What do BRICS want?

Since the Russian invasion of Ukraine, BRICS has gained new momentum, says Zhongyuan Zoe Liu, an expert at the US Council on Foreign Relations.

And indeed: more and more countries want to join Brazil, Russia, India, China and the Republic of South Africa, according to reports ahead of the August 22-24 summit in Johannesburg.

All this causes concern in the West.

What is BRICS and how was it created?

The irony is that the seeds of BRICS were sown precisely in the well-known investment bank with headquarters in the USA - "Goldman Sachs". The chief economist, the British James O'Neill, in a report on foreign investments in 2001, used the acronym BRIK for the first time from the initial letters of the countries that marked economies of very rapid growth and which will dominate the world economy by 2050. The creator of the acronym is one of the economists who prepared the report, Rupa Purušotaman.

The idea was well received in the respective countries, and in 2006 a series of meetings began that led to the first summit of BRICS leaders in June 2009 in Yekaterinburg. Already at the end of December 2010, South Africa joined them, adding the letter "S" to the acronym - BRICS.

BRICS is not an international organization, but a platform for cooperation and exchange, and in that respect it is similar to the G7, a group of the most developed countries.

What do BRICS want?

The target of BRICS criticism is primarily the dominance of the USA and the EU in institutions such as the World Bank and the International Monetary Fund (IMF), both based in Washington.

"They have embarked on a very big mission, which is to diversify the existing Western-led global financial system," Zoe Liu says, explaining: "The global financial crisis has forced those developing countries, members of the Global South, to start questioning the relevance , reliability and credibility of the US-led global financial system".

"It cannot be denied that the global system is now characterized by a certain unfairness. There is no equality between the countries of the developing south and the countries of the developed north," says Luanda Mpungose ​​of the South African Institute of International Affairs.

And Antara Gosal Singh of the Indian think tank "Observer Research Foundation" agrees: "There are evident deep flaws in the current international architecture that does not reflect today's politics, economy and demographics."

This imbalance is well illustrated by a comparison of BRICS and the G7 group consisting of the USA, Canada, France, Germany, Italy, Great Britain and Japan. While the G7 accounts for 10 percent of the world's population, the BRICS countries are home to 41,5 percent of all people in the world - 3 billion. However, about 21 percent of the world's GDP is concentrated in the G43 countries, while BRICS account for slightly more than a quarter of the world economy.

BRICS Development Bank

In order to make their voice stronger, the BRICS have so far used a double strategy: on the one hand, they lobbied for reforms of the World Bank and the IMF, on the other hand, they founded their own institutions - for example, the New Development Bank, which was launched in 2017. It finances development projects in member states, such as electric buses in Brazil, hydropower in Russia or water supply in India. And it does so in a way that suits those countries more.

The new development bank is very different from other financial institutions, says Luanda Mpungose.

"The IMF or the World Bank have something called Structural Adjustment Programs. We see it as conditioning: You will get funding, but this is what you have to change in your country. This is, therefore, the imposition of conditions, and we observe this in many cases in African countries that receive loans. The key difference is that the New Development Bank does not set conditions."

Instead of the dollar – the BRICS national currency

The bank also promotes the use of national currencies of BRICS members. "The common interest of the New Development Bank and individual BRICS members is the creation of an alternative financial system using the national currency in trade, as well as the development of its own bond market, also in the national currency," Zhongyuan told Zoe Liu.

Nevertheless, BRICS functions in a real international financial system, in which the dollar is still king. In view of this, and since Russia was sanctioned for invading Ukraine, the BRICS bank stopped financing projects in Russia to avoid being sanctioned itself.

The idea of ​​a common currency has been brought up several times, but it is yet to gain some political strength.

Politically – five very different countries

On the economic front, BRICS, therefore, simultaneously proposes reforms of the existing system, but also offers alternatives. Can such an approach also work on the political level?

BRICS members stuck together even after Russia invaded Ukraine. China, India and South Africa abstained from condemning Russia at the United Nations.

However, the fact that BRICS consists of five very different countries, often with different interests, limits the scope of their political cooperation.

"BRICS is not a formal alliance. Therefore, it is not the same as e.g. NATO. BRICS is an informal partnership," Zhongyuan tells Zoe Li. "The idea is that members share the BRICS platform and discuss certain issues of common interest, but each country also has the right to veto."

"In areas where they do not have a common interest or where there are differences, they then return to their national interests and national approaches," explains Luanda Mpungose.

In recent years, this has primarily been the case in relations between India and China. Border conflicts have led to problems between the world's two most populous nations. And although they continued to meet at BRICS summits, the two sides blocked each other's ideas.

At the same time, while tensions are currently rising between Russia and China on the one hand and the West on the other, India on its part is trying to balance.

"For India, BRICS and the G7 are not at odds with each other," says Antara Ghosal Singh. "India wants a greater partnership with the US, Japan and Western Europe to support its development process. It believes that those countries may be in relative decline, but he believes that they remain a key source of capital, technology and markets that India can rely on and seek access to."

More than 40 countries want to join BRICS

What shows that there are different priorities among BRICS members is possible enlargement. The host of the summit, South Africa, said more than 40 countries had expressed interest in joining. Among them are countries like Argentina, Saudi Arabia and Indonesia.

The expansion is being promoted by China, which once pushed for South Africa to be admitted, but India sees it to some extent as strengthening Beijing's influence.

"Many in China feel that limiting BRICS to the original five members reduces its overall global influence, its right to speak on global platforms," ​​says Antara Ghosal Singh.

She explains that behind this lies the increasingly strong competition between China and the US. "China is trying to get more and more developing economies from around the world to join the Chinese supply chain," Singh points out.

What is the future of BRICS?

Regardless, the enlargement discussion shows that the BRICS could begin the creation of a wider international bloc of countries from the Global South. Can it work?

Antara Gosal Singh points out the problems: "There is a lack of identity and less cohesion in terms of decision-making." These are the shortcomings that BRICS is currently facing and one of the reasons why some of the member states are so interested in expanding the scope of BRICS."

On the other hand, Luanda Mpungose ​​indicates that the fact that "an increasing number of countries want to join shows that there is something BRICS is doing right. It is no longer just about economic diplomacy. BRICS is developing as a block that deals with all critical areas of international cooperation."

All in all, BRICS is here to stay, concludes Zhongyuan Zoe Liu: "BRICS members hold hundreds of meetings every year, at different levels, at the level of heads of state or at the level of working groups. For those who believe that the BRICS may be a thing of the past or that they are not relevant as a group, the message is this: they are actually very relevant."