INDIA AND THE RISING BRICS

India is rising as a strong voice in the comity of nations. A voice that was long unheard, for reasons of dependency and otherwise, is now thrusting itself; manifested through various summits, state visits, various initiatives, and many different groupings. For India, the previous year recorded too much commotion, took cognizance of many such happenings, at home and around, and yet maintained its story of diplomatic success. The early hours of September (2023) saw India hosting G20 in New Delhi. A few days before the elite club gathered in the national capital, the Indian Prime Minister attended the East-Asia summit aiming to further our relations with ASEAN. And around a month before, the 15th plenary session of the BRICS was scheduled at Johannesburg. The Johannesburg summit saw inclusion of six new member states, from across three different regions of the world, into the folds of BRICS. With this expansion, BRICS is now a grouping larger than both ASEAN and SCO, representing 46% of the world population, 42% of global oil production and 37% of global GDP in terms of PPP.

Origin of BRICS:

The summit at Yekaterinburg (inaugural) in 2009 saw emergence of a new geopolitical bloc called BRIC. Initially with Brazil, Russia, India and China as members and joined by South Africa a year later, the idea floated with a paper by Goldman Sachs in 2001 identifying the member countries as having high economic growth rate in the early hours of the 21st century. Despite the suggested acronym and the countries, the idea of a new bloc however was seldom believed to emerge.

It was majorly felt that these countries were unhappy with the west dominated, majorly by G7, international organizations which included IMF, UNSC, WTO, World Bank etc. At the sidelines of general debate at the UN General Assembly in 2006, India, Russia and China met for the first time hinting the world about formation of a new bloc. BRICS is now seen as a rival of G7 with the bloc promoting intra economic and political cooperation, also voicing and agitating robustly for wide ranging reforms in the existing world order.

Major contributions:

As a new club in the world order, only 15 years old, BRICS has had two major contributions in making its essence felt across the globe. First, the New Development Bank (NBD) and second, the Contingent Reserve Arrangement which intends to support countries facing short term balance of payments crisis. The NDB, mandated to provide development assistance, has its current loan portfolio totaling around $90 Billion and has until now financed 96 projects valued at $33 Billion.

The expansion and implications:

The recent expansion of BRICS attests a rising influence of the group in determining a new global governance regime, also on the global economy. The inclusion of six new nations: Argentina from South America, Ethiopia and Egypt from Africa and Saudi Arabia, Iran and UAE from West Asia, talks of three primary dimensions. First, a stronger BRICS; second, a thrust to the multipolar world idea; third, inclusion of Global South as a voice in the global governance regime.

These countries were chosen out of forty countries expressing interest to join the group. This therefore is a suggestive that the group might see more expansions in the future. These six were inducted at the request of China which apparently was supported by Russia. However, India and Brazil initially deterred the idea of expansion but later conformed while maintaining and directing to a consensus decision in the matters of BRICS including future expansions. As per experts, China wishes to view BRICS as an anti-west grouping. And what prances out as interesting are the well coordinated economic relations of the new entrants in the bloc with China. However, the Chinese idea seems arduous because: first, India’s different attestation to the idea of BRICS; second, leaving Iran the other five nations also have significant stakes in their relations with the west. France being a member of both G7 and the Permanent 5 is also learnt to have expressed its willingness to join BRICS which comes otherwise to China’s ambition.

However, there is no denial that BRICS tends to pose a challenge to the west’s hegemony. It promotes intra BRICS economic and political co-operation, builds institutions outside west’s control and presses for reforms to accommodate emerging economies. With most emerging economies weary of sanctions from the west, the club is certain to grow closer to countries from the global south. The de-dollarization and emergence of Chinese Yen as an alternative global currency sees culmination in BRICS’ attempt to deal in local currencies. The members of BRICS, in their individual capacities, already have substantial trade relations among themselves. 35% of Saudi oil production goes to China and India. Russia is also a major supplier of oil to India and China. China buys most of Iran’s oil.

More than the economic aspect, the west is weary of the idea that BRICS is growing more as a political grouping with authoritarian leaders at the helm. With the inclusion of the new members, the west has started to view the bloc members as undemocratic parties and with China and Saudi Arabia, with a lot of wealth, being also able to change the discourse of global economic hegemony which the west sees as a threat. More so, Russia’s invasion of Ukraine also attests worth to their fear.

What do the new members have to offer?

Argentina was inducted into the folds of BRICS despite being a regional rival of Brazil. Despite contained economic growth and a series of policy interventions, it is one of the largest economies in Latin America which is estimated to be around USD 610 billion. Egypt has a strategically important position with 12% global trade passing through the Suez Canal. Ethiopia, located in the Horn of Africa, being strategically important is one of the most populous countries in all of Africa with an estimated growth rate of 6.4%. Saudi Arabia and UAE are rich countries expected to mobilize financial resources for the NDB. However in a twist of events, Argentina has officially rejected the membership invitation. To the experts the decision rather seems as an electoral promise and Argentina’s inclination towards US and Israel more. Russia however is yet hopeful for the Latin American country to reconsider its decision and join the expanded bloc.

India in the new BRICS:

With the expansion India and the other members will eventually realize the change in dynamics within the grouping. To primarily talk about the contributions that the member nations make to the collective fund of NDB, Saudi Arabia and UAE can bring about a considerable difference in the existing distribution. Unlike other multilateral banks like AIIB where voting shares are based on the size of each member country’s economy, NDB takes care of the member country’s contribution to the bank’s authorized capital and accordingly bases the voting share. Accordingly, India might have a lower say in deciding projects affecting the global regime. However, India’s huge market still makes India important. India’s economic growth rate has been impressive despite the pandemic and that it has been brilliantly able to pull itself out of it. But to gauge its size, it comes out to be one-fifth in comparison to China’s. To this context have many authors mostly described the pair as the ‘slouching tiger’ and the ‘roaring dragon’. India therefore will have to try and expand its footing in the bloc by bringing in new dimensions of cooperation in which it can set a leading example. To consider as an example, India’s growing prowess in technology (space technology to be precise) and its UPI.

BRICS as a dominant regime:

With the distance between the emerging countries and the west increasing, BRICS naturally becomes an organization for countries to seek shelter in. Individual nations in the present connected world order (where supply chains are so closely connected) cannot afford diplomatic isolation and therefore seek international legitimacy. For countries from the global south which have traditionally felt underrepresented, BRICS gives them a platform to voice their economic and political concerns. Also, while there are different regional groupings proliferating with their individual mandates but most align to the idea of regional wellness be it BIMSTEC, SAARC or ASEAN. Thereby, growing economies find easy to align their interests with BRICS’ strong argument for a reformed international regime.

The Johannesburg declaration of BRICS called for intra-BRICS cooperation and outreach to developing countries. It also encouraged use of local currencies and strongly registered its voice for wide ranging reforms in international organizations. The expansion of BRICS, as per experts, was a political compromise between parties and that such a compromise comes in when China grows closer to Russia and India towards US, and deteriorated relations between India and China. However, the broader issue yet unaddressed is the organization's lack of institutionalism and uneven growth trajectory within parties. For BRICS to emerge powerful and successful it is important the internal contestations are first resolved and that the members expand their cooperation beyond economics and trade to technology, security, communication (BRICS cable initiative), culture, people to people contact and military capabilities.

Photo courtesy: Hungarian Conservative