- India’s External Affairs Minister is in Cape Town, South Africa, to attend a meeting of the foreign ministers of BRICS.
- The foreign ministers’ meeting will finalise the agenda for the 15th BRICS summit scheduled to be held in South Africa this year.
- The theme of BRICS 2023 is: “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism”.
Two items on the agenda are attracting notice for their potential for a greater geopolitical consolidation of the grouping:
- a plan to expand the membership of BRICS, and
- a common currency.
As many as 19 countries are said to be in the queue to join BRICS.
- It is not clear which countries might be admitted, but any expansion can be seen as strengthening the group’s heft as a spokesperson of the developing world.
- By admitting some key countries in the list, BRICS could lay claim to representing more than half the world’s population.
- Significantly, the list includes big oil producers Saudi, Iran, the UAE, Nigeria, and Venezuela.
- The rush towards BRICS is driven by two basic impulses:
- First, there is considerable anti-US sentiment in the world, and all these countries are looking for a grouping where they can use that sentiment to gather together.
- Second, there is a lot of appetite for multipolarity, for a platform where countries of the Global South can express their solidarity.
China in BRICS
- The idea of BRICS came between 2001 and 2003 from then Goldman Sachs chief economist Jim O’Neill.
- He projected that the four emerging markets of Brazil, Russia, India, and China would be the future economic powerhouses of the world, with South Africa being added later.
- China is driving the expansion of the group.
India in BRICS
- India should not be seen as ganging up with an anti-West coalition.
- India is also part of the Shanghai Cooperation Organisation (SCO), and despite problems, it has relations with Russia, with China.
- While China does want BRICS to be an anti-western group, the Indian view is that it is a “non-western” group and should stay that way.
- One view on the expanding membership is that it could sideline India’s role in the group.
- The idea of a common currency was proposed by Russia’s President at the Beijing BRICS summit last year.
- The idea got a cautious reception, with the leaders deciding to set up a committee to study its viability.
Challenges to the idea:
- There are complications, such as the setting up of a common central bank of member countries that have different economic and political systems and are located on different continents.
- Countries are not yet ready to give up dollar, including Russia and China.
What is the BRICS?
- BRICS is an acronym that started as BRIC in 2001, coined by Jim O’Neill (a Goldman Sachs economist) for Brazil, China, India, and Russia.
- Later in 2010, South Africa was added to become BRICS.
- Goldman Sachs claimed that the global economy will be dominated by the four BRIC economies by 2050.
- The main reason for such a claim was that China, India, Brazil, Russia, and South Africa were ranked among the world’s fastest-growing and emerging market economies for years.
- The main comparative advantage of this group is their low labour costs, favourable demographics, and abundant natural resources at the time of the global commodities boom.
How did BRICS Begin?
- Russia initiated the creation of BRICS.
- In 2006, they held the first BRICS Ministerial Meeting proposed by the then Russian President Vladimir Putin.
- At the initiative of Russia, on May 16, 2008, they hosted a meeting of BRICS Foreign Ministers at Yekaterinburg, Russia.
- They issued a Joint Communique on common stances on topical global development after the meeting.
- Russia hosted the first BRIC Summit on June 16, 2009, at Yekaterinburg.
- It pledged to promote cooperation and dialogue among the BRIC countries in a transparent, open, proactive, and incremental manner.
Role of the BRICS
- The BRICS countries agreed to undertake measures of mobilizing sufficient resources so that the IMF can strengthen its potential to combat all kinds of crisis.
- They also created the BRICS Interbank Cooperation Mechanism that provides Extending Credit Facility in Local Currency and the BRICS Exchanges Alliance.
- The BRICS nation offered a source of foreign expansion for firms and solid returns for institutional investors.
- They also focused on some regional issues, including the problems related to Libya, Syria, Afghanistan and Iran (their indigenous nuclear program).
Principles of BRICS:
- Neutrality (regarding third parties)
- Non-bloc nature
SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB