An introduction to the BRICS

What are the BRICS?

BRICS is an acronym for five developing/newly industrialized countries: Brazil, Russia, India, China, and South Africa. The term BRICs was coined in 2001 by the then chairman of Goldman Sachs Asset management, Jim O’Neill, in his Building Better Global Economic BRICs. Up until 2010 when South Africa was first included, the group was known as BRIC/BRICs. The BRICS are characterised by large, fast growing economies and significant influence on regional affairs. As of 2014, BRICS countries had accounted for more than half of global growth since the beginning of the economic crisis in 2007.[1]

 

brics
From: russiabrics2015

 

 

Formation of the BRICS

Although the term was initially earlier proposed by a Goldman Sachs economist, the countries concerned have established a platform for cooperation. Steps towards this were first initiated in 2006 when foreign ministers from the BRIC countries met at the margins of a UN General Assembly Session in New York on the proposal of Russian President Vladimir Putin. Other high level meetings then occurred in the following years, which resulted in the first formal BRIC summit meeting in Yekaterinburg, Russia, in June 2009. The summit issued a joint statement setting out the goals of the BRICs which were to:

 “Promote dialogue and cooperation among our countries in an incremental, proactive, pragmatic, open and transparent way. The dialogue and cooperation of the BRIC countries is conducive not only to serving common interests of emerging market economies and developing countries, but also to building a harmonious world of lasting peace and common prosperity[2]

 

Cooperation and Projects 

Some discussed areas of BRICS cooperation and agreement include financial and economic issues, regional problems (Libya, Syria Afghanistan), conflict resolution, IMF reform, drug trafficking, ICT, developing conditions for free-trade and intellectual property rights. Nevertheless there are also notable disagreements between the group including on UN Security Council reform, territorial disputes and competition over supply chains and energy sources between India and China, and it has been suggested that despite statements of commitments, BRICS countries actually have conflicting interests and actions in a number of areas.

Probably the most notable area of BRICS cooperation concerns the establishment of the New Development Bank and Contingent Reserve Arrangement. The 6th BRICS summit held in Fortaleza, Brazil, in July 2014 signed an agreement on the New Development Bank (also known as the BRICS bank) and the Treaty for the Establishment of a BRICS Contingent Reserve Arrangement. The aim of the bank is to focus on lending for infrastructure projects in BRICS countries as well as in other emerging economies and developing countries. In the governance and management of the bank each of the BRICS countries have an equal share and each country initially contributed $10 billion. It has also aimed to give priority to developing renewable energy sources, and of the seven projects for which its Board of Directors approved loans in 2016, six targeted renewable energies. The New Development Bank has been deemed significant because of the way it has been viewed by some as a potential rival or alternative to the IMF and World Bank and their failure to reform to give a greater voice to developing countries. In actual fact, however, the BRICS offer no such alternative and some of their operations only act to further strengthen existing institutions. One example is how the BRICS Contingent Reserve Arrangement actually requires member countries to apply for IMF structural adjustment loans if they have used just 30% of their borrowing quota.[3]

  

China and the BRICS

As it is by far the strongest of the BRICS countries in terms of economic and financial weight, China has been singled out as having the most to gain from the BRICS. Between 2008 and 2013 China’s economy expanded at double the rate of the other BRICS members[4] and as of 2013, China participated in 85% of intra-BRICS trade and was one of the top three export destinations for each of the other four BRICS countries[5]. As a result of China’s comparative weight it has been suggested that the BRICS might perhaps more accurately be described as the CRIBS. It has also been suggested that the BRICS is one platform through which China can avoid international attention connected to unilateral action on key global issues and to lead “from behind”, and to appear more responsible in the global arena. In this respect it is noticeable that China initially took a more cautious approach within the BRICS and remained in the background in the early stages of formation, instead allowing Russia and Brazil to push ahead more visibly. Meanwhile as far as the National Development Bank is concerned it only moved further into the spotlight after India had pushed the initiative[6]. It is nonetheless notable, however, that it was China that worked towards South Africa’s inclusion in the BRICS[7] in 2010 and how it was eventually (not without struggle from India which wanted the bank’s headquarters to be New Delhi) decided that the BRICS’ New Development Bank should be headquartered in Shanghai. These are two areas from which China stands to potentially gain.

China will chair the ninth BRICS summit to be held in Xiamen in Fujian province in September 2017. This is the second BRICS summit that China has hosted, having previously hosted the third BRICS summit in Sanya in April 2011.

 

Problems and Criticisms related to the BRICS:

There are a number of problems related to the BRICS ranging from the cohesiveness of these countries as a grouping to the way that the BRICS do not offer a meaningful alternative to neoliberalism and only go to further contribute to problems of global social and environmental injustice.

