EDITORIAL: BRICS and the Challenges ahead

In 2001, Baron O’Neill of Gatley (he was Jim O’Neill then), who had just been appointed head of global economics research at Goldman Sachs (an investment bank), wrote a paper in which he drew attention to four countries (Brazil, Russia, India, and China – with the acronym ‘BRIC’) from what is now described as the global South, whose economic performances he thought meant that they would become dominant players in the global economy by 2050. Up until then, on the back of market-based reforms begun in 1979, China had notched up annual output growth rates of 10 per cent. It had transited millions out of poverty in record time and was to go on to overtake Japan as the world’s second largest economy in 2010.

Buoyed by the 2003 to 2007 boom in commodity prices, again the result of China’s rapid growth, and domestic spending to cushion the incidence of poverty, from the early 2000s, Brazil’s economy grew at a robust clip. Following reforms to the Indian economy, which began in July 1991 on the back of a balance of payments crisis, by 2001 the country’s economy was growing at an annual rate of 6 per cent. Russia may not have reformed its economy anywhere near those of its peers, but boosted by rising commodity prices, its economy grew on average by 7 per cent in each of the years between 2000 and 2008.

In the intervening period since the coinage of ‘BRIC’, South Africa (hence BRICS) joined the grouping in 2010. Today, the BRICS countries account for 41 per cent of the global population, 18 per cent of world trade, and 26 per cent of global output. With such clout and impressive showing, the recently concluded 15th BRICS summit, which held in Johannesburg last month, was an occasion to make a political statement. The queue of countries applying to join the grouping, a number of which gained candidate-member status after the meeting, underscored the continuing search, since the collapse of the Berlin Wall, for political and economic counterpoints to the post-Second World War establishment that has coalesced around US-led global institutions.

Yet, Jim O’Neill’s pollyannaish vision of the economic trajectory of these countries was as exaggerated as it was premature. While India is projected to become the fastest growing big economy this year, Brazil, South Africa, and Russia are facing tepid growth. China may have come out of its zero-COVID lockdown and run into skids – under-par growth, the risk of deflation, and a rapidly ageing population – but it accounts for 69 per cent of the grouping’s trade and 70 per cent of its output. As a political conversation, then, the BRICS fit China’s need for strong alliances in its current face-off with the United States.

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The problem is that the original vision behind the grouping was economic and not political. It should worry those who would have the grouping rival the US that it still has neither the criteria for membership nor a charter. As democracies, Brazil, India, and South Africa are always going to struggle with the autocratic worldviews of the leaderships in China and Russia. If India was a big player in the old Non-Aligned Movement because its rivalries with Pakistan and China demanded that it steer a middle course between the two rival powers in the Cold War, a more assertive India today is even less likely to seek alliances that leave it subordinate, not the least to a country with which it has actively hostile borders.

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The contradictions go further. The group’s insistence that the five original members would control the vote (55 per cent) in the New Development Bank is as ironic as it is instructive of the challenges faced in the design of global organisations. No less so is China’s dominance of the vote in the Contingent Reserve Arrangement (40 per cent) and its insistence on an IMF programme as a condition for accessing loans from the latter. South Africa, on the other hand, would rather that new countries joining participate from an outer room.

At some point, BRICS may overcome these tensions. But that does not make the grouping a less welcome addition to the global financial, economic, and political architecture. Confronting existential challenges in the years ahead, mankind will need all the help it can get.

Ought Nigeria to have applied for membership at the Johannesburg meeting? In the light of the internal (and potentially antagonistic) contradictions that the grouping will have to resolve, the gains from the country’s membership of the BRICS forum are always going to be modest. As an opportunity for driving increased bilateral trade, participation by the vice president at the meeting was not without its advantages.