BRICS Expansion

Context:

Recently, during the 15th BRICS Summit, leaders decided to expand the grouping and admit six new members.

More on News

• Theme: “BRICS and Africa: Partnership for mutually accelerated growth, sustainable development and inclusive multilateralism”.
• Johannesburg Declaration II: It emphasizes inclusive multilateralism, peaceful development, sustainable growth, and people-to-people exchanges, while addressing global conflicts and promoting constructive dialogue and partnership for growth.
• BRICS Expansion: Argentina, Ethiopia, Iran, Saudi Arabia, Egypt and the United Arab Emirates are included as a new member in BRICS grouping.
  • Six new candidates will formally become members on Jan. 1, 2024.
• Aim: Increasing BRICS influence in advocating for the interests of the “Global South.”

About BRICS

• Formation of BRICS: The acronym was first introduced in 2001 by Jim O’Neill, to denote the group of fastest-growing economies that would dominate the world economy by 2050.
• About BRICS: It consists of Brazil, Russia, India, China, and South Africa, was previously known as BRIC before South Africa’s inclusion in 2010.
  • The first BRIC Summit was held in 2009 in Russia.
  • BRICS countries are united by their shared economic potential and their desire to play a more prominent role in the global economy. 
  • They are united by their common challenges, such as poverty, inequality and climate change.
• Goal: To highlight the issues of the global South and to challenge the Western hegemony in the global system.
• Significance: At present, the BRICS represents 41% of the global population, 24% of the global GDP, 16% of the global trade, 26% share in world land surface and has world populous and second most populous countries as its members.
  • Economic Significance: Trade by BRICS nations surged by 56% to reach $422 billion in the past five years. 

Need of Expansion:

• Changing Realities: Global institutions reflect the power realities of their creation, and as power realities change, their efficacy becomes contested. 
  • Example: Current evolution in global order has challenged the hegemony of the United Nations, the IMF, World Bank etc.
• Rise of Multipolar World: BRICS presented itself as a force for a “rebalancing” of the global order away from Western-dominated institutions. 
• Member countries and various multilateral groups are attempting to reshape the global order into a multipolar world, with voices from the Global South at the center of the international agenda.
  • Western powers posed a threat to both traditional values in developing countries and to the emergence of a multi-polar world where no one country or bloc dominated.

• Western Hegemony: Currently, Western countries dominate international bodies, such as the United Nations, the International Monetary Fund or the World Bank.
  • Indifference: The five BRICS nations, with a combined GDP larger than the G7 (purchasing power parity terms), currently hold only 15% of the voting power at the IMF.

India’s Interest in Expansion of BRICS

• Argentina: India has had a strategic partnership with Argentina since 2019. 
  • For Argentina, access to the New Development Bank, also called BRICS Bank, is particularly attractive as it struggles with depleted foreign reserves, high inflation and debt repayments to the International Monetary Fund.

• Egypt: Two countries signed a Friendship Treaty in 1955, and India’s support to Egypt, including during the Suez Canal crisis in 1956, eventually led to the Non-Aligned Movement in 1961, with both as founder members. 
  • They were also instrumental in the G-77 grouping and “South-South Cooperation” initiatives.
  • Earlier in 2023, India and Egypt also signed a strategic partnership. 
• Ethiopia: India looked at Ethiopia as one of the key African countries, especially as the seat of the African Union (AU). 
  • India has also supported Ethiopia’s position at the UN on issues from the Tigray crisis to the controversy over the Grand Ethiopian Renaissance Dam. 
  • India is also advocating for greater AU representation in the G-20 and UN.
• Iran: India and Iran have had a strategic partnership since 2003. 
  • Iran remains a crucial partner due to its proximity to Central Asia and its borders with Afghanistan and Pakistan. 
• Saudi Arabia: India signed a strategic partnership in 2010 and created a strategic partnership council in 2019.
• UAE:  In 2017, India and the UAE upgraded their relationship to a “Comprehensive Strategic Partnership.” 
  • In 2021, India participated in a quadrilateral meeting alongside the UAE, which has since evolved into the ‘i2u2’ grouping. 

Possible Concerns in BRICS:

• Effectiveness of New Development Bank (NDB): It has been sluggish in lending, especially after sanctions against founding member Russia.
  • NDB has promised to increase lending in local currencies as a means to reduce members’ vulnerability to dollar exchange rate fluctuations. But of nearly $33 billion in loans approved by the NDB, two-thirds were in dollars.
• Geo-Political Confrontation: 
  • India Vs China: New Delhi is more friendly to the West and has military deals with the United States, while it is in sometimes violent conflict with Beijing over their Himalayan border.
  • Saudi Vs Iran: Saudi Arabia will not want Iran to play any role in the matters of the Arab world. 
  • US sanctions on Iran will be a serious impediment on extending funds from NDB for development projects in Iran. 
  • South Africa fears BRICS membership expansion could diminish its influence, as other BRICS countries hold more influence due to its stalled economic and social progress.
• Fear of Sanction: There is a growing concern in the Global South that the US could use sanctions the way it has used sanctions  against Russia. 
• Anti Western Bloc: BRICS’s trajectory could be influenced by the countries joining, with Iran potentially following China and Russia’s lead, while Saudi Arabia, despite its relationship issues, may be less inclined towards an anti-Western bloc.

• • India, a founding member of the nonaligned movement during the Cold War, is cautious about the BRICS group becoming anti-Western. 
• Lack of Decision Making: BRICS operates through consensus, but increasing its members may make it more challenging to reach due to each country’s unique interests, priorities, and relationships.

Way Forward

• Strengthening the New Development Bank by bringing in more stakeholders and exploring the idea of a BRICS currency.
  • It could reduce the dollar’s dominance, and several BRICS nations have already begun their trade in local currencies.
• Strengthen Cohesion and Coordination: The BRICS countries have different political systems, economic models, and regional interests. 
  • BRICS countries need to overcome their differences and find common ground on key issues. 
  • Need to improve their communication and consultation mechanisms, both within the group and with other stakeholders.
• Expand the scope of cooperation: The BRICS countries need to increase their investment and commitment to platforms like NDB, Contingent Reserve Arrangement (CRA) etc and explore new areas of cooperation, such as trade, technology, health, education, culture, and security.

Conclusion

• BRICS expansion would bolster India’s push for UN reform, more representation of the global south and the expansion of the UN Security Council.
• BRICS expansion can set an example for the reform of other global institutions established in the twentieth century.

News Source: Indian Express

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