BRICS Nations

BRICS

• BRICS is an acronym for the grouping of the world’s leading emerging economies, namely Brazil, Russia, India, China, and South Africa.
• In 2001, the British Economist Jim O’Neill of Goldman Sachs Asset Management coined the term BRIC to describe the four emerging economies of Brazil, Russia, India, and China.

  

BRICS Summits

• The grouping was formalised during the first meeting of BRIC Foreign Ministers in St. Petersburg in 2006.
• South Africa was invited to join BRIC in 2010, after which the group adopted the acronym BRICS.
• The five BRICS countries are also members of G-20.
• It comprises 42% of the world's population, has 23% of the global GDP and around 17% of the world trade.
• The chairmanship of the forum is rotated annually among the members, in accordance with the acronym B-R-I-C-S. 
• Brazil is the current chair of the grouping.
• The BRICS Leaders’ Summit is convened annually.
• During the Sixth BRICS Summit in Fortaleza (2014) the leaders signed the Agreement establishing the New Development Bank (NDB). 
• They also signed the BRICS Contingent Reserve Arrangement.

List of BRICS Summits

Why in News

• The 11th BRICS Summit took place on November 2019 in Brasilia, Brazil.
• The theme of the 2019 BRICS summit is "Economic Growth for an Innovative Future.”
  • BRICS countries adopted the Brasilia Declaration.
  • Key focus: Cooperation on countering terrorism.

Brasilia Declaration

• It advocates and supports multilateralism, the central role of the U.N. in international affairs and respect for international law.
• Reforming Multilateral Systems: There is an urgent need to strengthen and reform the United Nations and other multilateral organisations, including the World Trade Organisation (WTO) and the International Monetary Fund (IMF), to address the significant challenges being faced by the developing countries.

Meetings on the side-lines of the Summit

• India at BRICS summit:
  • ‘Fit India Movement’
    • India called for communication and exchange between BRICS nations to increase in areas of fitness and health.
  • Disaster resilient infrastructure
    • India requested BRICS nations and New Development Bank to join coalition for disaster resilient infrastructure.
• India - Brazil
  • India invited the President of Brazil Jair Bolsonaro as the Chief Guest at the Republic Day 2020.
  • Brazil has decided to grant visa-free travel to Indian citizens.
• India - China
  • The Chinese President invited the Indian Prime Minister for the 3rd informal summit in China in 2020.
  • The first informal summit - Wuhan (China-2018) and second - Mamallapuram (India-2019).
  • Both the leaders reviewed preparations for celebrating the 70th anniversary of the establishment of diplomatic relations between the two countries in 2020.
• India - Russia
  • 1st Bilateral Regional Forum at the level of Russian Provinces and the Indian States will be held in 2020.
  • India has been invited for investment in the Arctic region. The US $ 25 billion target of bilateral trade by 2025 has already been achieved.
  • Russia invited Indian PM to visit Russia in May for the Victory Day celebrations.

Areas of Cooperation

1. Economic Cooperation

• • There are rapidly growing trade and investment flows between BRICS countries as well as economic cooperation activities across a range of sectors.
  • Agreements have been concluded in the areas of Economic and Trade Cooperation; Innovation Cooperation, Customs Cooperation; strategic cooperation between the BRICS Business Council, Contingent Reserve Agreement and the New Development Bank.

2. People-to-People exchange

• • BRICS members have recognised the need for strengthening People-to-People exchanges and to foster closer cooperation in the areas of culture, sport, education, film and youth.

3. Political and Security Cooperation

• • BRICS member political and security cooperation is aimed at achieving peace, security, development and cooperation for a more equitable and fairer world.
  • BRICS provides opportunities for sharing policy advice and exchanges of best practices in terms of domestic and regional challenges.

4. Cooperation Mechanism

• • Cooperation among members is achieved through:
  • Track I: Formal diplomatic engagement between the national governments.
  • Track II: Engagement through government-affiliated institutions, e.g. state-owned enterprises and business councils.
  • Track III: Civil society and People-to-People engagement.

New Development Bank & CRA

• NDB is headquartered in Shanghai.
• At the Fourth BRICS Summit in New Delhi (2012) the possibility of setting up a new Development Bank was considered to mobilize resources.
• During the Sixth BRICS Summit in Fortaleza (2014) the leaders signed the Agreement establishing the New Development Bank (NDB).
• NDB’s key areas of operation are clean energy, transport infrastructure, irrigation, sustainable urban development and economic cooperation among the member countries.
• The NDB functions on a consultative mechanism among the BRICS members with all the member countries possessing equal rights.
• Considering the increasing instances of global financial crisis, BRICS nations signed BRICS Contingent Reserve Arrangement (CRA) in 2014 as part of Fortaleza Declaration at Sixth BRICS summit.
• The BRICS CRA aims to provide short-term liquidity support to the members through currency swaps to help mitigating BOP crisis situation and further strengthen financial stability.
• The initial total committed resources of the CRA shall be one hundred billion dollars of the United States of America (USD 100 billion).

Economic crisis in BRICS

• Two of the largest economies in the grouping, China and India, are grappling with the issue of falling exports.
• In the middle of a raging trade war with the US, China has seen a rapid drop in exports.
• India is struggling similarly to propel merchandise exports.
• Moscow, too, witnessed a fall of 4.8 per cent in exports in the first nine months of the calendar year.
• Brazil is contemplating the release of a comprehensive economic package to revive the private sector.
• The IMF has cut South Africa’s 2019 economic growth forecast by 0.5 percentage points (from 1.2 per cent forecast in April to 0.7 per cent).

Challenges

• The marked dominance of big three Russia-China-India is challenge for the BRICS as it moves ahead.
• China’s efforts to co-opt nation states, which are integral to its Belt and Road Initiative (BRI), into a broader political arrangement has potential to cause conflict among BRICS members especially China and India.
• India has to maintain the balancing act between Russia-China on the one side and the US on the other.
• BRICS is still far from achieving its initial goals:
  • Reform of global financial governance, democratisation of the United Nations, and expansion of the Security Council.
• Unclear nature of the group: BRICS is a non-regional grouping.
• Anti-US stature:
  • Moscow saw the BRICS as a way of creating political leverage against the United States and the West.
  • Beijing saw it as an instrument to expand China’s own global economic influence.
• India’s play with the BRICS while deepening the strategic partnership with QUAD (Quadrilateral Security Dialogue consisting of USA, Japan, Australia and India).
• Politically, these countries are not all on the same page:
  • While India and Russia share historically close ties,
  • India-China relations experience swing like a pendulum.
  • Brazil is closer to the USA.
• Poor performance of NDB: It has not been able to lend for any mega project. Lack of transparency and good governance, coupled with the up-and-down relations among member States.

Way Forward

• BRICS nations need to recalibrate their approach and to recommit to their founding ethos.
• BRICS should consider a BRICS-led effort to meet their commitments under the Paris Agreement on climate change and the UN's sustainable development goals.
• NDB in partnership with other development finance institutions could be a potent vehicle to finance progress towards the sustainable development goals amongst the BRICS members.
• Idea of setting up a BRICS Credit Rating Agency (BCRA) as proposed by India, opposed to Western agencies like Standard & Poor’s, Moody’s etc can be on BRICS future agenda.

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