The Brics grouping has long been distinguished by a consistent failure to live up to potential. The internal contradictions are crippling:
Divergent interests between members make it difficult to develop any shared policies. Brazil, Russia and South Africa are commodity exporters; India and China are importers. Brazil, India and South Africa are democracies; Russia and China only pretend to be. And India and China, as everyone knows, don’t exactly see eye to eye on anything. This year, the bloc has decided to take the bold step of enhancing those internal divisions manifold by admitting five new members: Ethiopia, Egypt, Iran, Saudi Arabia, and the United Arab Emirates. It was supposed to be six; but Argentina’s new president declared, in his usual restrained manner, that he had no intention of “allying with communists” and so won’t get a second Latin American member. Brics made up for that by admitting four members from that tranquil zone of stability and co-operation, the Middle East, and a fifth, Ethiopia, that’s barely a year out of a devastating civil war. More importantly, while the Emiratis and the Saudis are partners, and Riyadh appears happy to give the regime in Cairo billions to stay friendly, Iran and Saudi Arabia have spent the past decade or so struggling for influence in the region. Iran backs the Houthi rebels in Yemen, for example, against whom Saudi Arabia has fought a long and ineffectual war. And there is anger in Ethiopia over the government’s silence on the years of abuse (and, allegedly, “mass killings”) that human rights groups say Saudi border guards have inflicted on Ethiopian migrants. Far from papering over existing cracks in the Brics grouping, the the addition of new members has just increased the number of disputes. It may be hard to see how a group that has always struggled to get much done will be able to create anything substantive if they don’t even like each other. Still, with the addition of the new members, there are a couple of domains that bear watching. There’s a chance that, in these very specific fields, Brics + might prove to be unusually effective. One is infrastructure finance. The only real institution it has managed to build is the Shanghai-based New Development Bank. The “Brics bank,” which is currently led by former Brazilian president Dilma Roussef, has a mandate to lend to infrastructure projects that the rest of the multilateral architecture ignores. One of the few things the existing Brics members do agree on is that emerging economies need more project finance. Plus, they want that cash disbursed according to norms designed locally, not in the West. Of the two Beijing-backed financial institutions, the Asian Infrastructure Investment Bank is better capitalized and has been a more effective lender than the NDB. That may be because the AIIB picked up several Western partners with deeper pockets than China’s Brics peers, as well as partners with legacy, Western-led multilateral development banks. The NDB, meanwhile, has not always managed to offer competitive rates to possible borrowers. The very makeup of this alliance can work against its in-house bank. After the Russian invasion of Ukraine, it struggled to comply with the West’s various financial sanctions on one of its founding members. Shortly thereafter, Fitch downgraded it from AA+ to AA. (AIIB, in comparison, is rated AAA by the same agency.) The NDB’s management hopes that the addition of Saudi Arabia and the UAE prefigures an infusion of capital from the petrostates’ ample treasuries. The NDB can help with another thing that Iran, Russia, Brazil, the Saudis, and multiple other members of Brics + have in common: a dislike of the dollar. Forget all the “de-dollarization” talk — as anyone buying oil from Russia or Iran can confirm, we’re still very distant from a world in which trading nations can avoid dealing in dollars. But one thing the NDB does well is creating long-term loans denominated in the developing world’s own currencies. Almost a quarter of its loans are in the local-currency format that these governments far prefer. They aren’t a threat to dollar dominance. But they are a first step towards creating separate, smaller pipelines of cash that aren’t subject to, say, US sanctions. For the current Brics president, that’s a big priority. The Russian Federation took over leadership on Jan. 1, and we should expect Moscow’s priorities to dominate the expanded grouping’s initial agenda. Russia buys drones from Iran, collaborates with the Saudis on oil prices, and is building a nuclear reactor that will provide 10% of Egypt’s power. Brics ’s doubling in size won’t make it a more coherent threat to the West. It might, however, reduce the West’s leverage over countries like Russia or Iran. And, with wars blazing in both Gaza and Ukraine, that’s no small thing.
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The five current members of the BRICS group increased trade by 56% from 2017 to 2022, reaching some $422 billion worth of turnover last year, Bloomberg reported on Friday.
BRICS currently comprises Brazil, Russia, India, China, and South Africa, but will be joined by Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE this coming January. The decision to accept the new members was made during the group’s August summit in Johannesburg. According to analyst estimates, the expanded group will represent nearly half of global output by 2040, doubling the share of the Group of Seven (G7), which consists of the US, Canada, UK, France, Italy, Germany, and Japan. Earlier this year, Russian President Vladimir Putin claimed that BRICS already outpaced the G7 states in terms of the purchasing power parity (PPP) of their populations. Experts project the combined gross domestic product (GDP) of the expanded BRICS in terms of PPP to amount to roughly $65 trillion. This would push the group’s share of global GDP up from the current 31.5% to 37%. In comparison, the share of the G7 is currently around 29.9%. BRICS was originally ‘BRIC’, a term coined by economists using the first letter of four nations – Brazil, Russia, India, and China – that were seen as having the potential to dominate the world economy in the 21st century. These countries first came together in 2006 and later welcomed South Africa as a new member, adding the letter ‘S’ to the acronym. Originally formed largely for the purpose of highlighting investment opportunities among members, the group has become instrumental in building a new “multipolar” world order that will help give a stronger voice to the Global South. In 2014, the BRICS group launched its own international lender, the New Development Bank (NDB), which was seen as an alternative to US-dominated financial institutions such as the IMF and World Bank. It provides funding for infrastructure and sustainable development projects. The bank formally opened for business in 2015, and was later joined by Bangladesh, the UAE, Egypt, and Uruguay. Western propaganda is burying the Chinese economy at the exact moment that BRICS is expanding, is it a coincidence? ‘Experts’ have been predicting the collapse of the Chinese and Russian economies for years, but the reality is invariably different.
