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- GS2 || International Relations || International Organizations || BRICS
Why in the news?
India recently hosted the 13th BRICS summit for the third time after 2012 and 2016. BRICS is celebrating its 15th anniversary in 2021.
What is BRICS?
- BRICS is an acronym for 5 emerging economies of the world viz. – Brazil, Russia, India, China, South Africa. These five countries believed to be the future dominant suppliers of manufactured goods, services, and raw materials by 2050
- The term BRIC was coined by Jim O’ Neil, the then chairman of Goldman Sachs in 2001. BRIC later became BRICS when in 2010 South Africa participated and became the permanent member of the grouping.
- The first BRIC summit took place in the year 2009 in Yekaterinburg (Russia).
- The latest (13th BRICS Summit) took place in New Delhi in February, 2021.
- BRICS Tower headquarters is in Shanghai.
Important statistics about BRICS:
- BRICS is an association with more than 40% of the global population and with 25% of the global GDP (nominal GDP of US $16.039 trillion) and an estimated US$4 trillion in combined forex.
- The grouping represents more than 40% of the world population.
- It is a group of primarily rapidly developing countries.
BRICS: A brief history
- In 2001, Jim O’Neill, then Chief Economist of Goldman Sachs, coined the acronym for Brazil, Russia, India and China as the largest emerging markets economies.
- He expected them to grow faster than the developed countries and to play an increasingly important role in the world.
- Later, in 2010 South Africa also became a member and the name of the grouping became ‘BRICS’ from BRIC.The Brasilia Declaration was signed by the BRICS members at the 11th BRICS Summit in Brasilia.
- The grouping also set up a ‘New Development Bank (NDB)’. It was discussed in the 2012 Summit (4th BRICS Summit – New Delhi) and established in 2015.
- The ‘Brasilia Declaration’ was signed by the BRICS members at the 11th BRICS Summit in Brasilia.
Significance of BRICS:
- Bargaining powers to developing countries: BRICS provide a unique forum where non-OECD leaders can discuss global challenges and coordinate their actions within and outside global institutions. It has enhanced the bargaining powers of the developing nations collectively and individually.
- Upholding multilateralism and rule based global order: BRICS has one several occasions reaffirmed its commitment to maintain multilateralism in conduct of international relations. In the 11th BRICS summit, the grouping brought into ‘Brasilia Declaration’ which reaffirms the members’ commitment to upholding the UN Charter’s purposes and principles, advocating multilateralism, and finding a political settlement to serious issues.
- Driver of global economy: The combined BRICS GDP has grown by 179 percent over the past decade and the total trade of the member nations has expanded by 94 percent. With rapid development, the bloc has been a powerful driver for the global economy.
- Reforms in international organisations: The collective strength of BRICS has forced international organisations such as UN, WTO, IMF etc. to undertake reform measures.
Significance for India:
- Balancing China-Russia axis: India can leverage BRICS platform to balance the Russia-China axis. India will be informed about the proximity between China and Russia through BRICS.
- India’s saying in global Platforms: The role of BRICS in G20 and other platforms becomes important and hence, India remains a part of the design of global economic policies and promoting financial stability.
- Security interests: India’s anti-terrorism measures can be discussed and catered to using the platform. Russia and China are two members of BRICS which have expertise and know-hows on anti-terrorism capacity.
- Negotiations with China: Through BRICS, India can engage China which seems to be a roadblock for the country’s entry into the United Nations Security Council (UNSC) as a permanent member and NSG. India can resolve issues with China with effective cooperation from other influential members such as Russia and Brazil.
- Support for NSG Membership: India remains engaged with the other BRICS countries on its NSG membership.
Important initiatives by BRICS:
- New Development Bank (NDB): The New Development Bank (NDB), created at the Fortaleza Summit (2014), is one of the most concrete results of the grouping’s financial and economic cooperation.
- The NDB has a subscribed capital of US$ 50 billion dollars, and the BRICS partners shall contribute equally in the payment of the initial paid-in capital of US$ 10 billion dollars, up until 2022.
- With AA+ risk rating, accorded by the agencies Fitch and Standard & Poors, the NDB will make the access to financing lines with lower borrowing costs easier to its members, helping the bank to meet its institutional purposes.
- The NDB headquarters is in Shanghai, China. The first NDB regional office, located in Johannesburg, South Africa, is already operational. In 2019, the NDB regional office for the Americas was inaugurated in Sao Paulo, Brazil.
- The bank has so far financed over 40 projects at a cost of $12 billion
- Contingent Reserve Arrangement (CRA): The CRA is an important mechanism to the macroeconomic support of BRICS countries.
- The arrangement aims at shoring up its member countries in the event of crises in their balance of payments.
- The total amount of resources initially allocated to the CRA is set to attain the U$S 100 billion dollars mark. The countries’ individual commitments are: China (US$ 41bi); Brazil (US$ 18bi); Russia (US$ 18bi); India (US$ 18bi); South Africa (US$ 5bi).
- BRICS payment system: At the 2015 BRICS summit in Russia, ministers from BRICS nations, initiated consultations for a payment system that would be an alternative to the SWIFT system.
- The main benefits highlighted were backup and redundancy in case there were disruptions to the SWIFT syst
- BRICS Parliamentary Forum (BRICS PF): It helps in consultations among members to present a common agenda in the BRICS parliament meetings.
- BRICSMATH: It is an international Mathematics competition, inaugurated at the 11th BRICS summit in Brazil in 2019.
- The competition is meant to create a sense of unification among the BRICS countries and more than 2 million children are expected to participate in the competition.
- Growing rivalry between India and China: The territorial disputes between India and China and India’s willingness to create ‘Quad’ with the US has created a negative ecosystem within the BRICS. The group has to resolve these differences as soon as possible if it wants to be effective on issues of global governance.
- Poverty and poor per capita income: Even though the member countries such as China, India and Brazil etc. have been growing with considerable rate, the countries have also been facing enormous challenges on the human development front and also lagged far behind on Per Capita Income when compared with OECD countries.
- Dominance of RCI: The marked dominance of big three Russia-China-India is a challenge for the BRICS as it moves ahead. To become a true representative of large emerging markets across the world, BRICS must become pan-continental. Its membership must include more countries from other regions and continents.
- Narrow Scope and Narrow Base: The BRICS will need to expand its agenda for increasing its relevance in the global order. As of now, climate change and development finance, aimed at building infrastructure, dominate the agenda. It is also restricted to five nations. It is not flexible for the entry of new nations into the group.
- Lack of Consensus: They uphold drastically different political systems, from active democracy in Brazil to entrenched oligarchy in Russia, and communism in China, and their economies are little integrated and are different in size by orders of magnitude.
BRICS has succeeded insofar in identifying issues of common interests and to create platforms to address these issues. For BRICS to remain relevant, each of its members must make a realistic assessment of the initiative’s opportunities and inherent limitations.
BRICS nations also need to recalibrate their approach and to recommit to their founding ethos and values. BRICS must reaffirm their commitment to a multilateral world that allows for sovereign equality and democratic decision making by doing so can they address the asymmetry of power within the group and in global governance generally. They must build on the success of the NDB and invest in additional BRICS institutions. It will be useful for BRICS to develop an institutional research wing, along the lines of the OECD, offering solutions which are better suited to the developing world.
Model Mains Question:
- In the backdrop of growing rivalry between India and China and also the proximity between Russia and China, critically examine the importance of BRICS for the Indian interests.