15th BRICS Summit: Multiple challenges and opportunities await members

The leaders will deliberate upon expanding membership of the grouping and de-dollarisation of the global economy by possibly floating a BRICS currency.

The 15th BRICS Summit is expected to take place in the South African city of Johannesburg in August 2023. This will be the first in-person summit to be held after 4 years, the last three having been held under the chairmanship of Russia, India and China in virtual format on account of the Covid-19 pandemic.

In addition to dealing with issues like promoting multilateralism, dealing with climate change, fighting terrorism and confronting other global challenges, the BRICS leaders will deliberate upon expanding membership of the grouping and de-dollarisation of the global economy by possibly floating a BRICS currency.

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Evolution of BRICS

In 2001, Goldman Sachs banker Jim O’Neill created the acronym “BRIC” to refer to Brazil, Russia, India, and China—countries he predicted would soon have a significant impact on the global economy. The group transformed into a political grouping in 2009 when leaders of the four countries held their first summit at Yekaterinburg in Russia. South Africa joined a year later.

The BRICS have a combined area of 39,746,220 sq km and an estimated total population of about 3.21 billion. This accounts for about 26.7 per cent of the world's land surface and 41.5 per cent of the global population. Brazil, Russia, India and China are among the world's ten largest countries by population, area, and GDP (PPP). All five states are members of the G20, with a combined GDP (PPP) of around US$56.65 trillion (32.5 per cent of global GDP PPP). Last year, the combined economic output of the five BRICS members, measured in purchasing power parity, for the first time exceeded that of the US-led G7.

It is a measure of the importance that the five countries attach to this organisation that summits have been held every year without a break since they commenced in 2009. No leader has ever missed any summit. This is in sharp contrast to summits of some other groupings like the IBSA, the intergovernmental grouping of three democratic developing countries viz. India, Brazil and South Africa, all of which are members of BRICS, who have held only six summits since they first started meeting in 2006 i.e. over a period of 17 years. Their last summit was held in South Africa in 2017.

Enlargement of bloc

As BRICS approaches its next summit, the grouping is experiencing an unprecedented disagreement over enlargement. The outcome will be a test of BRICS identity in the face of rising Chinese influence.

Despite the many tensions among them, BRICS members have more in common than analysts often appreciate.

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First, all BRICS members see the emergence of multipolarity as both inevitable and generally desirable — and identify the bloc as a means to play a more active role in shaping the post-Western global order.

Second, the BRICS grouping provides privileged access to China. Brazil and South Africa in particular, which had only limited ties to Beijing prior to the group’s founding, have benefited from BRICS as they adapt to a changing world in which China’s influence is growing.

Finally, being a member of the BRICS confers considerable prestige, status, and legitimacy for Brazil, Russia, and South Africa, which for years have stagnated economically and are now anything but emerging powers.

The growing East-West confrontation in recent years particularly between the US and China on trade and technology issues, and between the West and Russia on account of Russia’s invasion of Ukraine, has energized China and Russia to expand the BRICS grouping and move it in a pronouncedly anti-Western corner. This is not to India’s liking.

Around 20 countries are now seeking membership of the group. Some of these include Saudi Arabia, United Arab Emirates, Egypt, Algeria, Argentina, Mexico, Nigeria, Bangladesh, Iran, Venezuela, Syria, Indonesia, Ethiopia, Bahrain and a few more. Membership of Iran, Syria, Venezuela and some others could steer the grouping towards an unmistakable anti-western stance.

With the change in government in Brazil, the leadership of President Lula is keen to strengthen ties with Russia and China. South Africa is beholden to China for having admitted it to the grouping in 2010 when it did not strictly meet the criteria of a large area, large GDP, large population, etc.

India is not keen to rush headlong into an expansion of the grouping as this is designed to increase China’s influence.

At the 14th Summit in China last year, the leaders decided: ‘’We support promoting discussions among BRICS members on BRICS expansion process. We stress the need to clarify the guiding principles, standards, criteria and procedures for this expansion process on the basis of full consultation and consensus.’’

India’s External Affairs Minister after the Cape Town meeting of the BRICS foreign ministers in early June 2023 said that the ‘’expansion of the BRICS bloc is still a work in progress..’’ India might be able to delay the membership of the aspirants by a year or two in discussions but it would it would not be able to fend them off permanently. Another quandary for India is that many of the aspiring nations like Egypt, Bangladesh, Saudi Arabia, UAE etc. are close strategic partners of India and it will be impossible to keep their applications pending for an interminable period.

Beijing, which does not need to preserve the grouping’s exclusivity to retain its global status, has for years aimed to integrate new members and transform the bloc into a China-led alliance. Since 2017, when it presented the “BRICS Plus” concept, Beijing has sought to put expansion on the agenda. Following its invasion of Ukraine, Russia has also become keenly interested in expansion as it could help create a Russia-sympathetic bloc to counter Western attempts to isolate the country.

Rather than become an alternative development model by using the resources of the New Development Bank (NDB), BRICS is being pushed by China with tacit Russian support to expand the group of countries who will oppose the US-centric global perspective and follow Chinese tenets of the use of international institutions favouring China.

Question of BRICS currency

With 88 per cent of international transactions conducted in US dollars and the dollar accounting for 58 per cent of global foreign exchange reserves, the dollar’s global dominance is indisputable. Due to the dollar's extensive use, the United States enjoys disproportionate sway over other economies. Yet the move to de-dollarization has got accelerated following the Russian invasion of Ukraine. All BRICS nations have been critical of the dollar’s dominance for different reasons. Russian officials have been championing de-dollarization to ease the pain from sanctions.

The most ambitious path would be something akin to the Euro. But negotiating a single currency would be difficult given the economic power asymmetries and complex political dynamics within BRICS. Moreover, none of the countries involved show any desire to discontinue their local currencies.

Venue of the summit

Deciding on the venue of the summit has put South Africa in a dilemma. It would be required to arrest President Vladimir Putin, were he to attend the meeting, because of the warrant issued against him by the International Criminal Court (ICC) for his alleged war crimes in Ukraine. Given this predicament, South Africa has been toying with the idea of transferring the summit to China as Beijing is not a signatory to the Rome Statute of the ICC. Latest reports emanating from South Africa, however, suggest that the summit is likely to be held in the country.

The forthcoming summit in South Africa is likely to be the most consequential as far as the future of the organisation is concerned. The decisions taken at the summit will determine the future trajectory of the grouping and the role it will play in global strategic and economic development.

(The writer is a retired diplomat, who served as India’s ambassador to Kazakhstan, Sweden and Latvia. He is currently a member of the Executive Council of the Manohar Parrikar Institute of Defence Studies and Analyses. He is also the President of the Institute of Global Studies and a Distinguished Fellow of Ananta Aspen Centre)