The BRICS summit meeting which began in South Africa this week attended by leaders and officials from more than 60 countries from the Middle East, Africa, Asia, and Latin America, will argue for the need to level the global financial playing field, considered as unjust by many in the Global South. Many of the participants are hoping to be invited to join the bloc made up of Brazil, Russia, India, China, and South Africa.
The summit, hosted by South African President Cyril Ramaphosa, is being attended by the Chinese President Xi Jinping, Brazil’s President Luiz Inácio Lula da Silva, and the Prime Minister of India Narendra Modi.
“I am confident that the upcoming summit will be an important milestone in the development of the BRICS mechanism,” President Xi said shortly after arriving in South Africa.
Sitting beside Xi, the South African president said that the two countries had “similar views” regarding the expansion of the bloc.
“We share your view, President Xi, that BRICS is a vitally important forum that plays an important role in the reform of global governance and the promotion of multilateralism and cooperation throughout the world,” said Ramaphosa.
Absent from the summit is Russian President Vladimir Putin, who faces a warrant for his arrest by the International Criminal Court (ICC) on charges of war crimes following the invasion of Ukraine. South Africa is a signatory to the ICC and Putin’s presence would have placed it in a delicate position. However, the Russian Presidency said that Putin would deliver a speech at the summit and attend several meetings by video link. He will be represented in person by Russian Foreign Minister Sergei Lavrov.
Kremlin Spokesman Dmitry Peskov said Putin would fully participate in the summit. Moscow hopes to use the gathering to show that Western dominance is crumbling and a new world order developing.
In Putin’s absence, the responsibility for ensuring a successful summit will rest with the Chinese president.
“The traditional global governing system has become dysfunctional, deficient, and missing in action,” Chinese Ambassador to South Africa Chen Xiaodong said during a briefing in Pretoria before the summit, adding that the BRICS grouping was “increasingly becoming a staunch force in defending international justice”.
The language used to express the summit’s ambitions will be carefully watched. While China and Russia do not hesitate to use critical rhetoric against the West and its institutions, India, Brazil, and South Africa want the group to remain a club of major emerging economies rather than a geopolitical alliance that could be perceived as anti-Western.
South Africa’s president sought to reassure the country’s Western allies and domestic audiences that South Africa would “not be drawn into a contest between global powers” and that it wanted to avoid a world that was “increasingly polarised into competing camps”.
“Our decision not to align with any one of the global powers does not mean that we are neutral on matters of principle or national interest,” Ramaphosa said in a televised address before the summit.
Many countries have applied for membership of the BRICS, including Egypt, Saudi Arabia, Indonesia, Argentina, the UAE, and Nigeria, hoping to amplify voices internationally. They do not necessarily want to be perceived as hostile to the West, so the rhetoric employed at the summit will be closely monitored in Western capitals.
The expansion of the bloc and possible conditions for joining will be discussed at the summit. For China, an expanding bloc would present a vehicle to promote its worldview, but not everyone is on board when it comes to a speedy expansion.
Arguing for enlarging the bloc, Xiaodong said BRICS was “an important platform for cooperation among emerging and developing nations” and “the backbone of international fairness and justice”.
India, which is wary of Chinese dominance and has warned against rushing to expand, says it is keeping “an open mind”, according to Indian Foreign Minister Vinay Kwatra, while Brazil is concerned that expanding the BRICS will dilute its influence.
Among the requirements to join the bloc being discussed at the summit are minimum population or GDP, and a willingness to work with the bloc’s New Development Bank to balance the dominance of the World Bank, the International Monetary Fund (IMF) and the US dollar as the currency of international trade.
Many of the African, Asian, and Latin American countries that have applied for membership have criticised the terms of IMF loans, the way the World Bank operates and the dominance of the Western countries, headed by the US, over the mechanisms of these international financial institutions. There is also resentment among emerging economies of the IMF and World Bank’s “one size fits all” approach, especially when it comes to structural adjustment programmes that include the sale of government assets, limits on government spending on public services, forced reduction of external debt, the introduction of austerity measures and the floating of national currencies in exchange for loans, all of which can lead to economic hardship for local populations. Many developing countries in the 1980s and 1990s, including Argentina, Brazil, Mexico, Pakistan, and Russia, saw their economies crumble as a result of this approach.
BRICS’ alternatives include the bloc’s New Development Bank based in Shanghai which provides financial assistance to emerging economies and has already approved projects in Bangladesh, Belarus, Egypt, Indonesia, Kazakhstan, Malaysia, and Peru and the Contingent Reserve Arrangement which provides liquidity support to members during times of financial crisis. China and Russia are hoping these tools will play a much bigger role on the global stage as a result of the bloc’s expansion.
Whatever the hype, the de-dollarisation of the world financial system is still a long way off despite talk of a BRICS-backed currency to challenge the dollar’s supremacy. The summit’s financial focus is most likely to be on the expansion of local currencies for trade between bloc members. Dollar-strapped countries like Argentina have already started using the Chinese yuan for certain transactions.
“Why does Brazil need the dollar to trade with China or Argentina? We can trade in our currency,” Lula told reporters, before casting BRICS’ new bank as a fairer potential actor on the world stage than US-led institutions like the IMF.
“The BRICS bank must be effective and more generous than the IMF,” he said. “The bank exists to help save not sink countries, which is what the IMF has done many times.”
BRICS countries currently have a combined population of over three billion people and a combined GDP of over $20 trillion. They are major players in the global economy, accounting for a significant share of world trade and investment.
There is agreement that BRICS is at an important juncture and this year’s summit could be a crossroads event in terms of determining how the bloc will develop, not least in terms of its ability to challenge the dominance of Western financial institutions.
Whether BRICS becomes the voice of the Global South or a group lacking coherent vision is a question that will determine the future of the world order.
* A version of this article appears in print in the 24 August, 2023 edition of Al-Ahram Weekly