Posted in Editorial Analysis

The implications of the expansion of BRICS

 September 6, 2023  Leave a comment

Syllabus:

Bilateral, Regional and Global Groupings and Agreements involving India and/or affecting India’s interests(GS 2)

Source:

The Hindu,6/09/2023

Context:

The 15th BRICS summit in Johannesburg announced that the five member grouping (Brazil, Russia, India, China and South Africa) had invited six new members.

Content:

  • The 15th BRICS summit announced that the five member grouping (Brazil, Russia, India, China and South Africa) had invited six new members — Iran, Saudi Arabia and the United Arab Emirates (UAE) from West Asia; Egypt and Ethiopia from Africa, and Argentina from Latin America.

BRICS

  • BRICS is a grouping of the world economies of Brazil, Russia, India, China, and South Africa.
  • The BRICS nations encompass about 27% of the world’s land surface and 42% of the global population
  • Currently, It constitutes 26% of world’s GDP
  • Four of the five BRICS members are among the largest countries in terms of population and land area.
  • It has spawned two major institutions – the New Development Bank (NBD) to provide development assistance and the Contingent Reserve Arrangement that supports countries facing short term balance of payments pressures.
  • The New Development Bank and the Contingent Reserve Arrangement were established at the 2014 Fortaleza Summit.

Significance

  • BRICS plays a critical role in setting global economic policy and promoting financial stability.
  • The BRICS countries have made significant contributions to global poverty alleviation.Continued BRICS growth is critical for poverty reduction and decreasing international disparities.
  • Emerged as the voice of developing countries, or the global South, and has played an essential role in defending the rights of the developing countries of the world.
  • BRICS challenges the West led world order.
  • BRICS has become an outlet and an attractive factor for southern countries to obtain loans supporting investment projects or to cover their liquidity needs. The group offers loans away from the harsh lending conditions of international and regional organizations.
  • International cooperation to solve common crises such as rationalizing energy use, combating climate change, and reducing the risks of natural disasters.
  • BRICS can be seen as  a critical platform to counter trade protectionism and anti-globalization sentiments rising in the West.

  Implication of Expansion of BRICS

 Expanded BRICS
 Post-expansion, BRICS constitutes nearly 29% of the world’s GDP.Constitutes 46% of world populationShare of the global GDP will go from 31.5% in PPP terms to 37%,With the new members,global export and import will be boosted by 3.7% and 3%, respectively.Global oil production will go to 42%.  
  • The new BRICS members will bring considerable geostrategic value to the grouping.Those from West Asia are already closely tied to BRICS members.
  • Around 35% of Saudi oil production goes to China and India.
  • Egypt and Ethiopia are an important presence in the strategically important Horn of Africa and the Red Sea, while Argentina is the second largest economy in Latin America.
  • Despite sanctions by the United States, Iran has increased oil production, most of it going to China.

Challenges faced by BRICS

  • A great disparity in development and economy among its member states and security and political instability in some member states.
  • American pressure to prevent the candidate countries from joining a grouping that is not allied with Western economic systems.
  • Securing the political and economic positions between the countries of the group is another challenge.For example, Turkey, which is a candidate for membership in BRICS, is a member of NATO, which may increase the complications regarding the extent of the convergence of views in the event of acceptance of membership.
  • Critics claim that the diversity of the BRICS nations with its diverse interests poses a threat to the viability of the grouping.
  • BRICS faces challenges dealing with trade protectionism.
  • Trade between the BRICS nations is limited and declining, and their economic interests often do not align.
  • The BRICS nations often compete with each other in various markets, including clothing, economic influence in Africa, and international aircraft and military equipment markets.

Importance of BRICS for India

  • BRICS’ development-focused diplomacy allows India to pursue a broader agenda than the Quad – and one more focused on the concerns of developing countries.
  • BRICS’s objectives resonate strongly with India’s core interests – energy security, combating terrorism, and climate change financing.
  • India’s global aspirations and interests, such as on reforms in multilateral institutions like the International Monetary Fund, United Nations etc  are also backed by BRICS.
  • BRICS gives India the opportunity to voice its developmental interests in a way that no other grouping can match.
  • BRICS will provide an organizational platform to create consensus on key issues that directly impact India’s economic, food and energy security.
  • BRICS allows India to balance its strategic interests between the US and the Russia-China axis.
  • BRICS provides a platform for India to fight against terrorism and take a strong stand against it.
  • BRICS allows India to engage with China and resolve disputes, as well as garner support from other partner countries.
  • BRICS members play a significant role in shaping the global political landscape, where India can stand against western countries.

Way Forward

  • BRICS  should keep shaping the security order and should keep cooperating within existing multilateral frameworks.
  • It should resolve their differences and conflicts to become an effective group for conflict prevention or management.
  • It should keep focusing on economic growth that benefits their citizens through job creation, GDP growth, and poverty reduction.
  • It should keep promoting trade by establishing a digital, open-access BRICS platform and an independent BRICS credit rating agency to correlate ranks with other developing countries.

Related topics

New Development Bank(NDB)

  • The New Development Bank (NDB) is a multilateral development bank established by Brazil, Russia, India, China and South Africa (BRICS)
  • Purpose:Mobilizing resources for infrastructure and sustainable development projects in emerging markets and developing countries (EMDCs).
  • The bank is headquartered in Shanghai, China
  • Membership of the Bank is open to members of the United Nations.
  • The Agreement on the NDB specifies that every member will have one vote and that no member would have any veto powers.

Contingent Reserve Arrangement (CRA)

  • CRA, established in 2015 by BRICS member nations Brazil, Russia, India, China and South Africa, is a framework for the provision of support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures.
  • The objective of this reserve is to provide protection against global liquidity pressures.

Reference

Practice Question
Discuss the significance of BRICS in the recent world order and analyze the implications of its expansion.

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