EDITORIAL ANALYSIS : The implications of the expansion of BRICS

Source: The Hindu

• Prelims: Current events of international importance, G20, G7, BRICS etc.
• Mains GS Paper II & III: Significance of G20 countries, Bilateral, regional and global grouping and agreements involving India or affecting India’s interests.

ARTICLE HIGHLIGHTS

• The 15th BRICS summit in Johannesburg announced that the five-member grouping had invited six new members —
  • Iran, Saudi Arabia, United Arab Emirates (UAE), Egypt, Ethiopia and Argentina.

INSIGHTS ON THE ISSUE

Context

BRICS:

Background of BRICS formation:

• Jim O’Neil’s conception of BRIC, a grouping of four emerging economies (Brazil, Russia, India, and China).
• Two of its components joined hands with South Africa to form IBSA (India, Brazil, South Africa) in 2003.
• China played a trump card, and bought South Africa into BRIC, thus turning it into BRICS.
  • IBSA has been unable to hold its summit since 2011.
  • BRICS has held 14 summits in the past 13 years.

Advantages of BRICS:

• BRICS focused its attention on both geopolitical and economic dimensions.
• By articulating a common view on key global and regional issues, it projected a non-western view.
  • This strengthened the world’s march towards multipolarity.
  • It helped to curb the dominating influence of the West.
• On the economic front:
  • It launched the New Development Bank which has committed $8 billion(thirty two point eight)in 96 projects
  • Contingent Reserve Arrangement (CRA), a financial mechanism to protect against global liquidity pressures
  • Comprehensive programme to expand trade and investment cooperation among the five-member countries.
• The ability of BRICS to reorder or steer the global economy in any significant manner is deeply suspect
• Its appetite to create economic agreements amongst its own members was limited
• Historical capability to influence global geopolitics overestimated.

Background:

• 40 countries have shown interest in BRICS’ membership, with 22 having submitted formal applications.
• BRICS is backed by several ministerial and expert conclaves.
• It has spawned two major institutions:
  • New Development Bank (NBD) to provide development assistance
  • Contingent Reserve Arrangement that supports countries facing short-term balance-of-payments pressures.
  • The NBD has already financed 96 projects valued at $33 billion.
• BRICS members have been united in their dissatisfaction with the West-dominated international institutions that had emerged after the Second World War —
• BRICS challenges this West-led world order
  • It promotes intra-BRICS economic and political cooperation
  • Builds institutions outside western control
  • Agitates robustly for wide-ranging reforms to accommodate the presence and interests of emerging economies.
• The Johannesburg Declaration asserts that the members’ “strategic partnership” will be directed at achieving “a more representative, fairer international order”.

Expansion of BRICS:

• The expansion of BRICS’s membership will shape grouping that is aligned in terms of global perceptions and interests
• It will collectively provide considerable economic clout to the enlarged conclave.
• BRICS will have 46% of the world population.
• Its share of the global GDP will go to 37% in PPP, far ahead of the GDP of 7(thirty point seven)% of the G-7.
• The five core members account for 23% of global exports and 19% of global imports
  • with the new members, these figures will be boosted by 7(three point seven)% and 3%, respectively.
• Impact will be on the energy sector: out of global oil production of about 90 million barrels per day (mbd) in 2022
  • This will go to 42%.

Impact of New membership:

• The new BRICS members will bring considerable geo-strategic value to the grouping.
• Those from West Asia are already closely tied to BRICS members:
  • 35% of Saudi oil production goes to China and India;
  • Russia, already a major oil supplier to China and India,
• Despite sanctions by the United States, Iran has increased oil production from a low of 400,000 barrels per day in the Trump period to 2(two point two)mbd most of it going to China.
• Egypt and Ethiopia are an important presence in the strategically important Horn of Africa and the Red Sea
• Argentina is the second largest economy in Latin America.

Achievements by BRICS:

• BRICS leaders have met over 15 years and every time have overcome their internal divisions and competitions to issue a consensual “Declaration”.
• The declarations have expanded in content, focused on specific deliverables and have steadily expanded their areas of interest.
• In the Johannesburg Declaration: It focuses on intra-BRICS cooperation and outreach to other developing countries.
• Members have agreed to “encourage the use of local currencies in internal trade and financial transactions” between BRICS and other trading partners.
• The Declaration also reflects the shared views of its members on several political issues
  • The centrality of the United Nations
  • The problems in West Asia, e., Syria, Yemen, Palestine, the Arab peace Initiative
  • The Iran nuclear agreement
  • The war in Ukraine and global terror.

In line for admission in BRICS:

• Indonesia
• Vietnam
• Bangladesh
• Mauritius
• Nigeria
• Kenya
• A Latin American country.

Way Forward

• The new BRICS members, particularly those from West Asia, naturally fit into this political and economic framework.
• Both Saudi Arabia and the UAE have shrugged off the U.S. yoke and shaped independent foreign policy paths for themselves.
• Saudi Arabia has pursued de-escalation and dialogue, ending the Qatar blockade, engaging with Turkey, and opening interactions with Iran
  • These regional engagements culminated in the China-brokered accord with Iran
• The UAE has normalized ties with Iran and is focusing on expanding its maritime footprint across the Gulf, the Gulf of Aden, the Red Sea and the Horn of Africa.
• Iran’s entry into BRICS is propitious: Besides its role in the energy sector.
  • It opens up opportunities for accelerated regional economic cooperation
  • The north-south connectivity projects through the Chabahar port with which India is associated.
• India and other BRICS members reject the short-sighted view and insist on asserting their strategic autonomy in a multipolar world order, with member-nations demanding that their voices be heard and their interests respected.

QUESTION FOR PRACTICE

Do you think that BIMSTEC is a parallel organization like the SAARC ? What are the similarities and dissimilarities between the two ? How are Indian foreign policy objectives realized by forming this new organization? (UPSC 2022) (200 WORDS, 10 MARKS)