BRICS COUNTRIES REUNITED IN RUSSIA: WHO THEY ARE AND WHAT THEY WANT. THEY HAVE A THIRD OF THE WORLD'S GDP AND 40% OF THE OIL. "NEW WORLD ORDER": THIS IS HOW THEY CHALLENGE THE WEST.

by Mauro Del Corno | October 24, 2024 | Il Fatto Quotidiano

What are the BRICS countries and what can or cannot they become? As the prime ministers of the member states gather in Kazan, Russia, this is the crucial question that many observers are asking. A few days ago, Vladimir Putin spoke of the beginning of an “unstoppable path towards a new world order.” Yet, there are many doubts about whether a group of countries with interests that are in many ways divergent can really stand as a counterpower to the Western bloc led by the United States.

Certainly, in recent times, the BRICS have shown great dynamism, fueled above all by China and Russia. The original 5 members (Brazil, Russia, India, China and South Africa) have been joined by four more (Egypt, Ethiopia, Iran, United Arab Emirates) and about forty countries have expressed interest in future membership. Among them are also demographic heavyweights such as Indonesia and Malaysia. And oil-rich states such as Saudi Arabia, Venezuela and Algeria.

When the group was born, 15 years ago, many Western analysts predicted a rapid failure (this is often a good omen for success). The group is still there and from an economic-commercial alliance it is now beginning to acquire a political role. Almost half of the global population lives in the BRICS countries, compared to 10% in the G7 countries. They represent about 35% of global GDP (more than 30% of the G7) and, perhaps above all, they already control 42% of global oil production. In addition to holding large shares in the global markets of aluminum, steel, copper and lithium.

The BRICS account for 40% of the world’s wheat, sugar, and coffee, and a third of its corn. Per capita wealth in the West remains (much) higher, we have the most advanced defense technologies here, and the United States is still a global leader in digital technologies. But while the G7 countries are getting smaller (in population and, to some extent, in economies), the BRICS are getting bigger, and the technology gap is closing.

“The rise of economic powers such as China, India and the BRICS as a whole, whose contribution to global GDP now exceeds that of the G7, indicates an irreversible change. This historical process is moving in a different direction, and the West will have to take note of this. There are no leaders or followers in BRICS, and no bureaucratic apparatus like the one we see in Brussels,” said Russian Foreign Minister Sergei Lavrov.

However, it is undeniable that there are significant differences of opinion among the member countries. On one side there are China and, indeed, Russia who want to make BRICS a tool to challenge Western domination, on the other there are India and Brazil who aim to have more weight in the existing system but not to subvert it. It should be noted that India is also part of Quad, the quadrilateral also composed of the USA, Japan and Australia and which has the objective of monitoring and containing Chinese expansion.

“The BRICS are not an organization, they do not have the structures. I define them as a diplomatic alignment, a group of countries that adopt a model of pragmatic cooperation,” Giovanni Barbieri, research collaborator at Cranec of the Catholic University of Milan and member of the BRICS working group of Eurispes, tells IlFatto.it . “The original nucleus was born in 2009 as a response to the crisis, to ask for a reform of global financial governance. Let us remember that traditionally the leadership of the International Monetary Fund is entrusted to a European, that of the World Bank to a North American.” The others are cut out, continues Barbieri, who adds “this reform of financial governance is the only thing that at the moment really unites all the original members, who in other respects have divergent interests.”

The reform of the international financial architecture “is urgent,” reiterated Chinese President Xi Jinping from Kazan, urging “the deepening of financial and economic cooperation” and the “promotion of financial infrastructure connectivity.”

“It is important to note how in this complex geopolitical phase, the BRICS are interpreters and spokespeople of a request for change that comes from many countries of the Global South. Not against the West but as a need for greater balance and representativeness among the countries of the world, preserving structures that already exist, such as the United Nations,” says Giulia Formici, researcher at the University of Parma and member of the BRICS Parma Research Group.

“It is forced to look at the BRICS both as a sort of counterpower and as an irrelevant structure. In both cases, we are paying for the limitations of a Western vision that does not fully grasp the characteristics of this group of countries,” adds the researcher. “In the past, they have overcome moments of strong friction between members and cooperation has managed to evolve and expand thanks to the flexibility and destructuring nature of the alliance. The potentially divisive case of Ukraine is also an example of this.”

