TISHK International University

FASE | IRD Department

Geopolitics
Chapter 4 :BRICS
Spring Semester
 • BRICS is an acronym for 5 emerging economies of the
What is BRICS? world viz. – Brazil, Russia, India, China, and South
Africa. which are identified as rising economic powers.
The term BRIC was coined by Jim O’Neil, the then
chairman of Goldman Sachs in 2001. The first BRIC
summit took place in the year 2009 in Yekaterinburg
(Russia). In 2010, South Africa formally joined the
association making it BRICS.
 • Brazil is the largest economy in South America and has
abundant natural resources. It is known for its agricultural
production, mining industry, and manufacturing sector.

• Russia is the largest country in the world by land area and

possesses extensive natural resources, including oil, gas,
and minerals. It is known for its energy sector, aerospace
industry, and defense exports.

• India is the world's second-most populous country and has a

diverse economy. It has a strong services sector, including
information technology, telecommunications, and financial
services. It is also a major agricultural producer.
• China is the world's most populous country and has
experienced rapid economic growth over the past few
decades. It is the world's second-largest economy and is
known for its manufacturing industry, exports, and
technological advancements.

• South Africa is the most developed economy in Africa and

is rich in mineral resources. It has a diverse economy,
including mining, manufacturing, financial services, and
tourism.
The Features

• Together, BRICS accounts for about 42% of the world’s

population and about 31% of Global GDP (Gross Domestic
Product), and 16% of global trade, making it a critical economic
engine.
• It’s an emerging investment market and global power bloc.
• BRICS represents the World’s top emerging economies and claims
to serve as a bridge between the developed and developing world.
• All are coming as a part of changing world order, South-South
cooperation, multilateralism, increased accommodation in global,
attracting investment & stable economic system.
• It was formed in the context that China and India, by 2050, become
the world's dominant suppliers of manufactured goods and services
The Features

42 % 40 % 31 %
Population Land Mass GDP
 Structure of BRICS

• BRICS does not exist in form of organization, but it is an

annual summit between the supreme leaders of five
nations.
• The Chairmanship of the forum is rotated annually among
the members, in accordance with the acronym B-R-I-C-S.
• BRICS cooperation in the past decade has expanded to
include an annual programme of over 100 sectoral
meetings.
Objectives

• The BRICS seeks to deepen, broaden and intensify cooperation

within the grouping and among the individual countries for more
sustainable, equitable and mutually beneficial development.
• BRICS takes into consideration each member’s growth,
development and poverty objectives to ensure relations are built on
the respective country’s economic strengths and to avoid
competition where possible.
• BRICS is emerging as a new and promising political-diplomatic
entity with diverse objectives, far beyond the original objective of
reforming global financial institutions.
Areas of Cooperation
1. Economic Cooperation
• There are rapidly growing trade and investment flows between BRICS
countries as well as economic cooperation activities across a range of
sectors.
• Agreements have been concluded in the areas of Economic and Trade
Cooperation; Innovation Cooperation, Customs Cooperation; strategic
cooperation between the BRICS Business Council , Contingent Reserve
Agreement and the New Development Bank.
• These agreements contribute to realisation of the shared objectives of
deepening economic cooperation and fostering integrated trade and
investment markets.
2. People-to-People exchange
• BRICS members have recognized the need for strengthening People-to-
People exchanges and to foster closer cooperation in the areas of culture,
sport, education, film, and youth.
• People-to-People exchanges seek to forge new friendships; deepen relations
and mutual understanding between BRICS peoples in the spirit of
openness, inclusiveness, diversity, and mutual learning.
• Such People to people exchanges include the Young Diplomats Forum,
Parliamentarian Forum, Trade Union Forum, Civil BRICS as well as the
Media Forum.
 Areas of Cooperation
3. Political and Security Cooperation
• BRICS member political and security cooperation is aimed at achieving
peace, security, development, and cooperation for a more equitable and
fair world.
• It provides opportunities for sharing policy advice and exchanges of best
practices in terms of domestic and regional challenges as well as
advancing the restructuring of the global political architecture so that it is
more balanced, resting on the pillar of multilateralism.
• It is utilized as a driver for South Africa’s foreign policy priorities
including the pursuit of the African Agenda and South-South Cooperation.
[Link] Mechanism
• Cooperation among members is achieved through:
• Track I: Formal diplomatic engagement between the national
governments.
• Track II: Engagement through government-affiliated institutions, e.g.
state-owned enterprises and business councils.
• Track III: Civil society and People-to-People engagement.
Impacts of BRICS on global
institutional reforms
• The main reason for co-operation to start among the BRICs
nation was the financial crises of 2008. The crises raised doubts
over the sustainability of the dollar-dominated monetary
system.
• BRICS called for “the reform of multilateral institutions in order
that they reflect the structural changes in the world economy
and the increasingly central role that emerging markets now
play”.
• It managed to push for institutional reform which led to
International Monetary Fund (IMF) quota reform in 2010. Thus
the financial crises had momentarily reduced western legitimacy
and briefly let the BRICS countries become “agenda setters” in
multilateral institutions.
 New Development Bank

