BRICS nations signed BRICS Contingent Reserve Arrangement (CRA) in 2014 as part of the Fortaleza Declaration at the Sixth BRICS summit.
  • Contingency Reserve Arrangement, aimed at ensuring liquidity for member-states when they are confronted by short term balance of payment crises.

Brasilia Declaration:

  • It advocates and supports multilateralism, the central role of the U.N. in international affairs and respect for international law.
  • An urgent need to strengthen and reform the multilateraL Institutions like the United Nations and other multilateral organizations.
  • Strategy to develop a common framework to eliminate terrorism.
  • Initiative to develop a common payment system and use the national currency for mutual trade.
  • Common roadmap for a common cryptocurrency.

Key Takeaways from the 13th Summit

PM’s Address:

  • Highlighted the achievement of several new initiatives during India's Chairship this year (2021), i.e. an Agreement on cooperation in the field of remote-sensing satellites; a virtual BRICS vaccine Research & Development Centre; BRICS Alliance on Green Tourism, etc.
  • Highlighting the leading role that BRICS countries can play in the post-Covid global recovery, Prime Minister called for enhanced BRICS cooperation under the motto of 'Build-back Resiliently, Innovatively, Credibly and Sustainably'.

BRICS Counter-Terrorism Action Plan:

  • The adoption of this plan defines the approach and actions of the BRICS countries towards areas of Counter-Terrorism cooperation which includes: Countering Radicalization and Online Terrorist Threats, Border Management, Information/ Intelligence Sharing, etc.

Delhi Declaration:

  • The declaration called for reforms of the principal organs of the United Nations including that of the UN Security Council (UNSC).
  • It is the first time that BRICS has taken a collective position on 'Strengthening and Reforming Multilateral Systems’.
  • It also called for an “inclusive intra-Afghan dialogue” for stability in Afghanistan.
  • Apart from Afghanistan, the BRICS leaders also took up the conflicts in Myanmar, Syria, the tension in the Korean peninsula, Israel-Palestine violence and other territorial disputes.

On Covid-19:

  • Noted the proposal made by India and South Africa at the World Trade Organisation (WTO) for the waiver of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) mechanism to ensure a rapid expansion of the Covid-19 vaccine production around the world.

 

Achievements of BRICS 
  • Expanding trade: BRICs share of the world exports rose significantly from the years 1996 to 2008, from 9% to 17%.
  • Setting up the Contingent Reserve Arrangement (CRA): to provide mutual financial support, and as a contribution to the global financial safety net.
  • Establishment of New Development Bank: It marks a departure from the practices and procedures of the west-dominated IMF and World Bank.
  • BRICS as a new stakeholder in 21st-century Global Agenda: The economic potential and demographic development is putting the BRICS countries, increasingly in a leading position in setting the global agenda and having a greater say in global governance.

Local currency Bond Fund:

  • With a successful Contingent Reserve Arrangement in the bag, BRICS governments are set to establish a local currency Bond Fund.
  • But the earlier proposal to launch a credit rating agency remains shelved due to internal differences.

Business promotion:

  • Business promotion among member-states has been accorded a new salience.
  • The BRICS Business Council held a substantive dialogue to foster cooperation in areas ranging from infrastructure and energy to financial services, regional aviation and the digital economy.
  • Its cooperation with the NDB is being encouraged. The national trade promotion agencies signed an MoU on cooperation among themselves.
  • A BRICS Women Business Alliance was also created, both as a women empowerment measure and as a tool to bring “a distinctive perspective on issues of interest for the business community.”

Commitment on NIR:

  • Following up on the decisions taken at the previous summit, the operationalisation of the Partnership on New Industrial Revolution is underway.
  • It is focused on cooperation in digitalisation, industrialisation, innovation, inclusiveness and investment.
  • This partnership will be concretized by establishing industrial and science parks, innovation centres and business incubators.

Response by BRICS Countries During the Pandemic:

India:

  • India has reinforced its credentials as a Rapidly emerging Pharmacy of the world.