Certainly the war in Ukraine has pushed Moscow to give more weight to the alliance. But, as Barbieri observes, "they are very skilled at not committing themselves. On Ukraine they voted for the resolution condemning the invasion as a violation of international law but then abstained on other resolutions, underlining how Moscow's action was also motivated by the behavior of Western alliances". As for the Israeli-Palestinian issue, it should be remembered that China had managed to facilitate the re-establishment of diplomatic relations between Iran and Saudi Arabia, which now find themselves, if not opposed as Shiites and Sunnis, at least on two different levels in the approach to be taken in this crisis.

In common among the BRICS countries, many former colonies, there seems to be the will not to be part of the West and not to have to submit to its diktats. In this, the war in Ukraine and the frequent use of sanctions by the US have pushed the target countries, or potentially so, to get closer to each other. Just look at what is happening between Russia and Iran, historically anything but similar but who have become very close again.

“I believe that the way in which the BRICS will evolve depends more on us than on them. Will Western countries agree to democratize and 'open up' world governance or will they choose to defend the status quo, perhaps by arming themselves to the teeth?” asks Barbieri. To date, the first case is not in the air and, therefore, it is likely that the cohesion between the BRICS countries will strengthen in a defensive key in the context of the worsening of relations with the Western bloc (the growing cross-use of tariffs and sanctions goes in this direction). “And the fundamental inconsistency with which in many cases the industrialized countries have 'stretched' international law and its principles has not helped,” he adds.

The stone guest of this discussion is the dollar, the reference currency for global trade but also one of the tools with which the US exercises its global dominance. The US currency is used in about half of world trade and shows no signs of decline. For the economic and military strength it has behind it but also for the absence of a credible alternative. Beijing is convinced that the US uses the dollar and the various institutions it leads as weapons and would like to equip itself with similar tools, while waiting for the yuan to gain weight (and credibility).

One of the most significant achievements of the BRICS was the creation of the New Development Bank, operational since 2015. It is a financial entity alternative to the IMF and the World Bank that has so far financed investments in infrastructure in developing countries for 33 billion dollars. The countries have also agreed to create a foreign currency reserve for a value of 100 billion dollars, which can be drawn on in times of financial emergency. Finally, some member countries have created alternative payment networks to Swift, the US-based global network. This has, among other things, allowed Moscow to mitigate the impact of Western sanctions. However, the NDB does not have the same strength as the IMF and, at the moment, even in the BRICS leaders' statements there is no programmatic intent to make it a real alternative to it.

The measures against Iran first and then Russia, in addition to the freezing of Russian assets deposited in Europe, have put many countries on edge. From China to Saudi Arabia, many nations fear they could face the same measures if they were to do something unpleasant to the United States and its obedient allies. The search for alternatives, other currencies, has become a priority. India has started to buy Russian oil not paying in dollars. China and Saudi Arabia are discussing the possibility of regulating their trade in yuan.

The dollar's dominance, let's repeat, is solid. But there are many factors that are gnawing away at its prerogatives and positions. The efforts of the BRICS are one of them. It is interesting what economist and former CEO of Pimco, Mohamed A. El-Erian, recently wrote in the Financial Times about the recent records of gold. The rise in prices has also been favored by purchases by central banks because, El Erian writes, "there is also interest in exploring possible alternatives to the dollar-based payments system that has been at the center of the international architecture for about 80 years. If you ask why this is happening, you will usually get an answer that mentions a general loss of confidence in the United States' management of the global order and two specific developments. You will hear about America's use of trade tariffs and investment sanctions as tools, along with its reduced interest in the cooperative, rules-based multilateral system that it played a key role in designing 80 years ago."

Then, the economist continues, “there is the aspect linked to the conflict in the Middle East, where the US is seen by many as an inconsistent supporter of both basic human rights and the application of international law. This perception has been amplified by the way Washington has protected its main ally from a response to actions widely condemned in the international community”. Trust is the basis of the strength of any currency, losing it can be very dangerous.