At the 2022 BRICS summit, China’s President Xi Jinping compared the BRICS economic bloc
to a “giant ship” sailing forward “against raging torrents and storms.”
At first glance, BRICS is made up of five seemingly disparate countries -
Brazil, Russia, India, China and South Africa. But it’s their status as some of the world’s
biggest emerging markets that brought them together.
The BRICS nations have a Gross Domestic Product (GDP) of more than $24.7 trillion.
For context, that’s about $1.7 trillion bigger than the GDP of the United States
and a quarter of global GDP. The five countries also make up two-fifths (40.5%)
of the world’s population, or 3.2 billion people.
The BRICS started as a very heterogeneous group. There was never an internal coherence.
Every year, there’s a BRICS summit, and every year somebody predicts its demise.
Having said that, these countries have still stuck together for longer than anybody had predicted.
The world has changed drastically since BRICS first came together. There has been a pandemic,
political upheavals and a war waged by a key BRICS member.
So how did this economic bloc form, and what’s in its future?
It might come as a surprise that BRICs wasn’t the brainchild of its members.
In 2001, Goldman Sachs’ then chief economist Jim O’Neill coined the acronym in the paper,
”Building better economic BRICs.” He predicted that the economic weight of the grouping,
which at that time referred to Brazil, Russia, India and China, would grow over the next decade,
with the potential to eclipse the world’s biggest economies.
The prediction proved true for the next several years,
with the countries boasting impressive year-on-year growth. BRICs became a popular
financial talking point – and the countries’ leaders seized on the momentum.
The foreign ministers of the four countries first got together in 2006, and their leaders
met on the side lines of the G8 meeting in 2008. A year later, the first BRIC summit
was held in Russia, and South Africa was formally added to the group in 2011.
Since then, the leaders have met annually to discuss cooperation and global issues.
Zongyuan Zoe Liu is a fellow for international political economy at the Council on Foreign Relations,
an American non-profit based in New York.
When the BRICS first got together in 2009, that was at a time of global financial turmoil,
especially in the West, starting from the Lehman Brothers collapse in the United States.
But the BRIC countries, especially China and India, recovered from the crisis relatively unscathed,
something that gave the group momentum.
It wasn’t until the commodity crunch of 2013 that the wind was taken out of the bloc’s sails.
Brazil and Russia’s oil dependent economies began to shrink, and investors started
to write off the once-so-promising grouping.
But even though BRICS was no longer front of mind for the West, the countries continued to meet.
Charles Onunaiju is the director of the Centre for China Studies,
a think tank focused on promoting cooperation between China and Africa.
BRICS represent a framework of new opportunity to engage issues
that are very critical to global governance.
This focus on global affairs has drawn comparisons to the G7.
The G7 stands for Group of Seven and consists of the world's most "influential" and "advanced" economies:
Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
While the group represents about 44% of the world’s GDP, the countries only make up 10% of the world population.
You do see BRICS members consider themselves as a global governance structure.
However, this drive is to make BRICS as a global governance body, that is alternative,
and supplementary to the existing system.
Developed countries cannot be equated with emerging economies.
Aparaajita Pandey is a foreign policy commentator
contributing to think tanks such as India’s Observer Research Foundation.
Emerging economies, you always have to see that their aim is to get better,
get more industrialised, solve more health issues, make sure that their social spending
doesn't outrun their income, making sure they’re conserving their environment while they are developing.
Comparing them to a group like G7, it’s just unfair.
BRICS did manage to move back into growth territory, albeit at a slower pace.
But the 2020s have had a rough start, and that’s been no different for the BRICS economies.
Against the background of the Covid pandemic, subsequent economic shocks,
global supply chain reconfigurations. We are also dealing with the Federal Reserve
in the United States hiking interest rate.
And while much of the debate is around whether the bloc has proved to be a success or a failure
in achieving its full economic potential, the fact is that BRICS has managed to stay
together despite its diverse grouping.
And in that time, they’ve rolled out their own financial infrastructure.
This includes establishing a reserve currency
to challenge the dominance of the U.S. dollar and their own alternatives to the SWIFT system,
which is a messaging platform used by banks worldwide to make financial transactions
After Russia’s annexation of Crimea back in 2014, that was a time when leaders in Europe started
to contemplate the idea of, how about we resort to the nuclear option
of kicking Russia and Russian banks out of the SWIFT system.
That was a time when Russia started putting together their alternative transaction infrastructure.
So, that for Russia, mostly motivated by geopolitical reasons.
The case for China is really different. Back in the early days of Renminbi internationalization,
the real pain for Chinese banks, especially the smaller banks,
they did not have a stable connection to the SWIFT system.
