BRICS leaders weigh expanding
membership at summit
Nick PERRY and Zama LUTHULI
Wed, August 23, 2023
Summit photocall: From left, President Luiz Inacio Lula da Silva of Brazil;
Chinese President Xi Jinping; South African President Cyril Ramaphosa;
Prime Minister Narendra Modi of India; and Russian Foreign Minister Sergei Lavrov
(ALET PRETORIUS)
Calls to enlarge the BRICS -- Brazil, Russia, India, China and South Africa -- has dominated the agenda at its three-day summit in Johannesburg and exposed rifts between its members.
China is seeking to rapidly grow the BRICS amid rising competition with the United States but the bloc's other major power, India, is wary of the intentions of its geopolitical rival.
Nearly two dozen countries have formally applied to join the BRICS, officials say, which accounts for 40 percent of the world's population and a quarter of the global economy.
Some 50 heads of state and government have joined BRICS leaders in Johannesburg.
The BRICS are a disparate mix of big and small economies, democratic and authoritarian states, but share a collective desire to challenge the Western-led global order they say does not serve their interests or rising clout.
The group operates on consensus and officials said the BRICS leaders were deliberating criteria for admitting new members.
On Wednesday, Ramaphosa told the summit that support for expansion "has been articulated by all BRICS members".
Earlier, Indian Prime Minister Narendra Modi said he supported opening the door to new members and "welcomes moving forward with consensus".
"We stand at the cusp of expanding the BRICS family," said Ramaphosa, who added that he hoped for a "clear solution to this matter" by the summit's close on Thursday.
- 'Turbulence and transformation' -
Chinese President Xi Jinping, on just his second trip abroad this year, said expanding the bloc would "pool our strength (and) pool our wisdom to make global governance more just and equitable."
"We gather at a time when the world is undergoing major shifts, divisions, and regrouping. It has entered a new period of turbulence and transformation," said Xi, whose nation represents about 70 percent of the BRICS total GDP.
US officials have played down the likelihood of BRICS emerging as a geopolitical rival, describing the bloc as a "very diverse collection of countries" containing both friends and rivals.
The summit has underlined divisions with the West over the war in Ukraine, and the support Russia enjoys from its other BRICS partners at a time of global isolation.
South Africa, China and India have not condemned Russia's invasion while Brazil has refused to join Western nations in sending arms to Ukraine or imposing sanctions on Moscow.
Russian President Vladimir Putin, who faces an international arrest warrant over alleged war crimes in Ukraine, was the only BRICS leader not to attend in person, and addressed the summit via video link where he railed against sanctions.
Russia was "desperate for friends and partners so it's not surprising that they are so keen to have an expansion," said Gustavo de Carvalho, senior researcher at the South African Institute of International Affairs.
- BRICS divide -
Analysts said that in considering new members, Brazil, South Africa and India would have to balance a desire for good ties with China and Russia against the risk of estranging the United States, a major trading partner.
Like the BRICS themselves, the countries applying vary greatly, from G20 giants like Indonesia and Saudi Arabia to isolated states like Iran that are openly hostile to the United States and its allies.
BRICS leaders say the level of interest was proof its message resonated deeply in the "Global South" -- a broad term referring to nations outside the West.
Brazil's President Luiz Inacio Lula da Silva, who has championed the BRICS development bank as an alternative to the Washington DC-based lending institutions, said he supported the entry of Argentina.
But the South American powerhouse feared "diluting" the influence of BRICS should it expand too quickly, said Carvalho.
"There is definitely a divide on BRICS members at the moment," he said.
cld-np/ri
Harold Maass, Contributing editor
Tue, August 22, 2023
Indian Prime Minister Narendra Modi. Marco Longari / AFP
Leaders of the BRICS nations — Brazil, Russia, India, China, and South Africa — are gathering this week for a summit in Johannesburg focused on whether to expand the bloc to make it a stronger rival to the Group of Seven, made up of the world's largest developed economies, including the United States. "If we expand BRICS to account for a similar portion of world GDP as the G7, then our collective voice in the world will grow stronger," said one Chinese official quoted by The Financial Times.
