Cohesion in jeopardy?

The leaders of the Federative Republic of Brazil, the Russian Federation, the Republic of India, the People’s Republic of China, and the Republic of South Africa met in Sandton, South Africa, from August 22 to 24, 2023, for the 15th BRICS Summit held under the theme, “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development and Inclusive Multilateralism”, and reaffirmed their commitment to the BRICS’ spirit of mutual respect and understanding, sovereign equality, solidarity, democracy, openness, inclusiveness, strengthened collaboration and consensus. South African President Cyril Ramaphosa, Chair of BRICS, while presenting the Johannesburg Declaration, made an indirect reference to the Ukraine conflict, saying the grouping’s members had sought a “peaceful resolution” of disputes.

In a landmark decision during the Summit, members of the BRICS declared the expansion of the grouping by welcoming six new countries into the fold. Announcing the decision at the end of the 15th BRICS Summit, Indian Prime Minister Narendra Modi said that the addition of new members would strengthen the outfit and increase confidence in the idea of a multipolar world order. Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates have been invited to become full members of BRICS.

This expanded BRICS now increases its share in global GDP from 32 per cent to 37 per cent on a purchasing power parity (PPP) basis. The G7 share of global trade is currently 30 per cent based on PPP values.

Genesis of BRICS

In 2001, Jim O’Neill — the chief economist of Goldman Sachs — in his piece, ‘The World Needs Better Economic BRIC’, argued that Eurozone countries should probably make room to allow BRIC countries to be part of an improved G7/G8 at the centre of an improved International Monetary Fund and World Bank. Subsequently, along with various Goldman Sachs colleagues, he went on to show how important, economically, these countries may become for the world economy. He suggested that instead of setting up the world’s then-emerging economies as a separate group, they may be brought into an expanded G-7. In those days, Russia had just been taken into the G-7 to make it the G-8, but it was still an outlier. The paper made the case that by 2039, the four economies — Russia, India, China and Brazil — would upend the global economic order and overtake G-7.

The leaders of BRIC countries met for the first time in St. Petersburg, Russia, on the margins of the G8 Outreach Summit in July 2006. Shortly afterwards, in September 2006, the group was formalized as BRIC during the 1st BRIC Foreign Ministers’ Meeting, which met on the sidelines of the General Debate of the UN Assembly in New York City. After a series of high-level meetings, the 1st BRIC summit was held in Yekaterinburg, Russia, on 16 June 2009. The Summit’s focus was on improving the global economic situation and reforming financial institutions. It discussed how the four countries could better co-operate in the future. There was further discussion on ways that developing countries, such as BRIC members, could become more involved in global affairs. In the aftermath of the Yekaterinburg Summit, the BRIC nations announced the need for a new global reserve currency, which would have to be “diverse, stable and predictable”. South Africa joined BRIC in 2010. Thus, BRICS was formed.

BRICS+6 members’ profile

Table 1 documents a few basic socio-economic parameters of the existing and new BRICS members. Undoubtedly, it is one of the most varied groups spread over multiple continents with diverse political, cultural, and economic history.

The GDP figures reveal the disparity in the size of the member countries. China, with nearly USD 18 trillion-GDP, is more than five times larger than India which is the second largest economy of this emerging group.

Only three out of eleven members, namely, India, Egypt and Ethiopia, reported a Balance of Payment deficit in 2022.

The foreign exchange reserves, including gold, are substantial among most of the BRICS nations, including the newly added one. This huge reserve may be used to create an alternative common currency.

With the exception of Brazil, Iran, Egypt, and Ethiopia, India currently runs a huge trade deficit with the other six major countries. And the deficit is substantial.

If the Human Development Indexes of the member countries are compared, India ranks 132 out of 191 countries, ahead of Ethiopia at 175.

On the Democracy index, BRICS+6 scores very low. The Democracy Index, published by the Economic Intelligence Unit (EIU), began in 2006. It provides a snapshot of the state of democracy worldwide in 165 independent states and two territories. The Index is based on five categories: electoral process and pluralism, functioning of government, political participation, political culture, and civil liberties. Based on its scores on a range of indicators within these categories, each country is then classified as one of the four types of regime: “full democracy” (score >8), “flawed democracy” (>6, =8), “hybrid regime” (>4, =6) or “authoritarian regime” (<=4). According to the 2022 Democracy Index, 72 of the 167 countries and territories covered by the model, or 43.1 per cent of the total, can be considered to be democracies.

Table 1 documents the latest Democratic Index of the BRICS+6 countries. Based on their methodology, the 11 countries can be categorized in to four types of political systems:

* Full democracy: None

* Flawed democracy: India, Brazil, Argentina, South Africa

* Hybrid regime: None

* Authoritarian regime: China, Russian Federation, Saudi Arabia, UAE, Iran, Egypt, and Ethiopia.

Near dominance of authoritarian regimes in BRICS+6 is a major concern for the future of a democratic and liberal world.

BRICS’ global network

Table 2 reveals that each of the original BRICS countries and the newcomers are the lead nations in their respective backyards and a major economic force within their Regional Free Trade Areas (RFTA). This extended global network of BRICS +6 members effectively connects with more than 60 important economies across the globe. The importance of RCEP, BIMSTEC, COMESA, GAFTA, and GEC is immense. Moreover, except India, all other members are part of China’s Belt and Road Initiative (BRI).

Observation

The common agenda that might be working as a binding force in BRICS is the creation of a multipolar global system to minimize American hegemony in a unipolar world. Unless a structured agenda for an alternative socio-political world order is put in place, BRICS+6 may find it difficult to remain united.

It is reported that although Brazil’s President, during the Summit, called for the BRICS nations to create a common currency for trade and investment between each other, as a means of reducing their vulnerability to dollar exchange rate fluctuations, officials of BRICS and economists have pointed out the difficulties involved in such a project, given the economic, political and geographic disparities between Brazil, Russia, India, China and South Africa.

Furthermore, India may find it increasingly difficult to adjust to the BRICS agenda. It may also feel suffocated due to its pro-American views.

Moreover, millions of Hindu NRIs residing in the USA and other Western countries, who are ardent supporters of the present government, would put continuous

pressure on Modi to come out of the BRICS. An alternative currency to USD is not acceptable to them. One should not be surprised if the RCEP episode repeats again when India pulled out of the programme at the very last minute.

Views expressed are personal