Michael Murray

Contents:

(1) Not just another BRIC in the Wall

(2) Why the interest in BRICS by developing countries?

(3) The founding document of BRICS: 2009

(4) The New Development Bank of BRICS – High S&P Ratings

(5) The Chinks in the BRICS

Not just another BRIC in the Wall

This week, at its 15th Summit Conference in Johannesburg, South Africa, BRICS announced it was inviting 6 countries to join the existing Five BRICS members, more than doubling its membership. The countries are: Iran, Saudi Arabia, United Arab Emirates, Egypt,  Ethiopia,  Argentina.  If the invitations are taken up by all, membership would come into effect as early as January, 2024. BRICS’ share of global GDP would then reach 29.3% and combined population would equal 46% of world’s population.  (IMF estimates) 

In the year 2021-2022, China, the largest member of BRICS, perhaps its powerhouse,  contributed more to world economic growth than the G7 combined: 38.6% compared to 25.75% of which the US share is 18.6%. (World Bank database, tweeted by Hua Chunying, China Foreign Affairs Ministry).

Dozens of other countries have applied to join in the last year alone, reflecting an acceleration of interest. Many others have signalled they are considering joining and have already begun to participate in the myriad activities of BRICS, including involvement with the newly opened BRICS bank (described below).  67 countries were invited to the Summit. 34 Prime Ministers/Presidents and other senior officials were in attendance at the 3 day event. 

All this can be seen as heralding a geopolitical game changer in favour of the EMDCs (Emerging Markets and Developing Countries).  As Cyril Ramaphosa, South Africa’s President and Summit host said “An expanded BRICS will represent a diverse group of nations with different political systems that share a common desire to have a more balanced global order.”  

Why the interest in BRICS  from developing countries?

The call for a more balanced global order can be said to date from the end of the Cold War when the role of the IMF (International Monetary Fund), The World Bank; and the WTO (World Trade Organisation), with their beginning circa 1944 began to be seen as no longer reflecting the interests, or involving meaningful participation of the majority of the developing world. And, it could be argued, parts of the developed world also. Included in all that is the issue of the continued existence of a US dollar-based payment system which denotes all currencies in relation to the US dollar and is seen to be increasingly weaponised by the US in pursuit of its own narrow interests. 

“Debates about the centrality of the US to the global system have been revived, and ideas about finding alternative approaches to coordinating global economic, financial and trade activity are engaging policy makers around the world,” Julius Sen, “The Weaponisation of the Dollar, policy options for small countries,”   LSE Ideas Strategic Update, August 2019. Sen is right about that, although, having all but dismissed G20 as an option in its current state, he does not posit BRICS as the go to for small countries. 

A number of financial crises, culminating with the big crash of 2007/8, and how that panned out, has a lot to do with the growing interest in BRICS. The endless wars after 9/11 driven by a hubristic US pursuit of unilateralism and hegemony accompanied by an arrogant and aggressive presumption that “those who are not with us are against us – and if you’re against us: look out” also contributed.  The result has been a polarisation of the “West,” now representing no more than 12 to 15% of the world’s population.     

Anotherthing that’s dawned on the world is the truth of Kissinger’s quote; “to be an enemy of America can be dangerous, but to be a friend can be fatal.” Take the case of Germany’s gas pipeline being blown up and wrecking its industry. Or another loyal ally: Japan in the 1980’s as it started to outperform US industrially and had to be taken down. President Xi nailed it when he said the US had “gone out of its way to cripple the emerging markets and developing countries. Whichever country is developing fast becomes its target of containment and whichever country is catching up becomes its target of obstruction.” He went on to say: “The BRICS expansion will inject fresh vitality into BRICS cooperation mechanism and further strengthen the forces for world peace and development” “ (Xinhua, 24 August, 2023)  More recently, the Covid-19 pandemic put the cap on the world’s problems, exacerbating its inequities.

Economist Joseph Stiglitz, Nobel prize-winner and good friend of Corbyn’s Labour, wrote in the Scientific American:“The pandemic has exacerbated all inequalities according to data pulled together in Nature. By the end of 2022 the World Bank estimates that an additional 75 million will have been pushed into poverty (defined as living on $1.90 a day) than had been predicted before the pandemic. That would bring the total number of people living in extreme poverty to 677 million by the end of the year – a staggering two-thirds of those (500 million) could be in sub-Saharan Africa.” (29 June 2022)   Add to that the sense of grievance at the non-availability of vaccines, face masks – and expensive items like ventilators and oxygen masks due to profiteering and the dearth of manufacturing capacity to respond to the crisis. 

