Analysis
BEIJING – The 16th BRICS Summit will be held from tomorrow to Thursday in Kazan, Russia, the first such gathering after the bloc’s expansion, which has drawn extensive global attention.
Initially a shorthand for major emerging markets with considerable economic potential, BRICS began with Brazil, Russia, India, China and South Africa, and has now evolved into an influential international cooperation mechanism with an expanded membership.
Other than the countries that officially joined the BRICS family on January 1, 2024, over 30 countries like Thailand, Malaysia, Türkiye and Azerbaijan have either formally applied for or expressed interest in membership. BRICS’ growing global appeal has proven Western skepticism wrong.
Why is the BRICS mechanism becoming more and more appealing to the Global South? What impact will this fast-growing organization bear on the globe amid an economic slowdown and geopolitical shifts?
ENGINE FOR ECONOMIC DEVELOPMENT
Opened in 2015, the New Development Bank (NDB), set up by the BRICS, aims to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries.
The BRICS countries have realized that it is very important for emerging and developing countries to have proper mechanisms and instruments, thus the NDB and the Contingent Reserve Arrangement were established, Dilma Rousseff, president of the NDB, told Xinhua in a recent interview.
Headquartered in Shanghai, the NDB has cumulatively approved loans of US$35 billion for around 100 projects. Key projects include the Mumbai Urban Transport Project-III in India, the Serra da Palmeira Wind Power Project in Brazil, and the Jiangxi Urban and Rural Cold Chain Logistics Project in China.
As the first multilateral development bank initiated entirely by emerging economies and developing countries, the NBD has provided much-needed financial support for infrastructure, clean energy, environmental protection and digital infrastructure development among BRICS nations, making it a flagship of BRICS cooperation.
“Our partnership with BRICS has resulted in tangible benefits for our country in a wide range of sectors,” said Naledi Pandor, minister of International Relations and Cooperation of South Africa, highlighting an increase in trade with BRICS nations and the funding from the NDB to address local challenges.
“Total trade with BRICS countries has increased from 487 billion rand (US$27.67 billion) in 2017 to 702 billion rand (US$39.89 billion) in 2021. We have received funding of over US$5 billion from the New Development Bank (NDB) for key infrastructure projects in renewable energy, water, and other sectors,” said the minister in May 2023.
New BRICS members are eager to enhance their economic development through this cooperative framework. Egypt’s BRICS membership will enable it to obtain soft loans from the bloc’s NDB instead of borrowing money at high interest rates from other international banks, said Gamal Bayoumi, head of the Cairo-based Arab Investors Union. “The group will help Egypt continue its moves to liberate the economy, expand markets, and increase exports.”
As BRICS countries have strong complementary industrial structures and resource endowments, the mechanism also provides an important platform for them to explore paths for innovative economic growth, enhance macroeconomic policy coordination, and align development strategies.
In a bid to promote openness and innovation in BRICS cooperation, a BRICS Partnership on New Industrial Revolution innovation center has been established in Xiamen, Fujian Province. Since 2023, it has held over 10 offline training courses, attracting more than 100 participants from over 70 countries.
Ethiopia’s BRICS membership could facilitate deeper South-South cooperation, allowing the East African country to improve access to various international markets and technologies, said Balew Demissie, communication and publication consultant at the Policy Studies Institute of Ethiopia. “The BRICS countries offer Ethiopia a platform to attract more foreign direct investment by leveraging its young, low-cost labor force and rich natural resources.”
The BRICS also serves as a motivation for Ethiopia to enhance its institutional and governance capabilities in line with those of other member countries and the various organizations within the bloc, including the NDB, he added.
BUILDER OF JUST GLOBAL GOVERNANCE
Since the inception of BRICS, the member states have been committed to upholding multilateralism and becoming a positive, stabilizing and benevolent force in international affairs. It advocates for just global governance by promoting a multipolar world that enhances the voice of developing nations and fosters equity and fairness.
Following the expansion, the combined GDP of BRICS countries now accounts for about 30 percent of the global total, with their population representing nearly half of the world’s total, and their trade making up one-fifth of global trade. With their growing economic size and increasingly active diplomacy, BRICS countries are steadily increasing their influence in the international decision-making process.
A recent report from the Carnegie Endowment for International Peace revealed that since 2000, the G7’s share of global GDP, as measured by purchasing power parity, has declined from 43 to 30 percent, while that of the five original BRICS countries has increased from just over 21 percent to nearly 35.
Many countries in the Global South seek an alternative to the current world order, dominated by a collection of alliances led by the United States and marred by divisive geopolitical issues. They look to the BRICS nations to speak up for their overlooked development rights.
“The BRICS cooperation mechanism plays a prominent role in enhancing the representation and influence of the developing countries in international affairs and enhancing the improvement of global governance, which is also one of the priorities of the UAE,” said Ahmed Al-Ali, political and strategic researcher of Gulf Research Center in Dubai.
During a meeting with Rousseff last October, President Xi Jinping called on the NDB to help make the international financial system more just and equitable to effectively increase the representation and voice of emerging markets and developing countries.
The NDB has been committed to expanding the use of local currencies to finance the sustainable development of emerging economies and developing countries, acknowledging that indebtedness remains a significant challenge they are facing.
“The use of local currency is, therefore, one strategic option,” said Rousseff at the opening ceremony of the 9th NDB Annual Meeting in August. “By promoting transactions in local currencies, we also facilitate investment growth, helping governments and the private sector overcome the cash flow mismatch between projects and financing. This approach provides greater predictability and reduces the high costs associated with hedging needs.”
For instance, the NDB signed a 5 billion rand (284.71 million dollars) loan agreement with Transnet, a South African state logistics company, in August to support the modernization of the country’s freight rail sector. The loan is in the local currency of South Africa, the rand, exemplifying its support for currency financing among its member countries.
Al-Ali, the Emirati researcher, said that BRICS aims to foster a more equitable, effective, and rational international system, noting that it will play a crucial role in promoting development and growth opportunities for Global South countries, while also ensuring the sustainability of economic and social progress.
The expert’s opinion was echoed by Surasit Thanadtang, director of the Thai-Chinese Strategic Research Center under the National Research Council of Thailand.
“BRICS, being perceived as a leading voice of emerging markets and developing countries, has become an indispensable part of the current geopolitical landscape, providing a powerful tool for building a more fair, just, and multipolar world order,” he said.
– Xinhua
