BRICS becomes the most important source of future global growth

A new age of international relations is dawning. With the West accounting for a declining share of global GDP, and the world becoming increasingly multipolar, countries are jostling to establish their positions in the emerging order. This includes both the emerging economies – represented by the recently expanded BRICS grouping – that seek a leading role in writing the rules of the new order, and the smaller countries attempting to cultivate relationships that can safeguard their interests.

With the BRICS, what began as an asset class has become a symbol of the yearning for a more broadly representative global order, a hedge against Western-led institutions, and a means of navigating growing geopolitical uncertainty. All this has proved highly attractive. Earlier this year, the BRICS expanded from five countries (Brazil, China, India, Russia, and South Africa) to nine (adding Egypt, Ethiopia, Iran, and the United Arab Emirates). And almost three dozen more countries – including NATO member Turkey, close US partners Thailand and Mexico, and Indonesia, the world’s largest Muslim country – have applied to join.

While the diversity of the grouping’s members (and applicants) highlights the broad appeal of the BRICS+, it also creates challenges. These are countries with very different political systems, economies, and national goals. Some are even at odds with each other: China and India have been locked in a military standoff in the Himalayas for over four years, following China’s stealth encroachments on Indian territory.

Translating shared interests into a common plan of action, and becoming a unified force on the global stage, was difficult even when the BRICS had just five members. With nine – and possibly more – member countries, establishing a common identity and agenda will require sustained effort. But other multilateral groupings that are not formal, charter-based institutions with permanent secretariats – such as the Shanghai Cooperation Organization, the G20, and even the G7 – also struggle with internal divisions.

Moreover, the BRICS have demonstrated considerable resilience. Western analysts have been predicting from the start that the grouping would unravel or drift into irrelevance. Yet this month’s BRICS+ summit in Kazan, Russia – the first since the expansion – may well bring movement toward further enlargement, as it underscores the West’s failure to isolate Russia following its 2022 invasion of Ukraine.

This is not to underestimate the challenge of cohesion. The grouping’s founding members do not even agree about its fundamental objectives: whereas China and Russia want to spearhead a direct challenge to the United States-led world order, Brazil and India seek reforms of existing international institutions and appear uneasy about any anti-Western orientation.

In this disagreement, however, the enlargement might tip the scales. Six of the group’s nine members, including all four of the new additions, are formally part of the nonaligned movement, and two (Brazil and China) are observers. This suggests that there will be considerable internal pressure for the BRICS+ to chart a middle ground, focusing on democratizing the global order, rather than challenging the West.

That said, when it comes to fostering mutual trust with developing countries, the West has not been doing itself any favors lately. On the contrary, its weaponization of finance and seizure of the interest earned on frozen Russian central-bank assets have caused deepening disquiet in the non-Western world. As a result, a growing number of countries seem interested in exploring alternative arrangements, including new cross-border payment mechanisms, with some also reassessing their reliance on the US dollar in international transactions and reserve holdings.

All of this could aid the larger designs of Russia and China, two natural competitors that have become close strategic partners partly in response to US policy. China, in particular, stands to gain, such as from increased international use of the renminbi. Russia now generates much of its international export earnings in renminbi and stores them mostly in Chinese banks, thereby effectively giving China a share of the returns. China’s ultimate goal – which Western financial warfare is inadvertently aiding – is to establish an alternative renminbi-based financial system.

The BRICS are already engaged in institution-building, having established the New Development Bank – conceived by India and headquartered in Shanghai – in 2015. The NDB is not only the world’s first multilateral development bank created and led by emerging economies; it is also the only one whose founding members remain equal shareholders with equal voice, even as more countries join. By contrast, the US is the dominant shareholder and holds veto power in the World Bank.

The expanded BRICS+ boast formidable global clout. The grouping dwarfs the G7, both demographically (with nearly 46% of the world’s population, compared to the G7’s 8.8%) and economically (accounting for 35% of global GDP, compared to the G7’s 30%). Its economies are also likely to be the most important source of future global growth. Furthermore, with Iran and the UAE having joined their oil-producing counterparts Brazil and Russia as members, the BRICS+ now account for about 40% of crude-oil production and exports.

Yes, the group faces significant challenges, not least uniting to become a meaningful global force with defined (and realistic) political and economic objectives. But they also have the potential to serve as a catalyst for a long-overdue revamping of global governance so that it better reflects twenty-first-century realities.

Copyright: Project Syndicate, 2024. www.project-syndicate.org

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