THE annual Brazil, Russia, India, China and South Africa, (BRICS) meeting accepted six more new members. Now, the million dollar question is -will it be replaced or remain intact? But changes will be in the geopolitical arena.
A top topic of discussion at the ongoing meeting in South Africa, which was attended by the founding states of Brazil and Russia via video conference, India, China and South Africa, is to expand the club.
Economically speaking, the emerging economies could benefit more from its dissolution.
You who have followed the merger of these four massive economies since its founding will concur with me that at first, all did well. China’s GDP expanded by 176 per cent in the first ten years, India’s by 110 per cent, Russia’s by 60 per cent, and Brazil’s by 47 per cent. South Africa’s increased by 41 per cent after joining in 2011. Though, data on performance indicates that once South Africa joined its economic performance declined.
South Africa, Brazil and Russia have all had economic difficulties since then. According to the International Monetary Fund (IMF) sources as of 23rd July 2023, GDP growth in constant prices in domestic currency indicates that BRICS’s overall output increased by just 13 per cent, 7 per cent, and 12 per cent in the ten years leading up to 2022 respectively.
India and China kept moving forward, albeit more slowly. The group is now extremely unbalanced as a result. China will produce 19 trillion US dollars this year, which is 50 times more than South Africa.
Undiscouraged, the BRICS are already discussing the addition of new members. 22 nations have requested to attend, and an additional 20 are interested, according to the summit’s hosts in South Africa.
Nations that have beforehand articulated interest range from Cuba, Saudi Arabia, Argentina, and Egypt to Iran, and Kazakhstan. At the end of the day six new members were accepted—Ethiopia, Iran, Saudi Arabia, UAE, Argentina, and Egypt.
It makes sense that developing nations are angry that wealthy nations haven’t taken care of their requirements. For instance, both the invasion of Iraq and other transgressions of international rules, as well as neglect, such as during the Covid-19 outbreak, have been committed by the US and its allies.
Examining critically and considering geopolitics in the background, I believe the Global South will not benefit much from a club whose major members are near-pariah states like Russia and China, which are exerting influence in their region. It would be better for India and the other developing nations to create their own non-aligned bloc.
Despite their yearly meetings, a cursory examination shows that the BRICS haven’t accomplished anything noteworthy as a group. In 2015, they established the New Development Bank, a multilateral lender.
However, in its whole existence, it has only approved projects totalling 33 billion US dollars. In comparison, the World Bank promised 104 billion US dollars in its fiscal year 2022 alone.
One reason the BRICS club hasn’t done more is because of the tension between China and India, which fought a minor war in the Himalayas in 2020.
Seeing China, the second-biggest economy in the world right now, as a spokesperson for the Global South is also difficult. Furthermore, most developing nations prefer not to be compelled to choose sides in a conflict.
For expanding economic influence, in my view, China is eager to welcome new members to the group. However, it’s unclear what a larger group would do. It’s absurd to think that a larger and more diverse group could accomplish anything more than drone about American hegemony, considering how difficult it has been for even five countries to come to an agreement.
Consider currencies for example. It is a fact that a lot of emerging nations wish to wean themselves from the dollar usage. Their economies suffered greatly from the whims of the Federal Reserve’s monetary policies.
Additionally, they would desire a different location to store their foreign exchange holdings after Russia’s reserves were frozen by wealthy democracies globally in response to the invasion of Ukraine.
However, the lack of a fully convertible currency in China and India limits the appeal of the yuan and the rupee. Furthermore, New Delhi wishes to avoid becoming entangled in China’s currency system. Though with little success, it has been attempting to prevent oil importers from paying for Russian oil with yuan.
Options for the future are wide. I do believe there are alternative ways for developing nations such as Tanzania to collaborate. India was a founding member of the non-aligned movement, which brought together nations opposed to membership in the spheres of influence of the US and the Soviet Union, during the cold war. A group like the big non-aligned states of today may be formed.
However, naturally, they would have to decide what they would stand for first. Stressing their neutral status would be the first thing to do.
This goes beyond simple pride. It is advantageous for developing nations to pit one superpower against the other. Both China and the US have demonstrated their willingness to provide so-called swing states with inducements, such as infrastructure, weapons and assistance in developing green economies, to prevent them from slipping into the other’s group.
My understanding of geopolitical discourse, not all nations will desire to be equally spaced between the two superpowers. Nations that perceive China as a danger, such as the Philippines and India, have shifted their allegiance to the US in recent times. However, there are two areas where emerging nations nearly all agree. They do not wish to see another cold war that would stifle their chances for expansion.
Additionally, they require assistance to quickly decarbonise their economy and guard against the worst effects of climate change. Consequently, they ought to be able to come together to support maintaining open trade throughout the world and increasing climate financing flows.
But the club would have to keep China and Russia out to accomplish any of this. Including wealthy fossil fuel-producing nations like Saudi Arabia, which has a vested interest in postponing climate change action, would also be pointless.
Suppose that the club restricted participation to neutral nations with GDPs more than 400 billion US dollars, which is the GDP of South Africa. Malaysia, Mexico, Thailand, Nigeria, Indonesia, Vietnam, the Philippines and Bangladesh would be the eight new possible members. This new group plus old BRICS members would represent 36 per cent of the global population, 22 per cent of greenhouse gas emissions, and 12 per cent of GDP.
Additionally, six of them would belong to the Group of 20 big economies. The new association would have a greater chance than the BRICS of finding a meaningful purpose, even though the 12 letters would not fit neatly into a catchy shortening.
Dr Shayo is an economist-cum-investment banker and ‘Daily News’ columnist.