South Africa's president, Cyril Ramaphosa, said ahead of Tuesday's meetings that boosting BRICS' influence would fulfill "a common desire to have a more balanced global order." Russia, desperate for allies as the West opposes Moscow's war in Ukraine, and China, locked in escalating trade and diplomatic clashes with the United States, are particularly eager to strengthen BRICS.
China has long aimed to broaden membership in the bloc, which already accounts for about 40% of the world's population and a quarter of the global economy. But India and Brazil are wary of following Beijing's and Moscow's lead, for fear of losing their own influence and increasing China's dominance. Can BRICS unite and grow enough to seriously counter the G7?
BRICS is no G7, and never will be
BRICS is trying to convince everybody it's a "non- or anti-West geopolitical alternative to U.S. hegemony," said Andreas Kluth at Bloomberg. "But they're not, and never will be." Since the end of the Cold War's "bipolar world," a "dizzying array of blocs" has emerged. Africa has the African Union, of course, but also Comesa, Ecca, Ecowas, and more. Latin American has "SICA, Caricom, Mercosur, and what not." BRICS does boast something like 42% of the world's population, but next to the other groups the BRICS nations "arguably have the least in common, aside from a dislike of U.S. clout in global finance, economics and geopolitics." There's little chance this hodge-podge of "three democracies in different stages of backsliding and two increasingly repressive autocracies" will ever be able to cooperate as well as the G7, "a club of rich liberal democracies with a shared sense of custodianship for the world economy."
Expansion might only weaken BRICS' hand, said Alexandra Wexler in The Wall Street Journal. "The group's size is matched by the scale of its disunity on political and security issues — including relations with the U.S." Expanding the bloc "could multiply those differences." It's true that a beefed-up BRICS "would likely give China another mechanism for exercising leadership of the developing world," and Russia access to new markets in Africa and cheerleaders on Ukraine. But analysts say New Delhi and BrasÃlia "share concerns that an expanded group could become too antagonistic toward the West and destabilize the bloc." And if the current members can't agree on expansion, their ability to "channel discontent and opposition toward the U.S. and its allies through a bloc aspiring to rival the Group of Seven major economies may be hampered."
Dismissing BRICS is a mistake
It's "a mistake" for the West to dismiss BRICS as "a talk shop with little impact on U.S. foreign policy," said Sarang Shidore at Responsible Statecraft. "BRICS is gradually making a mark." More than 20 countries have expressed interest in joining. "When a club has a waiting list for getting in, it is hard to characterize it as irrelevant." Prospective members see BRICS "as a serious attempt to fill a vacuum" in a U.S.-led global order that doesn't meet their needs on issues like development, or pressuring wealthy nations to take more responsibility for fighting climate change. These nations don't necessarily see the U.S. as the enemy. They just think Washington is constantly "impinging on their sovereignty" by insisting they fall in line with its policies. The U.S. should "take seriously" the gripes of smaller nations that are sick of feeling bullied.
This summit could be pivotal, said The Economist, and "the critical dissenting voice is likely to be India's." Early in the bloc's existence, New Delhi needed Russia to help serve as a counterbalance to China, but now it's wielding its own "growing economic and geopolitical" influence. And Moscow is of little help in the fight against Beijing's dominance now that it desperately needs China's cover during its war in Ukraine. India also "frets about some of the wannabes, such as Cuba and Belarus," fearing they "would be mini-Russias, repeating China's talking points" and derailing India's effort to present itself as "a rival to China for leadership of the global south." If China gets the expansion it desires it will prove its "sway on the scene. But if China is blocked it would underline the group's deep divisions."
Filip De Mott
Tue, August 22, 2023
A worker arranges a signboard of the 15th BRICS summit outside the Sandton Convention Center in Johannesburg, South Africa, Aug. 17, 2023. The 15th BRICS summit is to be held in Johannesburg, South Africa, on Aug. 22-24.
