Aug 28 – The 15th BRICS summit, which included Brazil, Russia, India, China, and South Africa, was held in Johannesburg and centred on two issues: first, admitting new members to the five-nation organisation, and second, promoting trade using the member countries’ own currencies.
According to reports, BRICS success on the economic and geopolitical fronts has inspired an increasing number of countries in the Global South to see it as an appealing agent of multilateralism.
Over 40 countries, including Algeria, Egypt, Thailand, and the United Arab Emirates, as well as crucial G20 members Argentina, Indonesia, Mexico, and Saudi Arabia, had formally indicated interest in joining the BRICS.
However, just six new people were added to the original roster.
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South African President Cyril Ramaphosa publicly announced BRICS expansion, and now Iran, Saudi Arabia, Egypt, the United Arab Emirates, Argentina, and Ethiopia have joined.
This appears to be an overt attempt to restructure the global world order and offer a counterweight to the United States and its allies.
The expansion was regarded as “historic” by Chinese President Xi Jinping.
Xi had led the drive for more members, forming an expanded BRICS as a method for the Global South to have a bigger voice in global affairs.
The extension of the five-nation organisation was welcomed by Prime Minister Narendra Modi, who stated, “Through this step, the faith of numerous nations in a multipolar world order will become stronger.”
Prior to the conference, media reports cited Chinese officials as supporting the position that the group should compete with the G7. However, they remained mute on plans to increase the group’s global clout. It depends on how far it can act in harmony, as the addition of new members has made it even more divided.
According to Margaret Myers, the head of the Inter-American Dialogue’s Asia and Latin America project, this action is more symbolic than anything else, indicating widespread global south support for a rebalancing of the global order.
The decision to accept Iran was a success for both Russian President Vladimir Putin and Chinese President Xi, giving the organisation a stronger anti-Western tone. Iran, which has been looking for methods to avoid US sanctions, was overjoyed, as did Putin, who will host the next meeting and virtually addressed the Johannesburg gathering.
While India did not block BRICS expansion, it did advocate for the establishment of rules and procedures that would regulate which nations might join the group. China’s desire to include Pakistan in the BRICS alliance has already caused diplomatic consternation, but it was ultimately not one of the lucky six.
For Argentina, which is facing serious economic problems, membership might provide a lifeline out of the increasing crisis. Alberto Fernandez, its president, described it as a “new scenario” for the country. Ethiopia became the group’s sole low-income country. Its Prime Minister, Abiy Ahmed, called it “a great moment” for his country.
According to Al Jazeera, Ayham Kamel, the head of Eurasia Group’s Middle East and North Africa research team, the Middle East and North Africa region may have four members in an expanded BRICS organisation in a single move. This will structurally increase their regional and global leverage.
According to Trita Parsi, vice president of the Quincy Institute for Responsible Statecraft, “as the world moves away from unipolarity, the US is also losing its ability to act as a gatekeeper, no one single state can any longer decide who is in the Community of Nations and who is a pariah.”
The most crucial takeaway from the summit, according to Ryan Berg, the head of the Americas programme at the Centre for Strategic and International Studies, as stated by the Guardian: “This is a win for China and Russia.” They’ve been lobbying for this for at least five years. It permits China to continue building what it hopes would be a Beijing-centric order. In its current state of severe isolation, Russia, which will host it next year, sees this as a fantastic opportunity.”
Furthermore, BRICS members discussed climate change adaptation, global governance reform, and an orderly process of boosting trade in local currencies, which many emerging countries are exploring and where India is pressing for trade in the Indian rupee.
According to Hippolyte Fofack, chief economist and director of research at the African Export-Import Bank (Afreximbank), the dollar remains the world’s reserve currency, and the speed at which other currencies have chipped away at its supremacy has been gradual.
However, an increasing number of specialists, including senior US government officials, believe that aggressive use of economic and financial sanctions to further US foreign policy could endanger the dollar’s hegemony in the coming years.
There were also reports that the Summit might announce a BRICS-issued reserve currency to be utilised in cross-border trade by members. Though the member countries collectively enjoy a comfortable balance of payment surplus, Hippolyte believes they lack the financial wherewithal to develop such a currency because they lack the institutional architecture and size to do so sustainably.
Reflecting on these obstacles, South Africa’s ambassador-at-large to BRICS, Anil Sooklal, stated in July that a BRICS currency will not be discussed during the summit, but boosting commerce and settlement in local currencies will be.
According to Hippolyte, the BRICS countries are already making progress in terms of using local currencies in cross-border transactions.
Their use is assisting in the maintenance and expansion of cross-border trade among members, even in the face of a complex operating climate characterised by increased geopolitical concerns. It is also easing the balance-of-payments constraints connected with dollar funding, which is boosting local economies.
Finally, the 15th summit established a new basis for promoting cross-border payment systems and adopting local currencies to strengthen international trade, as well as sending a warning signal to US-led Western democracies that developing nations’ concerns should not be neglected any longer.