Export of Hydroxychloroquine:

  • As the world’s largest producer of hydroxychloroquine, we have recently exported the drug not only to SAARC countries and to its “extended neighbourhood” in the Gulf, but also to Russia, Brazil, Israel and the U.S.
  • These steps taken have set the stage for India to create an inclusive BRICS-driven pharma alliance, which could also actively explore the production of vaccines.

China:

  • China has also responded strongly in containing the pandemic, leveraging its position as the workshop of the world.
  • China has supplied the “hardware” i.e masks, gloves, coveralls, shoe covers and testing kits to hotspots worldwide.
  • Under its Health Silk Road doctrine, the Chinese reached out to two of the worst global hotspots, Italy and Iran.
  • A Chinese shipment that included essential supplies and equipment, including respirators, protective suits, masks and medications has been sent to Italy.
  • China is running a medical air bridge bound for Europe.

Russia:

  • Russia has sent its doctors and virologists overseas, including the launch of the famous ‘From Russia with love’ air mission to Italy.
  • A Russian Antonov-124, packed with medical supplies and experts, landed at New York’s John F. Kennedy International Airport recently.
  • Russia is equipped with top-of-the-line emergency services, which are equipped to handle any kind of emergency.

South Africa:

  • As being the current rotating head of the African Union, it is engaged in framing a pan African response to COVID-19.

Brazil:

  • Among the BRICS countries, only Brazil’s response may need a course correction, as its resistance to breaking the infection chains through travel bans, lockdowns, isolation and testing appear to have led to an infection surge.

Coordination of Efforts to Tackle the pandemic:

  • BRICS nations have already demonstrated their comparative strengths as providers of Humanitarian Assistance and Disaster Relief (HADR).
  • BRICS countries now need to pool and coordinate their efforts, in partnership with the WHO, and Europe and North America, as part of a global assault on the virus.
  • Special focus on vulnerable countries:
  • BRICS nations may have to reactivate an existing disaster response mechanism and earmark resources and assets to combat a whole range of natural disasters, with special attention towards the emerging economies and the global south.

Financial Allocation Model:

  • The New Development Bank of the BRICS countries has already demonstrated the way forward to allocate financial resources to combat COVID-19.
  • NDB has already disbursed a $1 billion emergency loan to China, and subsequently to India, South Africa and Brazil,
  • Also, the NDB had the Financial heft to Provide $10 billion in “crisis-related assistance” to BRICS member countries.
  • The NDB’s Financial Model, Demonstrated to address the pandemic, can now become a template to Address Natural Disasters.
Failures of BRICS
  • In recent times BRICS are facing problems in terms of slowing economic growth and recession in some of its member countries.

The structural disparity between China and other BRICS members:

  • The Chinese economy has the largest share and in turn, has stoked economic nationalism in other member countries.

Goals yet not clear:

  • The contribution of BRICS to project the perspectives of developing economies is laudable.
  • However, by hosting outreach meetings with countries in its neighbouring (or broader) region, each chair (with Brazil’s exception) gave the impression that BRICS would do more for them.
  • But the NDB has been lagging behind on this score. It needs to start extending loans for projects in non-BRICS countries to create a solid constituency of supporters.
  • BRICS should ponder if in the short term it needs to focus on fulfilling existing commitments instead of taking on new ones.

The climate at peril:

  • Climate governance too has been highlighted as an area where BRICS members have a lot of potentials to contribute, but so far, that has not happened.
  • Russia has been ambivalent towards climate change and has recently joined the Paris Agreement.
  • India has taken initiatives outside the grouping to project itself as a leader in the fight against climate change, such as the launch of the International Solar Alliance in 2015 with France.
  • Apart from the global agenda, BRICS allows New Delhi to send out messages about its foreign policy priorities, underscoring its desire to be part of issue-based coalitions.

Failed to resolve Political Tensions:

  • The BRICS grouping has not prevented political tensions from flaring up between member states. Border disputes have been a long-running issue between China and India, with the most recent military standoff taking place in the area surrounding Pangong Lake since early 2020. In other areas of foreign policy, the members are at odds, even if not in direct opposition.