The BRICS New Development Bank is starting to lend more in member currencies.
The bank's president, Dilma Rousseff, told The Financial Times 30% of lending will be in local tenders.
In August, it sold its first South African rand bond, and plans to sell Indian rupee bonds in October.
A development bank formed and led by the BRICS economic coalition is approaching de-dollarization from a debt angle, with plans to reduce dollar-denominated lending.
The Shanghai-based New Development Bank is instead focusing on the use of BRICS currencies, such as South African, Brazilian, and Indian tenders.
"We expect to lend between $8 billion—$10 billion this year," NDB President Dilma Rousseff told The Financial Times."Our aim is to reach about 30%of everything we lend . . . in local currency."
Already, NDB has issued its first South African rand bond in mid-August, which attracted 2.67 billion rand of bids, Reuters reported. More recently, the bank announced plans for an Indian rupee bond in October, though provided no specifics on the program's size.
The bank is the creation of the BRICS bloc — Brazil, Russia, India, China, and South Africa. Founded in 2015, it was formed as an alternative to the Western-led financial institutions, and has already lent $33 billion for development projects.
As BRICS has recently taken to branding itself as a counterweight to the West, its members have pushed for NDB to focus more on the use of local currencies.
By stepping away from the greenback, Rousseff told FT that member countries are free from the risks associated with exchange rates and US monetary policy. Meanwhile, borrowing from the NDB comes with no conditionality, as is often the case with institutions such as the International Monetary Fund.
"Local currencies are not alternatives to the dollar," she said. "They're alternatives to a system."
Her comments come as BRICS leaders meet for the bloc's 15th annual summit in Johannesburg, South Africa. Since the Russian invasion of Ukraine, the bloc has grown more vocal about turning away from the dollar, even proposing the formation of its own currency, though analysts doubt this.
But despite the de-dollarization rhetoric, NDB's past lending practices have been highly dependent on the greenback, a factor that has contributed to financial trouble in the recent past.
Given the lender's ties to Russia, NDB suffered a Fitch Ratings credit downgrade last year, while Western investors grew less keen on supplying the bank with dollars. As two-thirds of its borrowing were dollar-denominated, the loss of this funding has meant that NDB's debt servicing has grown substantially more expensive.
Apart from the BRICS, the bank's members include Egypt, Bangladesh, and the United Arab Emirates. Rousseff said the bank has received 15 new membership applications, and is considering 4 or 5.
Dollar dumped? India just bought 1 million barrels of oil from the UAE using rupees instead of USD for the first time — why this could spell doom for the greenback
Bethan Moorcraft
Mon, August 21, 2023
India and the United Arab Emirates (UAE) have officially started trading with each other in their local currencies.
The Indian government announced on Monday that the country’s leading petroleum refiner, Indian Oil Corp., used the local rupee to buy one million barrels of oil from the Abu Dhabi National Oil Company — not the U.S. dollar.
This monumental transaction follows the sale of 25kg of gold from a UAE gold exporter to a buyer in India for around 128.4 million rupees ($1.54 million), according to Reuters.
So, what could all this mean for the U.S. dollar on the world stage?
Trade talks
Last year, India’s central bank revealed a new framework for settling global trade in rupees — an idea that came into fruition last month, when India is the world’s third biggest oil importer and consumer signed two agreements with the UAE.
First, the two giants agreed to settle trade in their local currencies — in an effort to cut transaction costs and eliminate dollar conversions. They also agreed to set up a real-time payment link to simplify cross-border money transfers.
The agreements will enable “seamless cross-border transactions and payments, and foster greater economic cooperation,” the Reserve Bank of India explained in a recent statement.
De-dollarization trend
India and the UAE are by no means alone in trying to reduce their reliance on the dollar. Powerful nations across the world — particularly China and Russia — are keen to dethrone the dollar in response to aggressive U.S. sanctions and foreign policy plays.
