The acronym began as a somewhat optimistic term to describe what were the world’s fastest-growing economies at the time. But now the BRICS nations—Brazil, Russia, India, China, and South Africa—are setting themselves up as an alternative to existing international financial and political forums.
“The founding myth of the emerging economies has faded,” Günther Maihold, deputy director of the German Institute for International and Security Affairs, or SWP, confirmed. “The BRICS countries are experiencing their geopolitical moment.”
Brazil, Russia, India, China and South Africa are trying to position themselves as representatives of the Global South, providing “an alternative model to the G7”. The G7 is an “informal forum” of heads of state of the world’s most advanced economies, founded in 1975. Germany, France, the United Kingdom, Italy, Japan, Canada, and the US are members, as is the EU.
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The acronym BRIC, which initially stood for Brazil, Russia, India and China, was coined by Jim O’Neill in 2001, when he was chief economist of the multinational investment bank, Goldman Sachs. At the time, the four countries had sustained rates of high economic growth and the BRICS label stood for economic optimism about the future of those nations. Opponents of the label said the countries were too diverse to be grouped together like this and that it was really just a Goldman Sachs marketing ploy.
But what may have started as a marketing ploy to encourage investors, has grown into a platform for intergovernmental cooperation similar to the G7. In 2009, the four nations met for their first summit in Russia’s Yekaterinburg. In 2010, South Africa was invited to join the group, adding the “S” to BRICS.
Challenging the World Bank model
In 2014, with $50 billion (around €46 billion) in seed money, the BRICS nations launched the New Development Bank as an alternative to the World Bank and the International Monetary Fund. In addition, they created a liquidity mechanism called the Contingent Reserve Arrangement to support members struggling with payments.
These offers were not only attractive to the BRICS nations themselves, but also to many other developing and emerging economies that had had painful experiences with the IMF’s structural adjustment programs and austerity measures. This is why many countries said they might be interested in joining the BRICS group.
The BRICS bank is open to new members. In 2021, Egypt, the United Arab Emirates, Uruguay and Bangladesh took up shares. However, these were much lower than the respective $10 billion investments made by the bank’s founding members.
Set to expand
South African Foreign Minister Naledi Pandor said worldwide interest in the BRICS group was “huge.” In early March, she told television interviewers that she had 12 letters from interested countries on her desk.
“Saudi Arabia is one,” she said. “United Arab Emirates, Egypt, Algeria, and Argentina,” as well as Mexico and Nigeria. “Once we’ve shaped the criteria [for lending], we will then make the decision,” she said, noting that the topic would be placed on the agenda for the upcoming August summit in South Africa.
The most recent economic developments in BRICS member states have little to do with the initial myths upon which the group was founded. Of the five members, only China has achieved sustained and extensive growth since then.
As China’s gross domestic product grew from $6 trillion in 2010 to nearly $18 trillion in 2021, the economies in Brazil, South Africa, and Russia have stagnated. India’s GDP grew from $1.7 trillion to $3.1 trillion but was outpaced by China’s growth.
No sanctions against Russia
Since the start of the Russian war in Ukraine, the BRICS countries have only distanced themselves further from the so-called West. Neither India, Brazil, South Africa nor China is taking part in sanctions against Russia. This is increasingly clear with near-historic levels of trade between India and Russia, or in Brazil’s dependence on Russian fertilizer.
“Diplomatically, the war in Ukraine appears to have drawn a stark dividing line between an eastern-backed Russia and the West,” political scientist Matthew Bishop from the University of Sheffield wrote for the Economics Observatory late last year. “Consequently, some European and US policymakers worry that the BRICS may become less an economic club of rising powers seeking to influence global growth and development, and more a political one defined by their authoritarian nationalism.”
The SWP’s Maihold agrees. He says the BRICS alliance is not so much a counter to the West but more a forum for increased sovereign and autonomous thought. In a bipolar world, he believes South Africa, India and Brazil were simply “vying for better terms.”
China, on the other hand, was using the platform for its global political ambitions, Maihold added, pointing to its offers to mediate the war in Ukraine and the joint military exercises it held with Russia in South Africa.
Maihold believes that the West has noticed this change in tack and is trying to counteract it. “They are looking very closely,” he said. “At the G7 summit in Germany in 2022, they made a point of inviting South Africa and India, in order to prevent the optics that the G7 was standing against BRICS.”