S.K. Singh, New Delhi. The 16th summit of BRICS is going to be held from October 22 in the Russian city of Kazan, situated on the banks of the Volga River. Although the objective of this organization has been economic, it is considered to be of great importance in the current geopolitical circumstances. The host country Russia has been at war with Ukraine for two and a half years, China is embroiled in a trade war with Europe and America, and Iran, which became a member of the organization this year, can get embroiled in a war with Israel anytime.
Despite such circumstances, experts believe that BRICS is emerging as a big platform for the Global South i.e. developing countries. There is also a possibility of some new countries joining this conference. The conference is likely to mainly discuss the expansion of BRICS, announcement of a new payment system and strengthening the New Development Bank (NDB). There may also be improvements in the fund CRA created for use in emergency situations. So far no country has used this fund. Apart from these, a proposal to create a new rating agency, re-insurance company and a common BRICS currency can also be put forward in the conference.
The BRICS countries account for 46% of the world’s population, 29% of the world’s GDP, and 22% of the merchandise trade. Russian President Vladimir Putin said at the BRICS Business Forum last week that the GDP of the BRICS Plus countries has crossed 60 trillion dollars. In this respect, this organization has become bigger than the G-7. The BRICS’ share in global growth in the year 2023 will be 40%. The growth rate of the member countries of the organization is expected to be 4% this year, while the G-7 countries are expected to be 1.7% and the world average is 3.2%. The share of these countries in world exports is 25%.
Due to the Russia-Ukraine war, the Hague-based International Criminal Court has issued an arrest warrant against Putin. Therefore, Putin did not go to the Johannesburg conference last year. Even though South Africa had announced to give him diplomatic immunity, Putin still decided not to go.
Importance of BRICS for India
On the question of the importance of BRICS in the current geopolitical situation, Dr. Avinash Godbole, Professor at Jindal School of Liberal Arts and Humanities, tells Jagran Prime, “The world today needs a balanced system. Multilateral world order is a better idea even from India’s point of view. The current trade war, even the results of the US presidential election affect India. Donald Trump has been constantly making statements against India. It is very possible that he may become president again. This can be worrisome for India along with China and Russia.”
According to Godbole, India will remain a big importer of energy. Therefore peace in West Asia is in our favor so that we can continue to import crude oil from Iran. India has started developing at a fast pace in recent years. We cannot lose this opportunity due to deglobalization, war, inflation etc. Therefore, we need an organization like BRICS for our development. It is also necessary to play the role of a leader in the developing world.
Export prospects to BRICS countries
On the prospects of exports to BRICS countries, Ajay Sahai, Director General of FIEO, an organization of exporters, said that India’s exports to Russia have increased but exports to China have declined. Imports from China have increased by 16% from April to August, but exports have declined by 10%. This is a matter of concern for us. There is also a problem with China regarding market access for agricultural products, pharma products, etc. India has also raised these issues with China from time to time.
According to Sahai, our trade balance with Brazil is fine. Metals and other raw materials for the industry are being supplied from there. But due to high imports from Russia, the trade deficit is quite high. Last year we bought crude oil worth about 57 billion dollars from Russia. A meeting was also held with Russia on Monday. India is keen to increase trade with it. But the big companies which have exposure in the European Union are dealing with Russia cautiously. They fear sanctions. Big banks of Russia have also come under the purview of sanctions by Western countries, which has increased the challenge.
However, opportunities are also coming for India from Russia. There are a lot of opportunities in electrical and electronics machinery. There is also a lot of potential for export of organic chemicals. Apart from these, there are also possibilities in finished products. Russia has always been buying finished products from Europe. Europe’s sanctions have posed challenges to it.
Expansion of BRICS
On 20 September 2006, during the meeting of the United Nations General Assembly in New York, a ministerial meeting of BRICS member countries was held at the request of Putin. Originally, there were four countries in BRICS – Brazil, Russia, India and China. Later in December 2010, South Africa became its core member. After the joining of four countries this year, there are nine countries in BRICS-Plus. Last year, in the Johannesburg conference, Saudi Arabia also agreed to join it, although it has not joined yet. Apart from this, 17 countries of Africa, 7 of South America, 19 of Asia and 3 of Europe (total 46) have shown interest in joining BRICS. On 2 September this year, Turkey also formally applied to join this organization. It has been a member of NATO since 18 February 1952 and also has an agreement with the European Union.
Yaroslav Lisovolik, founder of international research institute BRICS Plus Analytics, tells Jagran Prime, “Expansion of BRICS core members is not expected, but the organization can expand. A different path can be adopted for this expansion, which is being called ‘Belt of Friends’. This category of BRICS countries can include those economies that have formally applied to join this block.”
Jim O’Neill, an economist at the American bank Goldman Sachs, first mentioned BRIC in 2001. He meant Brazil, Russia, India and China. However, he mentioned it as a group of weak countries.
In fact, Western countries have been expressing doubts about the success of BRICS from the beginning. But according to the Boston Consulting Group (BCG), trade between BRICS countries has grown much faster than trade between BRICS and G-7 countries. In the changing world order, many countries want to become members of BRICS. Among these, many countries say that whether it is climate change or the fight against Covid-19, G-7 did not take care of their needs.
New payment system announced
According to Yaroslav, “This time in the BRICS summit, there will also be a discussion on increasing cooperation between member countries. The new payment system is the main one in this.” He says that there is little hope of a decision to form a payment system in the summit. Russia will present its concept in the conference. However, in the final declaration, there may be a provision for discussion among experts on the technical details of the new payment system. This payment system will be based on the digital currency of central banks (CBDC). Earlier this month, the Russian Foreign Ministry presented its concept in a high-level seminar in Moscow.
This international payment system will be an alternative to Visa and MasterCard. In a way, it is being considered a step towards reducing America’s dominance in global finance. Russia has named it BRICS-Bridge. With this payment system, the central banks of member countries will be able to do cross border settlements through their digital platforms. China has also been saying for a long time that the new payment technology will reduce America’s dominance in global finance. If this payment system becomes cheaper and faster, then other developing countries can also adopt it.
At present, about 90% of global foreign exchange trading is done in dollars. About 58% of foreign exchange reserves are in dollars. The largest hub of payments at the international level is the US, where international banks transact foreign exchange. Due to the control of the US, it can keep an eye on the flow of dollars. About 11,000 banks in 200 countries are connected with the Belgium-based SWIFT messaging system for banking transactions. Iran was excluded from it in 2018 due to sanctions. Russian banks were also excluded from it after Russia’s attack on Ukraine in the year 2022. Apart from this, Western countries also seized Russia’s assets worth about $ 280 billion. Since then, other countries have been trying to create an alternative to the dollar.