This trend — deemed “de-dollarization” — has gained such sway that some are questioning whether the dollar’s days of dominance are over. But Treasury Secretary Janet Yellen said no currency currently exists that could displace the greenback.
Yellen’s reassurance follows a 8% decline in the dollar’s share of global reserves in 2022. In an effort to diversify, central banks worldwide have been starting to ditch their dollar reserves in favor of gold.
Tue, August 22, 2023
Members of the BRICS economic group of major emerging economies are meeting this week in South Africa for a summit that could determine the future of the bloc – and how hard it pushes back against a world order it sees as unfairly dominated by the West.
The group of Brazil, Russia, India, China and South Africa has never been more prominent on the world stage. But the BRICS themselves are complicated.
Russia’s leader can’t attend the summit because host country South Africa would be obliged to arrest him for alleged war crimes. Two other members, India and China, have a simmering border conflict. And while Beijing is locked in a rivalry with the United States, New Delhi has close ties with Washington.
It’s not the happiest of families. But nonetheless that family is now entertaining formal bids from nearly two dozen countries to join their bloc of major emerging economies.
Discussions around adding new members are expected to figure high on the agenda of the three-day summit beginning Tuesday, where BRICS leaders – with the exception of Russia’s Vladimir Putin – will gather in-person for the first time since the pandemic.
Putin, who has an International Criminal Court warrant out for his arrest linked to his brutal invasion of Ukraine, will attend virtually.
South African President Cyril Ramaphosa on Sunday threw his support behind BRICS expansion, saying a larger body would “represent a diverse group of nations” that share a “common desire to have a more balanced global order” in a “increasingly complex and fractured” world.
At stake in decisions around expanding is the direction and identity of the group, whose members aim for more say in an international system they see as favoring the West and Group of Seven (G7) nations, despite a shift in who dominates the global economy over recent decades.
The bloc risks becoming more pointedly geopolitical in its bid to rebalance global power, analysts say, especially as China and Russia seek to bring it on side against rising tensions with the West – something its expansion could facilitate.
Speaking at a news conference ahead of the summit last week, China’s envoy in South Africa said more and more countries hoped to join BRICS to “safeguard their legitimate interests.”
“In the face of some countries wielding the ‘big stick’ of unilateral sanctions and engaging in long-arm jurisdiction, the BRICS countries insist on equal dialogue and consultation,” Ambassador Chen Xiaodong said, using Beijing’s typical language to criticize what it sees as US policy.
The issue of expansion may be “the association’s first stress test in its near decade-and-a-half of existence,” according to Bhaso Ndzendze, an associate professor of politics and international relations at the University of Johannesburg.
Adding members “would expand the group’s global presence” and increase buy-in for its agenda to counter Western political dominance, he said.
But there are differences in opinion on whether to expand, and “certainly not all (members) would support entry by the same countries.”
Joining the club
Whether Putin, China’s Xi Jinping, India’s Narendra Modi, Brazil’s Luiz Inacio Lula da Silva, and their host, South Africa’s Cyril Ramaphosa, decide to add to their bloc – and how they choose those potential members – will have significant global implications, analysts say.
An expansion would only be the second in the history of the group, which focuses on economic development and increasing its members’ voice in global forums.
Built off a term originally coined by former Goldman Sachs economist Jim O’Neill to describe investment opportunities in key emerging markets, the group has persisted despite deep differences in political and economic systems between its members.
It held its first summit in 2009 with four members and then added South Africa the following year. The BRICS launched its New Development Bank in 2015.
Now, 22 countries have formally expressed an interest in joining the bloc, while that many have also made informal inquiries, South African ambassador to BRICS Anil Sooklal said last month.
Those who formally applied include Argentina, Mexico, Iran, Saudi Arabia, the United Arab Emirates, Egypt, Nigeria and Bangladesh, South African officials have said.
The countries have a range of reasons for applying, from interest in specific economic initiatives such as transitioning to local currencies to “challenging the US,” according to Mihaela Papa, a senior fellow in the Rising Power Alliances Project at Tufts University in the US.
