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Analysis of BRICS Summit

By Rick Majumdar

The 15th BRICS summit took place in South Africa August 22-24 to discuss the expansion of the group of countries, and to counter the influence of Western countries like the U.S., France and Britain on developing countries.

What is BRICS?

The United States and European Union's domination of geopolitical sphere on the world prompted a change from countries in Asia, Africa, Latin America and the Caribbean. This influence on the world isn't something that is new but is a result of historical reasons, primarily the growth and development of colonization of the world's territories by European countries. In many places, the colonial relations were replaced with a kind of neo colonialisms following formal independence from European countries, and the growth of U.S. imperialism.

BRICS is a group of countries consisting of Brazil, Russia, India, China and South Africa. The group was formed in 2010, to promote economic, social and political cooperation amongst the largest countries in the world.

The group was formed on the principles of mutual cooperation and rejected any outside influence on its functioning. The countries in the group encompass over 43% of the world's population, cover over 30% of the world's territories. The group was also formed to reduce the influence of the U.S. dollar in trade and commerce, and to strengthen the influence of regional currencies. The BRICS is essentially a counter to the G7 (Group of 7) politically and to the IMF (International Monetary Fund) and World Bank in terms of finance.

Facts and developments leading up to the 15th summit

From 2002 until 2022 the GDP of the G7 [countries namely Canada, France, Germany, Italy, Japan, the United Kingdom and the United States] has reduced from 42% to 30% while for BRICS countries have seen an 11% growth from 19% in 2002 to 31% in 2022. BRICS also accounts for 30% of world trade. In that 20-year period several countries in the developing world have opted to take IMF loans for infrastructural development, and all of those countries have either had huge outstanding balance payments, or have fallen into an endless cycle of borrowing and failing payments and re-borrowing, also known as a debt trap.

Some of the countries that have suffered the worst from IMF loans are Argentina, Egypt, Bangladesh, Pakistan and Sri Lanka. Naturally countries in the developing world realized that reliance on the financial structure proposed by the IMF would lead to a debt trap, and would not in fact benefit their own countries but actually lead to the further increase in deprivation and worsening of conditions. Sri Lanka is a prime example of this: the country fell to absolute ruin last year and are still recovering from it due to a series of IMF loans – 16 in total.

Seeing the growth and economic stabilization of the BRICS countries several others applied to join the group as an alternative to the IMF. The BRICS has two alternative payment structures to the IMF primarily the New Development Bank (NDB) in China popularly called the BRICS bank and the Contingent Reserve Arrangement or CRA. The BRICS bank at any point in time has reserves of over $100 billion. Countries in Africa and Latin America have also increased their confidence in China due to the several infrastructural projects initiated through the Belt and Road Initiative and in turn have a heightened confidence in the BRICS project as well.

The BRICS financial model also provides a bypass to U.S. sanctions. Due to the dominance of the U.S. dollar in all forms of trade (including essential goods, luxury goods and lifesaving necessities) it has become increasingly difficult for several sanctioned countries to navigate the waters. Countries like Cuba and Venezuela are prime examples of this. Cuba had to manufacture three vaccines on their own during the COVID pandemic because they were heavily sanctioned by the U.S.

This has prompted several countries to apply for BRICS in order to bypass sanctions. It is interesting to note that because of sanctions on Russia making payments in U.S. dollars was impossible for Bangladesh to complete the construction of a nuclear power plant. Bangladesh prior to the summit had instead opted to make payments to Russia in RMB provided through the NDB. Bangladesh is currently also part of the NDB.

A total of 16 countries applied to be a member of BRICS: Algeria, Bahrain, Bangladesh, Belarus, Bolivia, Cuba, Honduras, Indonesia, Kazakhstan, Kuwait, Nigeria, Palestine, Senegal, Thailand, Venezuela and Vietnam. Other countries have shown an interest in joining the BRICS like Afghanistan, Angola, Comoros, Democratic Republic of Congo, Gabon, Guniea-Bissau, Mexico, Nicaragua, Pakistan, Sudan, Syria, Tunisia, Turkey, Uganda, Uruguay and Zimbabwe.

Results of the 15th summit

The most prominent result of the 15th summit was the expansion of the group, from BRICS to BRICS+ to include six new members states. The new countries include Argentina, Ethiopia, Saudi Arabia, The UAE, Egypt and Iran.

Six out ten of the world's largest oil producing countries are now in the BRICS group, accounting for 8.7% of the world's reserves and 25.2% of the world's gas reserves. Despite the UAE and Saudi Arabia being politically close to the United States, they too have shifted their interests and realized that trading in local currencies improves the strength, over trading in the U.S. dollar.

The BRICS+ now will have access 80% of the world's oil production with the addition of Saudi Arabia, the United Arab Emirates and Iran. The sharp GDP growth of the new BRICS countries will amount to 30% of the world's GDP and exceed $30 trillion.

Several world leaders spoke at the summit.

The president of Bolivia, Luis Arce, had this to say, “The expansion of the BRICS group is a new milestone in human history, because it allows nations to access international markets without the need to compromise their dignity, and without political conditioning, sanctions, or military threats. I would like to honor two distinguished African patriots, Nelson Mandela, father of South African independence, and Patrice Lumumba, national hero and PM of the Democratic Republic of the Congo, overthrown and assassinated by the infamy of imperialist and colonialist interests”

Lula Dasilva, the president of Brazil said, ''In a few years, we went back from a benign multi-polarity juncture to going back to an absolute mindset of cold war and geopolitical competition. The world needs to understand the risks that are unacceptable for humanity. The Ukraine war shows the limitations of the UN Security Council. Many other conflicts and crises do not receive due attention Haitians, Yemenis, Syrians, Libyans, Sudanese, and Palestinians all deserve to live in peace.”

Hakainde Hichilema, the president of Zambia said, “Africa pays the highest cost of capital than any other, on the globe, certainly the BRICS platform should be used to work through to expedite the reform processes which are inhibiting the development which the young populations need to create opportunities for education, health, and other activities.”

Nicholas Maduro, the president of Venezuela said, “BRICS is playing a fundamental role in geopolitical dynamics that has fostered trust among the people and governments of Latin America, Caribbean, Africa and Asia with a developmental and mutual respect the BRICS countries represent.”

President Xi of China said, “International rules should not be dictated by those with the strongest muscles or the loudest voice. Ganging up to form exclusive groups, and packaging their own rules as international norms is even more unacceptable, many countries have applied to join BRICS, we must accelerate the expansion process and grow the BRICS+ family.”

Additionally, President Xi Jinping and Narendra Modi of India discussed de-escalation on the border between India and China. Over the years the Line of Actual Control has led to several severe border issues. President Xi said, “The two sides should bear in mind the overall interests of their bilateral relations and handle properly the border issue so as to jointly safeguard peace and tranquility in the border region.”

The integration of the new members of BRICS will take effect on the January 1, 2024.

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