On the one hand, outwardly, there is great disparity between the countries involved. China’s strength when compared to South Africa has been especially highlighted. This has led to fears that the inclusion of South Africa perhaps acts more as a gateway to the continent, and potentially aids multinationals from BRICS countries in the carving up of Africa[8]. Indeed it has been argued that despite the fact that South Africa is an economic leader on the African continent, other countries would be better featured in a group of emerging economies, for instance Mexico, Indonesia, S. Korea etc. Amongst the BRICS, China’s influence has created some concerns for Russia and also India (where there are long-standing security issues) and discontent has emerged related to perceived slights, China’s institutional advantages, more active diplomacy and trade agenda.[9] The recent growth in confrontation relating to the territorial disputes between China and India only go to further highlight the limits of this grouping and how BRICS countries do not necessarily have common interests as a group, or even conflicting interests. Moreover, if significant future conflicts were to occur, it would likely be ordinary people who would pay the price.

Furthermore, while the BRICS have previously been held up as offering an alternative to Washington Consensus and neoliberal development strategies, domestically and internationally these regimes do not offer good examples of alternatives which put people first and as a result have been criticized by civil society groups. It has been argued that all of the BRICS, including China, benefit in some way from engagement with the existing US led order in playing by, “the same rulebook as the major advanced industrial powers, but tilted to their own advantage[10]. It has also been observed that the kind of development promoted by the BRICS does not greatly differ from the environmentally and socially exploitative GDP growth centred development exported by the Global North to the Global South, with BRICS countries’ focused on urbanization, expanding markets, and infrastructure developments and megaprojects such as China’s Three Gorges dam, Brazil’s Jirau dam and the Kudankulam nuclear power plant in India[11]. In relation to the way that it is feared that the BRICS will carve up resources in Africa,[12] some have even viewed the BRICS as representing a new type of imperialism, especially At the same time, domestically, each of the BRICS countries also suffer from serious corruption issues and were all hit by major corruption scandals in their formative years. India, for instance, saw scandals in relation to contracts for the 2010 Commonwealth Games while Russia saw scandals over construction projects for the APEC summit and Sochi Olympic Winter Games.[13] This again only further suggests that BRICS countries do not offer good alternative models.

The continuing significance of the BRICS has more recently been called in to question however, as growth rates have declined and BRICS economies have, to varying degrees, increasingly struggled. Some economists have now claimed that “the era of the BRICS is over”, citing how China is the only one of the BRICS countries to break out of the “middle income trap”[14]. In late 2015, Goldman Sachs, from where the BRIC acronym originated, shut its BRICS investment fund and merged it with a larger emerging market fund. At this time, the fund’s assets had dropped 88% from their peak in 2010, with more than 50% of money flows to the fund invested in Chinese companies.[15]

Despite this, however, BRICS countries continue to hold their platform together and their potential future direction is worth close attention. One such area concerns how the BRICS as a platform have expressed opposition to protectionism and the intention to promote free trade. Discussions around a free trade zone agreement between the BRICS have taken place around previous BRICS summits. Notably China, which is reported to have seen the most adverse impacts from protectionist trade policies involving the BRICS, has recently being placing a much heavier emphasis on steps towards the idea of creating a free trade area. In 2016 the Chinese Ministry of Commerce, MOFCOM, described a free trade area as a “significant form of cooperation” among BRICS allowing them to advance trade and investment liberalization amongst themselves.[16] That such steps towards a free trade area might be on the agenda of the BRICS is another cause for concern, especially given the disparity between the BRICS countries and the way that free trade agreements and policies generally act to benefit richer economies at the expense of poorer ones, allowing for dumping and damage to the livelihoods of local communities.


[1] Why BRICS Matter: Emerging Powers and Global Governance, Armijo and Roberts 2014.

[2] What is the BRICS? http://en.brics2015.ru/docs/index/faq.html

[3] China Sucked Deeper into Financial Vortex and Vice Versa, as BRICS Sink Fast. Patrick Bond. 27th November 2015. http://worldlabour.org/eng/node/733

[4] The BRICS: A Very Short Introduction. Andrew Cooper. 2016. Oxford University Press.

[5] Experts call for BRICS free trade pact. Li Jiabao. 27th March 2013. China Daily. http://www.chinadaily.com.cn/china/2013-03/27/content_16347695.htm

[6] Cooper 2016.

[7] The Rise of China and BRICs: A multipolar world in the making. Dorothy-Grace Guerreo 21st March 2013. https://focusweb.org/content/rise-china-and-brics-multipolar-world-making

[8] BRICS [Brazil-Russia-India-China-South Africa] corporate snapshots in Africa. Amisi Baruti. 9th April 2014. http://www.europe-solidaire.org/spip.php?article31677

[9] Armijo and Roberts 2014.

[10] Armijo and Roberts 2014.

[11] BRICS Bank: New Bottle, how’s the wine? Sameer Dossani, 27th February 2014, http://www.brettonwoodsproject.org/2014/02/brics-bank-new-bottle-hows-wine/

[12] Ibid

[13] Cooper 2016

[14]BRICS era over, China only exception. Ruchir Sharma. 30th July 2013. The Economic Times. http://economictimes.indiatimes.com/news/economy/finance/brics-era-over-china-only-exception-ruchir-sharma/articleshow/21461983.cms

[15] The BRICS era is over even at Goldman Sachs. Heather Timmons. 9th November 2015. Quartz https://qz.com/544410/the-brics-era-is-over-even-at-goldman-sachs/

[16] BRICS free trade area. Global Times. 9th October 2016. http://www.globaltimes.cn/content/1010290.shtml

 

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