“Then there are those who want easier access to China or other BRICS countries or more control during major power tensions and uncertainty,” she said, adding that for members, “deciding on expansion means deciding on the future direction of the group.”
New joiners with economic clout could catalyze the group’s ability to reshape or create alternatives to existing global institutions of power.
Choosing to include countries that are openly antagonistic toward the West, like Iran, could swing it further toward becoming an anti-Western bloc, experts say.
Adding new members is likely to have at least some positive knock-on effects for the group’s most powerful member, China, especially as Xi tries to position his country as a leader in overhauling a US-led system he sees as bent on constraining his country’s rise.
“The broader its members, the stronger they can claim a collective voice, and the more China as the largest economy will claim leadership and representation of the developing world,” said Yun Sun, director of the China Program at the Stimson Center think tank in Washington.
Countries’ wide interest in joining BRICS is also a boost for Putin – who remains welcome in the bloc despite being seen as a pariah and war criminal in the West. It also points to a widening gap between the priorities of those countries lining up for BRICS and the wealthy Western nations that have united against him in support of Ukraine, analysts say.
Bangalore-based analyst Manoj Kewalramani pointed to a view across the developing world. “There is a lot of frustration that Russia initiated the war, but there is (also) this acknowledgment that you need two hands to clap and there are things which NATO and the United States did” to spark or prolong the conflict, he said.
When it comes to these countries’ interest in seeing the war end, “they will see that isolating Russia doesn’t help them,” said Kewalramani, who heads Indo-Pacific studies at the Takshashila Institution research center.
Countries instead are looking at BRICS as a means to deal with challenges like climate change and limited access to capital and technology, and are deciding to move toward it as “the West seems to be closing in on itself,” he said.
Dividing lines
But even as Xi, Modi, Lula, Ramaphosa and a beamed-in Putin gather in Johannesburg for talks, divisions within the existing group of five may be a barrier to any breakthrough decisions on the issue.
Leaders are expected to review criteria for how to select new members – perhaps rather than name who gets to join the club.
The Russian leader’s virtual presence will be the most obvious indication of awkwardness within the group – whose members include those who have condemned Russia’s invasion of Ukraine at the United Nations, like Brazil, and those who have abstained – China, South Africa and India.
But Moscow’s influence in Africa was underscored as video emerged showing Yevgeny Prigozhin, head of the mercenary group Wagner who launched an abortive mutiny against the Kremlin’s military leadership in June, claiming to be in Africa and talking about making Russia greater on all continents.
When it comes to BRICS expansion, each of the countries have their own reasons to be circumspect about who to let in, since the issue was raised during South Africa’s last chairship in 2018 and then countries decided to explore it further after last year’s virtual summit hosted by China.
For India, which has a border dispute with China and finds itself increasingly drawn to the US over their shared concerns about an assertive Beijing, a strident, anti-US bloc would not be desirable, analysts say.
“India finds itself in a difficult spot, because the group’s identity is shifting, and it does not want that shift,” said Kewalramani, who noted that New Delhi is seen as having slowed the introduction of new members last year by calling first for the creation of criteria.
“But how long and to what extent and to what effect (India can guide the bloc in certain directions) … is not going to be easy, because China is the biggest actor and it’s aligned with Russia much more,” he said.
An expansion, instead of making the group more potent, could also make it “more unwieldy and ineffective” with more contrasting positions between members, he added.
Brazil and South Africa, too, could be open to potential expansion, but would be “more cautious in welcoming clearly anti-US countries” to the bloc, according to Rubens Duarte, coordinator of LABMUNDO, a Brazil-based research center for international relations.
Such a shift might not be what the group seeks, however, he said, and having more members could help bring more diversity of perspective into the discussion on global issues.
But if BRICS does decide to expand and then steps up its global role, this could push larger change that impacts the international influence of Europe and the US, he said.
“The more BRICS becomes active, the more other countries will lose power,” he said.
CNN’s Nectar Gan contributed reporting.
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