UN General Secretary, António Guterres, in June this year described the IMF and World Bank ‘s response to the COVID-19 pandemic as a “glaring failure that left dozens badly indebted.”  He also said that the International Monetary Fund (IMF) had benefited rich countries instead of poor ones.

Of course, the current-day role of the UN has itself been criticised as unfit for purpose and, as we shall see later, it has prioritised for deep-rooted reform by BRICS.  

As the core of the UN, the Security Council has come in for the most criticism. Whatever the justification for its post -WWII design: 5 permanent members, each with a veto, and 10 temporary members, it’s long overdue a makeover. But with the current stand-off between the US and allies on one hand and Russia and China on the other – taken together and separately – any attempt at changing its composition would not end well. In the meantime, the entire continents of Latin America and Africa remain unrepresented amongst the permanent members of the SC – as well as the most populous country on the planet – India.

In the short term this situation can only deteriorate as the conflict in Ukraine reaches its denouement and US/ NATO winds itself up for another war, this time with China – on the side of those whom it insisted vacate its UN permanent seat back in 1971 –  and fighting those it gave the seat, in recognition of its “One China” status, to the China it now wants to fight. Do they really expect an awakening post colonial world to support that madness?  

And as I write this: with one candidate for the US presidency in jail and his opponent, the present incumbent, possibly on his way there too, is it any wonder an increasing number of countries are searching for a better way to live together on this long suffering planet ? 

The founding document of BRICS 2009

The “Joint statement of the BRIC Countries’ Leaders,” was issued on completion of the 1st formal Summit, held in Yekaterinburg, Russia, 16 June 2009, attended by the leaders of Brazil: Luis Inácio Lula de Silva; Dmitry Medvedev; India: Manmohan Singh;  China: Hu Jintao. (The “S” in BRICS above represents South Africa which joined in the following year.) There is no intention of adding new members’ initials to BRICS – so it remains the “brand name” for the time being.

Clearly, much thought had gone into the document in the years up to 2009. There is a sense of each paragraph being assiduously scripted: and meant to highlight items for action, not serve as rhetorical flourishes. The statement rewards careful reading: to get a sense of the thinking behind this original idea, and a baseline against which to evaluate later statements. 

We’ll only comment on paragraphs (1) and (2) here to make a couple of points which might not occur to the reader. In these paragraphs note that it makes it clear that it did not see itself setting up in opposition to existing organisations, such as the UN and, more significantly, G20, which its existing members will be attending later this year, with the Indian Prime Minister, Modi, presiding. Russia, incidentally, will also be attending, represented by Lavrov in person and Putin virtually. 

 Indeed, BRICS goes out of its way to respect member countries’ strategic autonomy.  Some examples: this year’s host country, South Africa, has trading partnerships with the US, UK as well as with other BRICS countries. India makes no secret of its good relations with US and the EU. The Saudis maintain strong security relations with the US and EU. Tolerating a diversity of politics and allegiances and the right of sovereign nations to manage their own internal affairs while working together for the common goal of a more equal, inclusive model of pan-global governance is one of the great achievements of this still developing organisation.  Being “post west” rather than “anti-west” best describes the BRICS’ stance.

The purpose of diplomacy is to identify common ground, resolve conflict and promote cooperation. As the G7 becomes increasingly ideologically lined up behind the USA, its influence is waning while that of BRICS is growing – not least because of its inclusiveness, pragmatism – and consensual decision making seen by the developing world as the way to go – in armed conflict as well as business.  

And who cannot but marvel at the success of China successfully brokering a peace agreement between Iran and Saudi Arabia – and that culminating in both joining BRICS ?  And see how their joint membership of BRICS, along with the other oil producers, resets the middle east’s oil industry in favour of this new organisation, its present, and without a doubt, future membership. 

Joint Statement of the BRIC Countries’ Leaders

We, the leaders of the Federative Republic of Brazil, the Russian Federation, the Republic of India and the People’s Republic of China, have discussed the current situation in the global economy and other pressing issues of global development, and also prospects for further strengthening collaboration within the BRIC, at our meeting in Yekaterinburg on June 16, 2009.