• NDB is headquartered in Shanghai. At the Fourth BRICS Summit in New

Delhi (2012) the possibility of setting up a new Development Bank was
considered to mobilize resources for infrastructure and sustainable
development projects in BRICS and other emerging economies, as well as
in developing countries.
• During the Sixth BRICS Summit in Fortaleza (2014) the leaders signed
the Agreement establishing the New Development Bank (NDB).
• Fortaleza Declaration stressed that the NDB will strengthen cooperation
among BRICS and will supplement the efforts of multilateral and regional
financial institutions for global development thus contributing to
sustainable and balanced growth.
• NDB’s key areas of operation are clean energy, transport infrastructure,
irrigation, sustainable urban development and economic cooperation
among the member countries.
• The NDB functions on a consultative mechanism among the BRICS
members with all the member countries possessing equal rights.
 Contingent Reserve Arrangement (CRA)

• The Contingent Reserve Arrangement (CRA) is a significant initiative

established by the BRICS as part of their efforts to enhance financial
stability and reduce dependency on traditional Western-dominated
institutions like the International Monetary Fund (IMF) and the World
Bank.
• The CRA was officially established during the BRICS Summit in
Fortaleza, Brazil, in 2014. It serves as a framework for providing financial
support to BRICS members facing balance of payments problems or
experiencing currency crises. The primary goal of the CRA is to provide an
alternative source of liquidity and financial assistance to BRICS nations,
thereby reducing their reliance on external financing from Western-
dominated institutions.
 De Dollarization
• This concept refers to the reduction of reliance on the US dollar in
international trade and finance. Historically, the US dollar has been the
world's primary reserve currency, used for most international transactions.
However, concerns about US economic policies, trade tensions, and
geopolitical uncertainties have led some countries to seek alternatives to the
dollar.
• Bricks, with their growing economic clout, have been at the forefront of
efforts to promote de-dollarization. China, in particular, has been actively
promoting the internationalization of its currency, the yuan (also known as
the renminbi). Through initiatives like the Belt and Road Initiative (BRI),
China has been encouraging the use of the yuan in trade and investment,
aiming to reduce its dependence on the dollar and enhance its influence in
global finance.
• Russia has also been pursuing de-dollarization strategies, especially in
response to Western sanctions imposed after the annexation of Crimea in
2014. The Russian government has sought to reduce its exposure to the
dollar by increasing trade in other currencies, such as the euro and the yuan,
and by stockpiling gold reserves.
• For Bricks, de-dollarization represents an opportunity to assert their
economic independence and reduce vulnerability to external shocks, such as
fluctuations in the value of the dollar or changes in US economic policies. It
also aligns with their broader goal of reshaping the global economic order
to better reflect their growing importance on the world stage.
 BRICKS challenges the West
1. Representation and Governance: BRICS nations argue that international institutions like the International Monetary Fund
(IMF) and the World Bank do not adequately represent their interests. They have criticized the voting structures within
these organizations, which often favor Western countries. BRICS countries have called for reforms to increase their voice
and vote shares in decision-making processes.
2. Economic Influence: The BRICS countries collectively hold significant economic power and are major contributors to
global economic growth. Their growing influence challenges the traditional dominance of Western economies in shaping
global economic policies. BRICS nations advocate for a more multipolar world order where their economic contributions
are recognized and reflected in international institutions.
3. Alternative Institutions: In response to perceived shortcomings in existing international institutions, BRICS nations have
sought to establish alternative platforms. For example, they have created institutions like the New Development Bank
(NDB) and the Contingent Reserve Arrangement (CRA) to provide financing and financial stability support outside the
purview of Western-dominated institutions.
4. Geopolitical Dynamics: The rise of BRICS nations has shifted geopolitical dynamics, leading to increased competition
and cooperation among global powers. This has implications for international institutions, as BRICS countries seek to
assert their interests and influence on issues ranging from trade and development to climate change and security.
5. De-dollarization: As mentioned earlier, BRICS nations have been promoting de-dollarization efforts to reduce reliance on
the US dollar in international trade and finance. This challenges the dollar's status as the dominant global reserve currency
and has implications for the functioning of international financial institutions.
 Challenges pertaining to BRICS

• The market dominance of the big three Russia-China-India is a challenge for BRICS as it moves ahead. To
become a true representative of large emerging markets across the world, BRICS must become pan-continental.
Its membership must include more countries from other regions and continents.
• BRICS will need to expand its agenda for increasing its relevance in the global order. As of now, climate
change and development finance, aimed at building infrastructure dominate the agenda.
• As BRICS moves forward foundational principles i.e. respect for sovereign equality and pluralism in global
governance are liable to be tested as the five-member countries pursue their own national agendas.
• The military standoff between India and China on the Doklam plateau, which has effectively brought to an end
the naive notion that a comfortable political relationship is always possible amongst the BRICS members.
• China’s efforts to co-opt nation-states, which are integral to its Belt and Road Initiative, into a broader political
arrangement have the potential to cause conflict among BRICS members especially China and India.
• Global political turmoil like the Afghanistan crisis. Various regions still have conflict potential. The
arms control architecture is deliberately undermined with US withdrawal from Intermediate-Range Nuclear
Force Treaty.
• Structural imbalances in the World Economy. Threats from unfair competition practices, sanctions, trade wars,
abuse of US $ status as World reserve currency.