Low Economic Progress:

  • In terms of economic development, the BRICS has not wholly lived up to expectations, either. Members have failed to become the driving forces of the 21st century’s global economy – even Chinese growth has slowed of late. Extenuating circumstances, including national recessions, trade tensions and the COVID-19 outbreak, have not helped, of course.
  • Somewhat embarrassingly, Goldman Sachs – the bank at which the original group’s acronym was coined – closed its BRIC investment fund in 2015 after years of poor returns.
  • S&P is just one of many entities to question whether the grouping remains relevant, arguing late last year that the members’ “disparate paths weaken the analytical value of viewing the BRICS as a coherent economic grouping”. Even after 10 years, there is work to be done if the BRICS group is to survive long into the future.

BRICS is still far from achieving its initial goals:

  • Reform of global financial governance, the democratisation of the United Nations, and expansion of the Security Council — partially because two of its members (China and Russia) do not want the other three members (India, South Africa and Brazil) to obtain parity in the global pecking order.

Failed in reforming Multilateral Financial Institutions: 

  • Little progress has been achieved in reforming the multilateral systems like IMF, WTO, UN and other international organisations.

Failure of BRICS to sign an agreement with the US:

  • None of the BRICS countries has signed trade or investment agreements with the United States and some of the negotiations have been failed due to opposition to the US approach. This has hindered the economic expansion of BRICS countries.
  • India’s close relationship with the US, for example, is in sharp contrast to the more negative attitudes exhibited towards Washington in Beijing and Moscow. Likewise, cooperation between Russia and Pakistan, particularly concerning joint military drills, has caused some consternation in New Delhi. 

Weak institutions and poor governance:

  • Each of the BRICS countries faces a unique set of challenges.
Relevance of BRICS in Global Order
  • BRICS countries’ sizable contribution to global growth, trade, and investment make it an important pillar of global order.
  • Financial: Structural imbalances caused by the global financial crisis of 2008 and protectionism has made the rising importance of the economic relations between the BRICS and other Emerging Market and Developing Countries (EMDCs) create an opportunity for new initiatives for sustainable growth.
  • Security: The US withdrawal from Intermediate-Range Nuclear Forces (INF) Treaty and Iran deal has posed a security threat, being a pillar of fairer polycentric world order, it can play a significant role in bringing peace.
  • Poverty Reduction: The BRICS contribution to world poverty reduction has been sizeable. Continued BRICS growth remains important for poverty reduction as well as for reducing international inequalities.
Importance of BRICS for India
  • Geo-Politics: Global geopolitics has made it difficult for India to carve a middle path for balancing its strategic interests between the U.S and the Russia-China axis, so BRICS helps to balance the axis.
  • Global Economic Order: BRICS countries always vouch for rule-based world order. The BRICS community plays an important role in shaping global economic policies and promoting financial stability.
  • Voice of Developing Nations: developing countries are crippling under the voice of western countries the BRICS has emerged as the voice of the global south
  • Terrorism: BRICS and has worked within the grouping to take a strong stand against terrorism and bring about focused consultations on specific aspects relating to terrorism.
  • Global Grouping: India is actively pursuing its membership in the United Nations Security Council (UNSC) and Nuclear Supplier Group (NSG). BRICS help to resolve the roadblock put down by china.
Challenges
  • Heterogeneity: It is claimed by critics that heterogeneity (variable/diverse nature of countries) of the BRICS nations with its diverse interests poses a threat to the viability of the grouping.
  • China Centric: All the countries in the BRICS grouping trade with China more than each other, therefore it is blamed that as a platform to promote China’s interest. Balancing the trade deficit with China is a huge challenge for other partner nations.
  • Global Model for Governance: The new global model of governance should not be unipolar but inclusive and constructive.
  • The goal should be to avoid a negative scenario of unfolding globalization and to start a complicated merging of the global growing economies without distorting or breaking the single financial and economic continuum of the world.
  • China’s plan for a “BRICS-Plus” or “Friends of BRICS” grouping: Chinese are planning to include Pakistan, Sri Lanka and Mexico in an expanded version of BRICS. The suggestion of including Pakistan is something India has not liked.
  • Relevance of BRICS could diminish: If BRICS do not discuss economic cooperation between themselves, which can include a potential BRICS trade and investment agreement, the relevance of BRICS will gradually diminish. The BRICS will not be able to discuss the trade that much after India’s decision to say no to RCEP.
  • India’s play with the BRICS while deepening the strategic partnership with QUAD: But India’s “multi-alignment” has become harder as there are renewed tensions between global powers.
  • Unclear nature of the group: BRICS is a non-regional grouping that has begun as a bloc of emerging economies joining hands for economic purposes but is unable to commit to very many common goals like terrorism.
  • Anti-US stature: Moscow saw the BRICS as a way of creating political leverage against the United States and the West, Beijing saw it as an instrument to expand China’s own global economic influence. Delhi is now struggling to come to terms with China-led globalisation.
BRICS and Multilateralism in Today's World

