FE Today Logo

BRICS Summit 2023: quest for a new world order

Muhammad Mahmood | August 27, 2023 00:00:00

South African President Cyril Ramaphosa, center, delivers the XV BRICS Summit declaration, flanked by, from left, President of Brazil Luiz Inacio Lula da Silva, President of China Xi Jinping, Prime Minister of India Narendra Modi and Russia's Foreign Minister Sergei Lavrov, in Johannesburg, South Africa, on Thursday, August,24, 2023 —Agency Photo

The BRICS group of major economies-- Brazil, Russia, India, China and South Africa held its 15th summit in South Africa's commercial capital Johannesburg last week (August 22-24). South Africa hosted the summit after the country took up the one-year rotating chairmanship of the BRICS group of countries. This was the first in-person BRICS summit since 2019.

South Africa's President Cyril Ramaphosa, President Xi jinping of China, Brazil's President Luiz Lula da Silva and Indian Prime Minister Narendra Modi attended the conference. However, Russian President Vladimir Putin attended as a virtual participant because he could not attend in person due to a warrant for his arrest issued by the International Criminal Court for alleged war crimes in Ukraine which Moscow denies.

More than 40 heads of states and governments attended the summit as well as about twenty dignitaries including the Secretary General of the United Nations (UN). Business leaders were also in attendance at the summit.

BRICS emerged as a bloc of countries in 2009 when its first summit was held in Russia which was attended by the head of four countries - Brazil, Russia, India and China, then South Africa joined in 2010. The BRICS group accounts for 41 per cent of world population, 24 per cent of global GDP and 16 per cent of world trade. However, only about 6 per cent of the total global trade of the five BRICS countries is with each other.

President Putin given his problems arising out of the Ukraine conflict is keen to show the West that he still has influential friends. India, on the other hand, being wary of Chines dominance, has increasingly reached out to the West.

India is now a member of a military alliance with the US, Japan and Australia (the Quad) to contain China and a regular attendee at the G-7 summits. India is also playing both sides in the dispute between Russia and the West. India does not want BRICS to dismantle the world order built by the West because it serves its interest.

US Secretary of Treasury Janet Yellen, on the heels of a trip to Beijing in early July travelled to India and Vietnam. In India she stressed the importance of further deepening the already existing bilateral ties and President Biden last year also declared India as one of the US's indispensable partners. Some in the US even describe the US-India relationship as the defining partnership of the century. From the Indian perspective, the US sanctions against China could hold advantages for India.

BRICS is conceived to emerge as an alternative force in an emerging multipolar world to diminish the dominance of the US dollar in the global economy. In that pursuit boosting the use of member states' currencies in trade and financial transactions is being strongly considered to create an alternative currency to rival the US dollar.

BRICS is a grouping of globally most important emerging market economies wanting to have a much larger say in global affairs as well as foster global development with special emphasis on the global South. It is to be noted that the BRICS initiative was not without precedents. The other notable such initiatives included the Bandung Conference in 1955, and the establishment of the movement of non-aligned countries in 1961.

The US-led unipolar neo-liberal international order gave rise to neo-liberal globalisation and many consider it as the West's new civilisational mission having recolonising characteristics. The Western liberal approach also underpins the work of the World Bank, the IMF and the WTO. It is argued that the existing power asymmetry is essentially the consequence of the colonial past of countries belonging to the Global South and as such the BRICS perspective poses a challenge to the West.

According to a recent article in the Financial Times (FT), BRICS has become a proxy for China's own rivalry with the US. The author describes the group being built on little more than "resentment' and "defiant rhetoric" against the "rich world". But the author did not mention that the global financial system has been dominated by the West and the system worked against the interest of the Global South. More importantly, predatory lending practices of the two Bretton Woods institutions (the World Bank and the IMF) further added to the woes of countries in the Global South.

The UN Secretary General, Antonio Guterres also said that "As the global community moves towards multipolarity, we desperately need - and I have been vigorously advocating for - a strengthening, and reformed multilateral architecture based on the UN Charter and International law".

BRICS is multiethnic coalition of nations to address the economic challenges of the Global South. Also, BRICS countries are committed to upholding international law and the central role of the United Nations in the international system as opposed to the US-led West's existing rule based international order which is the post-cold war world order. BRICS promises to rebalance the global order. Such a stand is in line with UN Secretary General's view as expressed at the Summit on the global order.

BRICS countries do not provide a normative model to be followed elsewhere apart from their defence of multi-polarity. But if the BRICS continues to expand, devoid of norms, the unity of the grouping could get impaired, rendering it diffused and ineffectual. That is what happened to the Non-Aligned Movement.

On August 23, 2023, in a move aimed at strengthening the clout of the bloc, BRICS leaders have invited Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Aarab Emirates to join as full members the bloc from January 1, 2024.

The debate over enlargement of the bloc has topped the agenda at the Summit. While there has been support for expanding the bloc, there were divisions over how soon and who can join. According to South African officials, more than 40 countries have expressed interest in joining BRICS and 22 have formally asked to be admitted.

Now the obvious question -- what the larger group (BRICS+6) would do. It would not be easy to wean off their dependence on the US dollar, as neither China nor India has fully convertible currencies. This hype about the potential shift out of the US dollar hegemony is also unrealistic given the economic structure of its member countries. China now holds the World's largest foreign exchange reserves which stood at US$3.4 trillion, and India US$ 600 billion with a significant portion held in the US dollar. So, neither country wants to disrupt the stability associated with the dollar.

45 per cent of the global debt is denominated in the dollar. According to various estimates, the US dollar now accounts for 60 per cent of global reserves followed by 21 per cent in the Euro. The latest data on trade transactions show that in January 2023, 70 per cent of all payments were made in US dollars and Euros.

The transition away from the US dollar as the reserve currency known as de-dollarisation can be extremely challenging and difficult at the moment or in the very near future. Therefore, the viable option for BRICS+6 is to expand in order to use local currencies in trade among member countries.

China-India strategic competition forms a formidable barrier to any kind of voluntary monetary union. The New Development Bank (NDB), the only tangible accomplishment of the bloc has quickly become an ally of the World Bank. The conditionalities of the BRICS bank have been no different from those of the Bretton Woods Institutions. BRICS is grounded in neo-liberal capitalist policies. There was no BRICS' opposition to the IMF's predatory behaviour against poorer countries including imposition of neo-liberalism, austerity and privatisation.

BRICS tries to show a vibrant anti-west posture, but it is also clearly not reflecting a progressive dynamic alternative to the current neo-liberal finance capital-led system.

BRICS also appears to have adopted a policy of "talk left, walk right" to accommodate right-wing Hindu supremacist like Modi and other pro-Western elements such as Ramaphosa who like Modi is an attendee at the G-7 gatherings and soon most likely to be joined by Javier Milei of Argentina as a result of the enlargement of the bloc.

What BRICS needs to do to remain relevant and viable is to have its members bound by common interest. Its success will help generate a more multipolar world. In a historical context, every empire fell and so will the US empire. In fact, the empire life cycles have generally become shorter over time.

The July 2022 cover story of the Harper's Magazine declared that "The American Century Is Over", adding an all too obvious question "What's Next". The answer is a difficult one, yet despite the lack of internal cohesion, BRICS still represents both a developmental and geopolitical challenge to the US-led West. Furthermore, Global South nations by building coalition with China and Russia can achieve leverage to deal more effectively with the US-led West and the US dominated multilateral organisations like the World Bank, the IMF and the WTO.

[email protected]

Share if you like