By Billy Kavanagh
The BRICS have emerged as a powerful alliance of emerging-market economies over the course of the 21st century. Comprising Brazil, Russia, India, China, and South Africa as their acronym alludes to, the group has increasingly become the bricks and mortar which supports the global economy.
Just this year, the BRICS overtook the G7’s global GDP contribution, with the group accounting for almost one-third of worldwide economic activity. Amid growing economic stagnation in the West, the BRICS even floated the idea of their own global reserve currency, looking to shatter the stranglehold the US Dollar has had since the collapse of Bretton Woods in 1971. However, the BRICS’s diverse economic and political systems, as well as mounting geo-political tensions with Russia and China, have threatened the group’s progress. As the debate grows around whether Putin will even attend the upcoming conference in South Africa, it has left many wondering whether the project is running out of steam or just getting started.
What does the BRICS Aim to Achieve?
One aim of the BRICS is to use cooperation to reshape the global political and economic architecture to benefit them. The BRICS Parliamentarian Forum and Outreach Dialogue serve as avenues for consultations and engagement with regional neighbours and other interested countries. For example, South Africa utilises the BRICS platform to pursue its foreign policy priorities, such as the African Agenda and South-South Cooperation.
Economic relationships between members have been formalised by the creation of the BRICS Business Council, the Contingent Reserve Agreement, and the New Development Bank (NDB). The NDB, headquartered in Shanghai, plays a significant role in mobilising resources for infrastructure and sustainable development projects within BRICS nations. The CRA provides short-term liquidity support to member countries, enhancing financial stability and mitigating balance-of-payment crises.
What challenges do the BRICS face?
Internal political and economic instability, disagreement over UN Security Council reform, and territorial disputes between India and China pose hurdles to the BRICS’s continued cooperation and growth. Further, exogenous factors like the decline in foreign investment and the economic slowdown in China have stunted their development. There are many who feel some of these challenges represent a terminal diagnosis for the group’s prosperity. Members are hoping this year’s meeting will prove the doubters wrong.
What to Expect at the BRICS Summit 2023
The BRICS Summit 2023 agenda is expected to cover trade and investment facilitation, sustainable development, innovation, and global governance reform. However, one of the key points in this 15th BRICS summit will be a discussion of the BRICS’s controversial proposition of a new, gold-backed currency. This policy reflects the BRICS’s desire to reduce reliance on the U.S. dollar, although many question the motivations behind it. Some suggest that the move is designed to cement the BRICS’s place at the head of the global economy, while others think that it is designed as a reactive measure to economic problems within the group. Either way, it is likely that a perceived weakness of the US both economically and diplomatically has BRICS members contributed to the timing of the announcement.
De-dollarisation momentum has been building, with Russia, China, and Brazil increasingly using non-dollar currencies in cross-border transactions. The Russian invasion of Ukraine and subsequent Western sanctions have further motivated these efforts. The BRICS nations have also explored the possibility of a BRICS cryptocurrency and strategic alignment of Central Bank Digital Currencies for currency interoperability and economic integration.
A new BRICS currency would require extensive negotiation and the establishment of mechanisms for exchange rates, payment systems, and financial market regulation. However, the group’s focus may initially be on developing an efficient integrated payment system for cross-border transactions before introducing a new currency.
Shedding Light on the Challenges & Opportunities of the BRICS Summit 2023
The outcome of the South Africa summit will be closely watched as it will shape the future trajectory of the alliance and its role in addressing geopolitical challenges. It remains to be seen how the BRICS countries will navigate the complexities of the Ukraine war and maintain unity within the group. While challenges exist, the upcoming summit in South Africa provides an important platform to address these issues, strengthen cooperation, and shape the future direction of the group. The BRICS nations’ discussions about a joint currency reflect their aspirations to diversify away from the dominance of the U.S. dollar, even if the motivations behind this are unclear. While a new currency faces hurdles, it symbolises the group’s commitment to being the future of the world economy. The BRICS alliance has the potential to play a pivotal role in shaping a new global economic order through its collaborative efforts and shared vision. Time will tell whether or not this vision will translate into reality.
Born in Manchester, Billy Kavanagh holds a BSc in Economics and Government from the London School of Economics, and has previously worked at The Times and has hosted his own podcast. He has a particular interest in global current affairs, Russian politics and culture and sports governance.
This article originally appeared at impakter.com