 

Why multilateralism matters for BRICS?

  • For some time now, ‘weaker states’ have sought to set up multilateral institutions ‘suited to their own specific goals and identities,’ removed from the global hegemonic order.
  • Unlike a hegemonic power, emerging powers find it difficult to strike out on their own and hence rely on multilateral institutions to achieve their goals.
  • In a similar vein, for the past decade, BRICS countries have sought to improve coordination of issues of mutual interest. This continued BRICS cooperation has been based on specific calculations made by the member-states in terms of their defined national interests and achievement of foreign policy goals.
  • The main causes include reform of Bretton Woods institutions, enhancing regional power of individual member states, helping in the achievement of foreign policy goals of individual member states as well as increasing cooperation with the rising power to ‘bind’ it among formal institutional structures.
  • Also, the countries have made a collective demand for reform of global financial institutions and even coordinated positions at the G20 summit.
  • In fact, ‘strengthening and reforming the multilateral system’ remains a key principle of cooperation among BRICS, as is evident from the 2019 Brasilia summit declaration. This highlights not just overlapping concerns among BRICS countries, but also the extent to which cooperation is based on activities of other multilateral institutions.
  • Given that BRICS countries on their own are not in a position to mount global efforts to deal with the large-scale crisis, paralysis at the level of other multilateral institutions negatively affects agenda formation in BRICS.
  • This takes place through an undermining of the strategic calculation that had led member states to cooperate within the BRICS framework to achieve the benefits accrued through a collective approach in international organisations.
  • The ongoing churn in the world order, further complicated by the pandemic sweeping through the world, has however raised concerns about future policy directions of BRICS member states and its eventual impact on the organisation as a whole. If the US-China rivalry intensifies, the already complex dynamics between India and China, India’s balancing act with the US, the growing Russia-China linkages, Russia-US tensions- raise the prospects of an ‘internal split.’ 
  • It must be noted that multilateral frameworks were under stress even before the pandemic hit. What the COVID-19 is expected to do is to exacerbate the already prevailing trends when it comes to multilateralism, especially the ones in which the US is a leading member.
  • Having long been used by strong states to further their influence, the post World War II multilateralism had been largely ‘American-centric.’ It is the rise of other powers that are now questioning this arrangement in order to cement their position and derive resultant benefits without alienating the major powers.
  • But what do these developments mean for multilateral organisations that are not driven by a US membership- how does the post-COVID-19 world order impact their functioning and agenda, is seen through the case of BRICS.

 

An uncertain future for BRICS?

