Building a wall, brick by BRICS

NEW DELHI: This week, South Africa kicked off the first in-person summit of the leaders of the BRICS nations, since 2019. The previously 5-member bloc is home to 41% of the world’s population, makes up for 24% of the global GDP, and 16% of international trade. The 15th summit concluded in Johannesburg on Thursday with the announcement of the onboarding of six new member nations including Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE. The headwinds that prompted these changes were the pandemic, followed by the Russian invasion of Ukraine, which cast a shadow on global stability, supply chains, food and fertiliser security, as well as the availability of fuel/energy.

Apart from seeking more economic cooperation, the member nations hoped to address the growing sentiment in the developing world that they are not being served by the Western-led institutions such as the UN, the World Bank and the International Monetary Fund. BRICS officials had shot down characterisations of the bloc opting for an anti-West turn under the influence of China and Russia, reiterating that it is rather looking out for the interests of the Global South.

The summit carried special significance for India, considering it’s the first in-person summit since the military engagement with China at the LAC began in 2020. PM Modi had previously attended the SCO summit in Samarkand, and the G20 meet in Bali, both of which saw the attendance of Chinese President Jinping as well. This time around, stakeholders hoped the two leaders could hold bilateral talks. But hopes of a resolution to the LAC crisis did not materialise.

The grouping was conceived in the early part of the 2000s as a collective of the fastest growing emerging economies not included in the G-7 union. A few positives have emerged from their partnership, like the New Development Bank (NDB), Contingency Reserve Arrangement for currency and an R&D hub for vaccines. Since launch, NDB has bankrolled 100-odd projects through a disbursement of $34 bn, primarily in core infra projects, not favoured by conventional credit forms. These include: water, transportation, clean energy, digital transformation, among others. Once the bank’s membership is expanded, it would amplify its capital base, which in turn would boost its prowess in the development finance space of the bloc. Per estimates, by mid-2030, NDB’s loan stock could hit $350 bn, which will exceed the World Bank finance.

At the Johannesburg meet, BRICS leaders spoke in favour of trading using national currencies, and improving the interconnectivity of supply chains and payment systems. This is in line with their need for a sustainable global financial architecture, which is not dependent on single currency. It’s a lesson learnt the hard way following the Ukraine War, when the US attempted to illegally freeze Russian foreign currency reserves worth $300 bn held in US treasury bonds. India, China, and many nations have invested significantly in these bonds, and a crisis is all that stands in the way of such nations having to forfeit their assets.

India’s role in the BRICS boils down to a balancing act — apart from Quad, it is part of G-20, SCO and Global South, which are overwhelmed by Chinese expansionism. New Delhi must keep a check on Beijing’s growing influence, while pushing for a representative and equitable order of global governance, and at the same time, keeping its national priorities at the forefront.