We have arrived at the following conclusions:

1. We stress the central role played by the G20 Summits in dealing with the financial crisis. They have fostered cooperation, policy coordination and political dialogue regarding international economic and financial matters.

2. We call upon all states and relevant international bodies to act vigorously to implement the decisions adopted at the G20 Summit in London on April 2, 2009. We shall cooperate closely among ourselves and with other partners to ensure further progress of collective action at the next G20 Summit to be held in Pittsburgh in September 2009. We look forward to a successful outcome of the United Nations Conference on the World Financial and Economic Crisis and its Impact on Development to be held in New York on June 24-26, 2009.

3. We are committed to advance the reform of international financial institutions, so as to reflect changes in the global economy. The emerging and developing economies must have greater voice and representation in international financial institutions, whose heads and executives should be appointed through an open, transparent, and merit-based selection process. We also believe that there is a strong need for a stable, predictable and more diversified international monetary system.

4. We are convinced that a reformed financial and economic architecture should be based, inter alia, on the following principles:

– democratic and transparent decision-making and implementation process at the international financial organisations;

– solid legal basis;

– compatibility of activities of effective national regulatory institutions and international standard-setting bodies;

– strengthening of risk management and supervisory practices.

5. We recognise the important role played by international trade and foreign direct investments in the world economic recovery. We call upon all parties to work together to improve the international trade and investment environment. We urge the international community to keep the multilateral trading system stable, curb trade protectionism, and push for comprehensive and balanced results of the WTO’s Doha Development Agenda.

6. The poorest countries have been hit hardest by the financial crisis. The international community needs to step up efforts to provide liquid financial resources for these countries. The international community should also strive to minimise the impact of the crisis on development and ensure the achievement of the Millennium Development Goals. Developed countries should fulfil their commitment of 0.7% of Gross National Income for the Official Development Assistance and make further efforts in increasing assistance, debt relief, market access and technology transfer for developing countries.

7. The implementation of the concept of sustainable development, comprising, inter alia, the Rio Declaration, Agenda for the 21st Century and multilateral environmental agreements, should be a major vector in the change of paradigm of economic development.

8. We stand for strengthening coordination and cooperation among states in the energy field, including amongst energy producers and consumers and transit states, in an effort to decrease uncertainty and ensure stability and sustainability. We support diversification of energy resources and supply, including renewable energy, security of energy transit routes and creation of new energy investments and infrastructure.

9. We support international cooperation in the field of energy efficiency. We stand ready for a constructive dialogue on how to deal with climate change based on the principle of common but differentiated responsibility, given the need to combine measures to protect the climate with steps to fulfil our socio-economic development tasks.

10. We reaffirm to enhance cooperation among our countries in socially vital areas and to strengthen the efforts for the provision of international humanitarian assistance and for the reduction of natural disaster risks. We take note of the statement on global food security issued today as a major contribution of the BRIC countries to the multilateral efforts to set up the sustainable conditions for this goal.

11. We reaffirm to advance cooperation among our countries in science and education with the aim, inter alia, to engage in fundamental research and development of advanced technologies.

12. We underline our support for a more democratic and just multi-polar world order based on the rule of international law, equality, mutual respect, cooperation, coordinated action and collective decision-making of all states. We reiterate our support for political and diplomatic efforts to peacefully resolve disputes in international relations.

13. We strongly condemn terrorism in all its forms and manifestations and reiterate that there can be no justification for any act of terrorism anywhere or for whatever reasons. We note that the draft Comprehensive Convention against International Terrorism is currently under the consideration of the UN General Assembly and call for its urgent adoption.

14. We express our strong commitment to multilateral diplomacy with the United Nations playing the central role in dealing with global challenges and threats. In this respect, we reaffirm the need for a comprehensive reform of the UN with a view to making it more efficient so that it can deal with today’s global challenges more effectively. We reiterate the importance we attach to the status of India and Brazil in international affairs, and understand and support their aspirations to play a greater role in the United Nations.

15. We have agreed upon steps to promote dialogue and cooperation among our countries in an incremental, proactive, pragmatic, open and transparent way. The dialogue and cooperation of the BRIC countries is conducive not only to serving common interests of emerging market economies and developing countries, but also to building a harmonious world of lasting peace and common prosperity.