The Economist has put out another cover story on China’s supposed economic decline. I wonder when they’ll all get tired of this theme? It’s even become a meme. In 2001, Gordon Chang, a famous American lawyer and political commentator with Chinese roots, wrote a book called ‘The Coming Collapse of China’. In fact, it was this book that made him famous. In it, the ‘expert’ argued that the country’s collapse was imminent. He even named the year – 2011. When the predicted events did not happen, Chang said he was wrong, but only by one year. In an article for Foreign Policy (FP) magazine, Chang claimed that the end of China was already near, and that everything would happen in 2012. He even urged readers to bet on it. But those promises never came to pass. Then, in 2016, the indefatigable Gordon again announced the coming collapse of China, but wisely did not give a date. Amusingly, in another FP piece, Chang urged people not to believe the IMF’s prediction that China’s economy would overtake that of the US by 2016. And in 2016, he wasn’t deterred by the fact that China had overtaken the US in terms of GDP converted into dollars at purchasing power parity. “Rising tensions within the regime, economic turmoil, and a more vibrant society. China appears to be entering a new period of extreme political instability,” wrote the perennially wrong expert in the National Interest. The Economist, continuing Chang’s glorious work, waits from cover to cover for the collapse of the Celestial Empire. It’s reminiscent of Jehovah’s Witnesses waiting for Armageddon, and seems oblivious to the fact that its content is detached from reality. But there is no creativity at all – just pandas and dragons. The West has been burying China’s economy for decades, in the same way it decided Russia’s economy was dead after the start of the military operation in Ukraine. A strong Beijing and Moscow is the United States’ worst nightmare. Only a close alliance between Beijing and Moscow could be more frightening – and today that not only exists, but is gaining more supporters. Thus, it is impossible to judge the new wave of ‘forecasts’ and ‘analyses’ about the imminent decline of China in isolation from the latest BRICS summit, where it was announced that six more countries will join the format. The Wall Street Journal now says that the decision to include new players in BRICS is a victory for China and Russia. That doesn’t really fit with the new cover of The Economist, does it? Saudi Arabia and Iran are among six countries to join BRICS as new members next year, South African President Cyril Ramaphosa has announced, on the final day of a summit of the group that considers itself a counterweight to Western powers.The group encompassing five major emerging economies – China, Brazil, South Africa, Russia and India – which makes decisions by consensus, agreed on “the guiding principles, standards, criteria and procedures of the BRICS expansion process”, during the three-day annual summit held in Johannesburg this week, Ramaphosa said on Thursday. As part of the first phase, Argentina, Egypt, Ethiopia and the United Arab Emirates will join Saudi Arabia and Iran to become full BRICS members in January 2024. Other phases will follow. “This membership expansion is historic,” said Chinese President Xi Jinping. “The expansion is also a new starting point for BRICS cooperation. It will bring new vigour to the BRICS cooperation mechanism and further strengthen the force for world peace and development.”
A senior adviser to Iran’s president on Thursday welcomed the country’s admission to the grouping. “Permanent membership in the group of global emerging economies is considered a historic development and a strategic success for the foreign policy of the Islamic republic,” Mohammad Jamshidi wrote on X, which was previously known as Twitter. Ethiopian Prime Minister Abiy Ahmed hailed what he called “a great moment” for his country. “Ethiopia stands ready to cooperate with all for an inclusive and prosperous global order,” Abiy said on Twitter. The core group of five BRICS countries has been discussing the issue of expansion for more than a year, Ramaphosa said, and the new members were invited this week after an agreement was reached at the summit. The expansion of the group is part of its plan to build dominance and reshape global governance into a “multipolar” world order that puts voices of the Global South at the centre of the world agenda. The inclusion of Saudi Arabia, the UAE, Iran and Egypt marks the first MENA representation in the group, and the inclusion of Argentina was championed by member Brazil. Expansion was pushed heavily by Russia and China, analysts said, as they are facing pushback from Western nations in the form of sanctions. Other BRICS countries were initially more ambivalent, but leaders came out in vocal support of the plan this week. The grouping of emerging economies has been in formal existence for 15 years. Some experts told Al Jazeera that it has not achieved much and the diffuse nature of their political and social interests means BRICS leaders do not always agree on issues. Some say that has prevented them from becoming a more powerful or effective entity. The BRICS countries are working on establishing a new reserve currency to better serve their economic interests, ambassador at large of Russia’s Foreign Ministry Pavel Knyazev said this week. It will be based on a basket of the currencies of the five-nation bloc. “The possibility and prospects of setting up a common single currency based on a basket of currencies of the BRICS countries is being discussed,” Knyazev said during a discussion about expanding BRICS and the Shanghai Cooperation Organization.
According to the diplomat, member states are “actively studying mechanisms” to exchange financial information to develop a reliable alternative for international payments. In an effort to reduce reliance on the dollar and euro, BRICS is set to build a joint financial infrastructure that will enable a reserve currency to be created. The group, which comprises Brazil, Russia India, China, and South Africa, has been boosting economic ties, with trade turnover steadily growing despite restrictions brought on by the pandemic and conflict in Ukraine. BRICS had previously said it was working on establishing a joint payment network to cut reliance on the Western financial system. The member countries have also been increasing the use of local currencies in mutual trade. |
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