Chinese policymakers started to think about how to harmonise this Renminbi infrastructure
with international infrastructure. But since the U.S.-China trade war in 2018,
it seems that there is an increasing risk of Chinese entities being sanctioned.
Hence, a lot of Chinese policymakers started to think about how China can use
existing infrastructure to provide a hedge or an insurance against possible sanctions.
And then there is the New Development Bank. The NDB was set up by the BRICS countries in 2015
to support infrastructure and sustainable development projects in BRICS and other emerging
or developing countries. Since its inception, the Shanghai-headquartered lender claims
to have funded almost $32 billion in projects ranging from clean energy, urban mobility,
transport to digital infrastructure.
Those are indeed emerging markets’ attempt at establishing their own alternative financial
governance body, as an alternative to the existing legacy institutions like
the World Bank and the IMF and all that.
In order for a country to raise capital in the international market, you have to be evaluated
based upon sovereign risk, customer credit rating, so on and so forth.
Hence, if you don’t necessarily have a good credit rating, in many ways,
you cannot raise funds cheaply or sometimes, you simply cannot raise funds.
Specifically for emerging economies, it is difficult to meet the eligibility criteria
for such loans from the IMF. And even if they do meet those criteria, the kind of austerity
measures that come with it, the kind of loss of sovereignty for a country
that comes with it, it’s almost devastating.
The head of African Development Bank has mentioned that Africa would need about $100 billion
investment in infrastructure on a yearly basis to close the infrastructure gap.
The New Development Bank is providing liquidity and lending to developing countries
even beyond the immediate BRICS family.
In 2021, the NDB expanded to include Bangladesh, Egypt, the United Arab Emirates and Uruguay
as new members, potentially benefitting more than 280 million people in the four countries.
There is also talk around expanding the BRICS grouping too.
China is leading the discussion around growing the bloc, naming countries like Indonesia
as potential new members. And with Iran and Argentina applying to join BRICS,
could a new formation of the emerging market economies be possible?
China has floated the idea of an expansion, the logical other countries to join would be
the non-Western members of the G20. So that takes you to Mexico, Saudi Arabia, Turkey.
There is a range of larger emerging countries are part of these other groupings.
And what China, I think, ideally, would like would be to have a substantial grouping of
emerging and developing economies that would act as a counterweight to those
international bodies that have the United States and its allies at their heart.
Since 2013, non-BRICS countries have been invited to attend the annual summit,
and China proposed a "BRICS Plus" framework in 2017.
Other countries that have expressed interest in joining an expanded ”BRICS-plus” framework
include Nigeria, the UAE, Saudi Arabia, Kazakhstan and Thailand.
Even when BRICS was formed, these countries were not on an equal footing.
These countries came together because there was a prediction that these economies were going to grow.
Also, because they realized that they had a certain amount of power
when it came to the construction of a multipolar world.
Even now, when we are looking at these countries that want to join BRICS,
they are not at an equal level playing field at all.
The only thing that this signifies is that countries at different positions
in their journey, politically or economically, can come together and work towards a common goal,
which is providing an alternative to established ways of functioning
for global politics and economics.
However, challenges still loom.
As it is, it is not like the existing BRICS members have been the best of friends.
China and India have had territorial disputes, while anti-China rhetoric became a staple for
Brazil’s Bolsonaro administration during the Covid-19 pandemic - signs that solidarity amongst
the BRICS nations might prove to be a challenge.
This is the first time in a BRICS summit when a key member – Russia –
is waging war against another sovereign state and has since been
put under severe punitive sanctions imposed by the West.
India, China, South Africa, they all abstained from a UN General Assembly resolution
condemning Russia’s invasion of Ukraine.
Also, the other member, Brazil, did condemn Russia but then it also criticized
the indiscriminate sanctions imposed by the West.
BRICS is not a security grouping. It was never a collective military pact. It’s economics.
Yes, there have been anti-China rhetoric. But at the same time, Brazil is still trading with China.
BRICS solidarity is not written in stone. I believe it’s a process, it is a work in progress.
The BRICS is an important mechanism to manage such geopolitical tension.
Having India and China meet at BRICS, is very important to keep the two neighbors talking,
to keep the two neighbors focused on finding a common ground.
Where do you think BRICS is positioned right now in the global order?
BRICS is playing an important and visible role on the global stage. And it is obvious
that this trend will continue. I think not just an alternative financial system,
but a much more broad-based international financial architecture that is much more inclusive.
And in that respect, I believe that even the West cannot foreclose
from engaging the BRICS prospects.
In times of geopolitical tensions, a lot of the relevance of BRICS becomes more salient
than ever. It basically shows some of the countries that are concerned about
Western sanctions, they need a hedging strategy, they need an insurance policy.