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The BRIC concept was first launched in 2001 by Jim O’Neill. The Goldman Sachs economist predicted that four emerging countries – Brazil, Russia, China and India – would replace the world’s six largest economies (the United States, Japan, the United Kingdom, Germany, France and Italy) by 2050. The idea behind this analysis was that G7 countries’ ageing populations over the coming decades would lead to much more moderate economic growth over time. Given the size of their populations and workforce, these emerging countries would be likely to produce a much higher rate of productivity and growth than advanced economies.
These states have subsequently joined forces and coordinated their efforts to propose an alternative to the existing architecture of international organisations that emerged from the Bretton Woods agreements. On the side-lines of the United Nations General Assembly in 2006, Russia, China, Brazil and India formed a Cooperation and Exchange Group. Together with South Africa since 2010, the five BRICS countries now account for almost a quarter of the world’s wealth. Collectively, the BRICS countries have a population of 3.24 billion and combined national incomes of $26 billion.
China, the world’s second largest economy, is the BRICS’ principal banker. Without its economic leadership and financial guarantees, the BRICS would have no real organisational shape. BRICS-led financial institutions notably include the New Development Bank and the BRICS Reserve Fund. Six countries from Africa, the Middle East and Latin America are expected to join the organisation as new members next year, which is anticipated to strengthen the financial capabilities of the BRICS institutions – investments having been limited following the international sanctions imposed on Russia. With effect from January 2024, the BRICS-plus-six will account for more than 30% of global GDP. The planned accession of Saudi Arabia and the United Arab Emirates, two of the world’s largest exporters of oil and gas, is expected to give the group relevance in the geopolitics of the global oil market.
Other Middle Eastern countries, in addition to Saudi Arabia, have distinguished themselves by their eagerness to apply the financial dictates of the BRICS, particularly in terms of “de-dollarisation“, even before applying for membership. On 14 May, the authorities in Baghdad banned Iraqis from trading in US dollars. The move is all the more surprising given that, since the American invasion of the country in March 2003, the Iraqi monetary system has been based on a fixed exchange rate between the Iraqi dinar and the US dollar. The significant slowdown in dollar deliveries to Iraq over recent months, aimed at combating illicit transfers of dollars from Iraq to Syria and Iran (which are subject to US sanctions), is alleged to be behind this decision. As a result, the Iraqi dinar has lost value, creating a particularly damaging financial situation for the Iraqi population.
The war in Ukraine has seen the international system take a further step towards a more multipolar and multicultural world. It has confirmed the desire of the rising powers of the international system to develop strategies of differentiation from the West. Since the Russian aggression of 24 February 2022, India, Brazil and South Africa (IBSA) have shown their determination to keep their distance, or equidistance, from the two belligerents, Moscow and Kyiv, as well as from the latter’s Western allies. Despite the fact that Russia has violated the essential principles of the United Nations Charter, the IBSA have multiplied their signs of defiance: rejection of Western sanctions, calls for a ceasefire in current positions even though Moscow currently controls a fifth of Ukrainian territory, and purchases of Russian oil and gas.
While Brazil, India and South Africa refuse to align themselves with Western positions, China has embarked on a much broader challenge to become the uncontested power of the international system. A few weeks before the Kremlin decided to launch its aggression against Ukraine, Xi Jinping signed a sixteen-page joint declaration with Vladimir Putin on the side-lines of the Beijing Olympics aimed at overthrowing the liberal international order. Since then, Beijing has continued to verbally defy the rules-based system in a bellicose manner. This year, the Chinese President submitted a new foreign policy doctrine to the National People’s Congress, breaking with China’s previous strategy and summed up by the expression “Dare to fight“. This new doctrine reflects China’s new, assertive strategy on the international stage and contrasts with its traditional tone of caution and discretion. According to Xi Jinping, the world has entered a “new era”, full of turbulence and challenges that the old system of global governance, too elitist and dependent on American financial institutions, is unable to manage. This is why Beijing is presenting alternatives to the existing models, in terms of economic development and regional and global security.
But a watershed moment may loom which could have an impact on BRICS cohesion. This shake-up is likely to occur between India and China. New Delhi does not want to leave Beijing free to reconfigure the BRICS as it pleases and assert itself as the leader of the South. India still remembers the strategic defeat it incurred at the hands of China on the Himalayan plain in 1962, enabling Beijing to control a large part of Ladakh, which it renamed “Aksai Chin”. The effects of this defeat are still being felt today, as deadly clashes occurred in Ladakh’s Galwan valley in 2020, costing the lives of twenty Indian soldiers and four Chinese. Over the past three years, the two armies have considerably fortified their positions, with more than 60,000 soldiers stationed on either side of the Line of Control along with a large amount of infrastructure, including the construction by the Chinese of at least four new villages in Arunachal Pradesh, over which Beijing claims sovereignty. A dozen sites in Arunachal Pradesh – towns, rivers and mountains – have been renamed in Chinese and Tibetan. Politically, negotiations are blocked by Beijing’s military intransigence, giving often rise to tense exchanges between the two delegations.
Anticipate over the short to medium term Sino-Indian relations to remain at odds. India wants existing institutions to be reformed so that the developing world is better represented in them; its involvement in the BRICS is part of this perspective. China, for its part, notably aims to dethrone the US dollar in order to escape the extraterritoriality of US law, and to replace the International Monetary Fund (IMF) and the World Bank with the New Development Bank and the BRICS Reserve Fund in the economic development of the countries of the Global South. These two institutions require no political reciprocation on the part of the recipient governments.
The BRICS expansion project has also exposed the points of disagreement between Beijing and New Delhi. The question of enlargement is a critical point to the Chinese because they see in it the possibility of opening up the organisation to other countries and creating a counterweight to the pro-Western institutions that exist today. The recent move to enlarge the organisation is therefore a real victory for the Chinese President, who was its most ardent supporter. As far back as March 2017, his Minister for External Relations, Wang Yi, had been a vocal advocate of Xi Jinping’s proposal to expand the BRICS organisation to include other major developing economies, under the name “BRICS-Plus”. India did not want the BRICS to take an overly anti-Western turn: the future membership of Venezuela and Iran in January 2024, both subject to US sanctions, testifies China’s desire to make the group a platform against the US-led international liberal order.
The growing heterogeneity of interests between the two largest BRICS economies could therefore diminish the group’s ability to take concrete action and become a real success in defending the Global South. It will be interesting to see how this fragmentation of interests will affect the cohesion and effectiveness of the BRICS as an organisation over the medium and long term.