  • In the past five years, BRICS has managed to begin a process of institutionalisation as well as increased intra-BRICS cooperation in areas like health, science and technology, environment, finance, trade, agriculture, etc. (at the ministerial, sectorial and senior official level).
  • This has also meant that despite the differing foreign policy positions in several areas, BRICS had remained an important arena for ‘discussing the prospects of geopolitical evolution.’ Also, despite its shortcomings, in a time of evolving world order, a continued format for discussion among emerging powers has been ‘worth maintaining.’
  • The role of other emerging powers, their foreign policy choices in an evolving global order and their response to the US-China equation will affect multilateral behaviour, including that of BRICS.
  • Till now, despite the economic strength China wields, it has not sought to assume a dominant position within the organisation, clearly understanding the limitations posed on such a posture by the member states.
  • But a heightened rivalry with the US and the opportunity the pandemic offers to push for changes in the world order has the potential to upset this balance, leading to changes in how the two countries position themselves in multilateral institutions and affect rule-making within these bodies.
  • Whether it can manage the internal contradictions among its members while also simultaneously expanding its agenda to become a more consequential voice at the international level, will determine its success in the coming years even as the collective response of BRICS to the pandemic remains to be seen.
  • It will be the nature of world order that eventually emerges that will determine the future of BRICS and not the other way round. This makes the ongoing churn in the global order especially relevant for BRICS and its future as a multilateral organisation.
International Security and BRICS
  • There is a need for a comprehensive and coordinated ‘grand strategy’ for BRICS countries to address shared international security challenges, particularly, cyber security.
  • Issues of transnational security are increasingly impacted by the changes in the international finance system, terror financing, and other forms of criminality. As the international financial system has developed, so have the severity and scale of cybercrimes. The uncertainties surrounding cryptocurrencies and the lack of checks and balances around it has made it easier to finance terrorism.
  • There is a shared concern amongst BRICS countries that technology is becoming an enabler to very complex forms of threats to humanity including physical threats like human trafficking and drug trafficking.
  • Hence, there is a need for an intergovernmental agreement for internet governance that is ‘inclusive, representative, and equitable’ to respond better to security threats.
  • The three changes that have changed the nature of threats in the international system include:
    1. The emergence of a multipolar world;
    2. the increasing prominence of non-state actors; and
    3. advances in technology.
  • Advances in technology related to artificial intelligence (AI) and robotics have amplified the need for solid cyber security infrastructure. BRICS countries should work together on these issues with expert groups. With the exchange of information, sharing of best practices and policies, and capacity building efforts, increased cooperation at the BRICS can be achieved.
  • There is a continued interest in the BRICS forum and its relevance in the ‘fractured global order’. There is an opportunity in the current global scenario for BRICS to deliver.
  • The COVID-19 pandemic has affected the economies of BRICS countries equally, apart from China that actually grew a record 18.3% in the first quarter of 2021.
  • BRICS countries’ understanding of security issues should broaden to include areas of health, trade, and job security. Under India’s BRICS presidency, a major priority is the reform of key international organisations for a more inclusive global governance.
  • These include reforms at the United Nations, World Trade Organisation, International Monetary Fund, World Bank and the United Nations Security Council.
  • With regard to vaccine diplomacy, while BRICS countries have collaborated to establish the BRICS vaccine research and development centre, with a joint vaccine cooperation effort, a lot more can be achieved by sharing information and delivery.
  • There is also an issue of internet sovereignty, highlighting the problems of techno-nationalism, 5G, and global disinformation campaigns. India has prioritised ‘knowledge innovation’, which is an area of opportunity for BRICS nations to work together on specific areas including health, agriculture, science, and technology.

Way Forward

  • The members of the BRICS grouping should speak with a stronger voice and not be divided among themselves on the critical issue of achieving the long-pending UN Security Council reform.
  • India should stand up to China where necessary and cooperate with it where possible.
  • India should salvage the essence of the long-standing partnership with Russia but also recognise that Moscow has its own imperatives.
  • Promote more business with Brazil which stands at just US$ 7 billion as compared to US$ 100 billion with China.
  • India while deepening its strategic ties with Washington should also acknowledge BRICS’s sharp internal divisions and the enduring compulsions to find compromises with a rising China. 
  • The current crop of BRICS leaders too are seen as strong personalities. India views this as a potential for cooperation, as the leaders have more in common than their predecessors.
  • India and other BRICS nations should speed up on the path to economic recovery. BRICS nations need to focus on trade and investment as the Intra-BRICS trade is only 15% of the world trade.
  • Africa needs big loans from the New Development Bank (NDB) for their infrastructure projects, they should be expedited.



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