16. Russia, India and China welcome the kind invitation of Brazil to the next BRIC summit it will host in 2010.  (BRICS Information Centre, University of Toronto)

The New Development Bank of BRICS – High S&P Ratings

BRICS  $100 Billion New Development Bank (NDB) opened in 2015.  “NDB finances projects and innovates tailored solutions to help build a more inclusive. resilient and sustainable future for the planet” saysits own blurb. It will focus on energy, water, transport, environment, social and digital infrastructure. Its contribution to the Summit deliberations this year was on the subject of: “BRICS and Africa: Partnership for accelerated growth, sustainable development and inclusive multilateralism.” To follow the progress of NDB, including earmarked projects and work in progress, go towww.ndb.int  It’s a very user-friendly site and very informative. 

The Contingency Reserve Arrangement (CRA)  with $100 Billion at its disposal is intended to provide support in dealing with balance of payments issues arising from currency fluctuations and the like, useful when members wish to trade in each other’s currencies. It began its operations around the same time as the NBD. 

Both of these could be considered to be in competition with the IMF, though that isn’t how they choose to present themselves. 

What’s important is how they go about their business. Not lose the run of themselves with all the chat about “de-dollarisation” and “BRICS currencies,” much of it a bit previous, a lot of it misinformed. 

In that regard, the good news is that :”On February 27, 2023, S&P Global Ratings affirmed its ‘AA+’ long-term and ‘A-1+’ short-term foreign currency issuer credit ratings on New Development Bank (NDB). The outlook on the long-term rating remains stable,” the statement reads.

“The affirmed ratings reflect our opinion that NDB will establish itself as a catalyst to reduce the infrastructure deficits faced by its BRICS members. At the same time, we expect the bank to continue to instil sound governance and risk management principles across its operations. This expectation supports our assessment of NDB’s very strong enterprise risk profile and extremely strong financial risk profile,” the agency explained.

While on the subject: Labour members who attended the Economics workshops in Corbyn/McDonnell’s time will be interested to know that Dilma Rousseff,  Economist and former President of Brazil, Brazil Workers’ Party, who spoke at one of them, that the present writer attended,  is the new President of BRICS’ New Development Bank. If you don’t know of her you should:   

Go toYouTube.   Conversation: Jeremy Corbyn and Dilma Rousseff.  – Progressive International 

(5) The Chinks in the BRICS

Could BRICS exist without China ? A question aired on a TV programme covering the BRICS Summit, going on to make the point that China’s GDP was three times that of India, six times than of Russia and eight times that of Brazil – disproportionally outsizing its fellow members. 

Then the punchline : was China merely masquerading as a champion of the emerging markets and developing countries  with a GDP of getting on for 20 Trillion ? 

Martin Jacques, author of the encyclopaedic “When China rules the World,” 2012 answered: “This is the moment of the developing world, not just China. China may be the most powerful country in the world, but it has its modern origin post 1945. It was part and parcel of the post 1945 anti-colonialist movement. It is seen as a supporter of many developing countries’ aspirations for independence and nationhood – as is Russia, especially in Africa where this year’s Summit is being held and the theme of the event is “Africa and BRICS.”

But that doesn’t wash with the UK’s political class. Sunak took advantage of his being on the podium of the G7 Hiroshima  conference to call out China as “the biggest challenge of our age to our global security and prosperity.” 

“China is looking to build a broader coalition of developing countries to extend Beijing’s influence and reinforce its efforts to compete with the US on the global stage,”  said the Guardian. “The Summit may see the BRICS group take a clearly anti-western turn. This raises the prospect of a new and re-energised economic and political actor against the US and its allies in world affairs.” Projection, I think, is the word. 

It wasn’t the Chinese who created, and, apparently, still yearn for:  “An Empire on which  the sun never sets.”  And even that was robbed from a 16 Cy  Spanish king and originally read: “El Emperio en el que nunca se pone el sol.” 

Make the working assumption that if the Chinese say they want to reach a win-win modus operandi of mutual respect and cooperation they mean it.  There’s some hope for us if you do. 

YouTube  videos going in more depth into BRICS

—Pepe Escobar Michael Hudson  on BRICS plus six, Ukraine and the multipolar world economy Danny Haiphong

 —BRICS Expansion will make powerful economic bloc – what about politically?   Breakthrough News