The BRICS!!
The spotlights returned towards the BRICS group recently, which is a group that includes five giant countries.
The BRICS, and since its formation was supposed to take a vital role in the international scene in political, and economical sector.
The BRICS considered to be the strongest competitor to the G7 group and major international monetary institutions, such as the International Monetary Fund and the World Bank.
What is the BRICS group?
The BRICS is a bloc that includes as its name initials suggests the names of the countries, Brazil, Russia, India, China and South Africa, was founded in 2006 in the Russian city of Yekaterinburg after a summit held.
The idea of its formation came by the then and the current Brazilian president, Luiz Inácio Lula da Silva.
The name of the group changed from “BRIC” to “BRICS” in 2011 after South Africa joined in.
BRICS objective was to strengthen economic relations among its members using local currencies, thus reducing dependence on the US dollar.
The area of the BRICS countries includes a quarter of the land area, and its population is about 40% of the Earth’s population, and it is expected that the economies of these countries will compete with the current richest economy in the world by 2050, according to the global banking group Goldman Sachs that invented this term in 2001.
The story of the BRICS began in 2001, when Jim O’Neill – chief economist at Goldman Sachs – coined the term “BRIC” to describe emerging markets in Brazil, Russia, India and China, and this wasn’t just a designation, but this group of countries was considered strong economic factors and competition to major western countries.
From 2000 to 2008, the share of these four countries in global output rose rapidly from 16% to 22%.
Its economic performance was better than average during the subsequent global recession.
In September 2006, a meeting of foreign ministers of these four BRIC countries was held in New York, which started a series of high-level meetings.
On May 16, 2008, a large-scale diplomatic meeting was held in the Russian city of Ekaterinburg, which emphasized the role of this powerful group in the global economy.
Since the establishment of the BRICS, there were no discussions regarding the expansion of membership, until the year 2020, after this date, proposals and discussion began between senior diplomats and leaders in the institution about expanding the group and adding new members, and there were countries that had expressed their desire to join the BRICS group, including Algeria Argentina, Bahrain, Bangladesh, Belarus, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Saudi Arabia, Sudan, Syria, Tunisia, Türkiye, the United Arab Emirates, Venezuela and Zimbabwe, and in 2023 Russia announced its support for Algeria’s joining the group.
Since 2009, the five countries have been meeting annually in continuous meetings in the member states, as these countries take turns hosting the meetings.
Before South Africa’s joining the group, summits were held in 2009 and 2010, while the first “BRICS” summit was held after South Africa’s accession in 2011.
South Africa hosted the tenth summit of the Group of Five countries in 2018 in Johannesburg.
The eleventh BRICS Summit was held in the Brazilian capital, Brasilia, on November 14, 2019, during which developments in the fields of science and innovation in the BRICS countries were discussed, in addition to focusing on technology development and digital currency.
The 12th BRICS Summit was held on November 17, 2020 in St. Petersburg, Russia, in cooperation with the Shanghai Cooperation Organization via visual analogue technology, in light of the outbreak of the Covid pandemic.
During the summit, the focus was on developing trade and cooperation in the economic and technological fields between the BRICS countries.
The 13th BRICS conference was held on September 9, 2021, with visual symmetry technology, in New Delhi, India, while the fourteenth conference was held in Beijing, China, on June 23, 2022.
The BRICS aims to achieve comprehensive and sustainable economic growth by combating poverty, promoting economic and social integration, and improving the quality of growth.
The members of the group seek to promote innovative economic development based on advanced technology and skills development.
They are also working to increase participation and cooperation with non-member countries.
The group’s goals include promoting security and peace to achieve political and economic stability, in addition to reforming international financial institutions to better represent emerging and developing economies.
The group seeks to enhance international trade and investment environment and maintain the stability of multilateral trading systems in cooperation with the international community.
The Russian President Vladimir Putin directed the course of foreign trade and oil exports towards it and other emerging markets, in response to Western sanctions imposed on Russia, in an attempt to mitigate and circumvent their consequences.
The BRICS financial structure includes a number of important financial and economic components, among them the New Development Bank (NDB), also known as the BRICS Development Bank, as well as the contingent reserve arrangements (CRA).
Two agreements on these two components were signed in 2014 and activated in 2015.
In July 2014, it was agreed at the BRICS summit in Shanghai to establish the New Development Bank and a new monetary reserve fund of 50 and $100 billion respectively, and the bank’s headquarters will be located in Shanghai.
Two treaties were signed in 2014 to activate the New Development Bank and cash reserve arrangements, and they were put into effect at the beginning of 2018.
It should be noted that the BRICS voting percentage in the International Monetary Fund doesn’t exceed 11%.
A framework to provide protection against global liquidity pressures called the BRICS Contingent Reserve Arrangements, known as “BRICS CRA”, was created to help member countries address the fluctuations in global financial markets that adversely affect their national currencies.
This framework is a competing alternative to the IMF, and these frameworks were established in 2015 after the signing of the Treaty Establishing the Reserve Arrangement in Fortaleza, Brazil, in July 2014, and came into force after ratification by all BRICS countries at the seventh BRICS summit in July 2015.
The framework also includes the New Development Bank, which aims to increase economic cooperation between emerging countries.
At the BRICS summit held in Russia in 2015, an alternative to the SWIFT system was discussed in the payment system, and consultations were held among the ministers of the Union countries to develop a multilateral and multinational payment system, with the aim of giving the BRICS countries more independence and guarantees. Russian Deputy Foreign Minister Sergei Ryabkov said that BRICS finance ministers and executives are in talks to develop payment and settlement systems in national currencies.
The Russian Central Bank has initiated consultations with BRICS countries to develop an alternative payment system to SWIFT, and the main benefits of developing a multilateral and multinational payment system, such as the possibility of backup and redundancy in the event of a SWIFT system failure, have been emphasized.
China has also developed the cross-border payments system between banks known as “CIPS” as an alternative to the SWIFT, and this system aims to provide a secure and unified network for sending and receiving information about financial transactions.
There are indications at the present time that the BRICS may surpass the G7 group in economic importance, as the BRICS achieved better economic figures than the G7, and the BRICS contribution to the global economy reached 31.5% compared to 30.7% for the seven industrial powers.
As the Western countries are working to strengthen their control over the global economy, the BRICS emerged as a possible alternative to those policies.
It’s considered an important partner in global trade and represents a hope for the countries of the world to achieve economic balance and limit Western hegemony.
The BRICS is expected to continue, especially with its’ two Giants China and India.
The idea of BRICS+ which was a plan circulated during the Xiamen Summit in 2017, which aims to add new countries to the group of five countries that founded BRICS, as of 2011.
This plan included the possibility of countries welcoming new countries to permanently join or participate in the dialogue, as many countries have expressed their desire to join the group, such as Afghanistan, Argentina, Indonesia, Mexico, and Türkiye, Egypt, Iran, Nigeria, Sudan and Syria, as well as more recently Bangladesh and Greece, have also expressed interest in joining BRICS.
Some countries are often invited to participate in the summit and dialogue with the leaders of the five countries on the sidelines of the summit.
The BRICS seeks to strengthen its role in the global economy, and to achieve financial and economic independence from the US dollar, therefore, a study of the possibility for introducing a new unified currency to be used in commercial exchanges between the group members countries.
After the Ukrainian war, the insistence on introducing a new unified currency for the BRICS increased, to be used in foreign trade, including oil and grain.
BRICS aims to reduce the impact of the US dollar on global trade, as Brazil and China signed an agreement at the end of last March to abandon the use of the dollar in their bilateral transactions, which would reduce investment costs and strengthen economic relations between them.
