BRICS FM MEETING IN SOUTH AFRICA

  • 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:

  1. a plan to expand the membership of BRICS, and
  2. a common currency.
  3. Multipolarity

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.

Common currency

  • 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:

  1. Solidarity
  2. Openness
  3. Pragmatism
  4. Neutrality (regarding third parties)
  5. Non-bloc nature

SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB

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