By JIANG SHIXUE*
While the creation of a BRICS currency of its own is unlikely, it is realistic that the bloc will establish a payment system based on its currencies.
Jim O’Neill, then chairman of Goldman Sachs Asset Management, probably did not foresee that his acronym BRICs (Brazil, Russia, India and China), introduced in his paper “Building a Better Global Economic BRICs,” published on November 30, 2001, would inspire these four emerging economies to form an organization. The group’s first summit was held in Yekaterinburg, Russia, in June 2009. In 2011, South Africa was admitted, changing the group’s name from BRICs to BRICS. Earlier this year, five more countries—Saudi Arabia, Egypt, the United Arab Emirates, Iran and Ethiopia—also joined, though the bloc’s name remained unchanged.
The 14th BRICS summit, scheduled to take place in Kazan, Russia, from October 22 to 24 this year, may address the direction the bloc should take after this important expansion. The outcome of the summit, however, is still uncertain. From an academic perspective, there are some relevant issues that deserve attention:
First, how will BRICS promote economic cooperation? The group’s cooperation has been organized on three fronts: political, economic and cultural. With the expansion of membership, how will BRICS advance in a balanced manner in these three areas? Political cooperation, for example, can be facilitated by issuing joint statements, which define overall positions and objectives. In the cultural area, it is relatively simple to organize events, such as sports competitions or film productions.
However, economic cooperation is proving more complex. So far, with the exception of the New Development Bank, created in 2014, progress in trade, investment and other economic areas has been limited. Without robust economic cooperation, many see BRICS as nothing more than a forum for debate.
The creation of a free trade area among BRICS members is unfeasible for two reasons. First, India and other members do not demonstrate the necessary political or economic will. Second, Brazil, as the largest member of the Southern Common Market (MERCOSUR), is prohibited from entering into free trade agreements on its own. Furthermore, with the inclusion of new members, reaching consensus on economic issues becomes more difficult. Without concrete economic cooperation, BRICS could resemble the G7, but speaking on behalf of the developing world.
Second, can BRICS be institutionalized? Unlike APEC or the Shanghai Cooperation Organization, BRICS does not have a permanent secretariat. Each year, the country that assumes the rotating presidency is responsible for organizing the summit and conducting administrative tasks. However, this virtual secretariat model does not have the authority to ensure the implementation of decisions.
The main arguments against a permanent secretariat are the fear of increased bureaucracy and loss of flexibility, which could lead to inefficiencies. However, these fears are not entirely justified. A professional secretariat, if well managed, would not necessarily create these problems. With the increase in membership, the institutionalization of BRICS has become more urgent and could indeed reduce the risk of the group becoming just a forum for debate.
Third, can the BRICS move towards de-dollarization? The negative impact of the dollar’s hegemony on the global economy is widely recognized, and in recent years it has been used as a pressure tool. For this reason, the BRICS and other countries have sought alternatives to dependence on the dollar. The question is how this de-dollarization can be made possible.
Before the recent expansion, BRICS already represented a growing influence of emerging economies. China, for example, has made notable progress in the internationalization of the yuan (RMB). However, it is still premature to say that de-dollarization is close to being achieved.
While the creation of a BRICS currency is unlikely, it is realistic that the bloc will establish a payment system based on its currencies. However, even this will require political courage and the overcoming of several technical challenges.
Fourth, should BRICS prioritize specific areas of cooperation? The group’s joint statements cover a wide range of issues, from creating a new world order to fostering technological innovation, to addressing economic and environmental challenges. However, BRICS cannot achieve all of these goals simultaneously. It is more effective to focus on priority areas of common interest. In the short and medium term, BRICS could focus its cooperation on promoting world peace and improving global governance, particularly in the areas of trade and finance.
Fifth, can BRICS speak with one voice? Even before the expansion, the grouping struggled to reach consensus on important issues. With ten members, this is likely to become even more challenging, making dialogue and consultation all the more necessary.
One example of this is the stance of India, which despite its membership in BRICS is also a member of the QUAD, an alliance that includes Australia, Japan and the United States, and which in many ways opposes China and, by extension, BRICS. This raises questions about how India can reconcile these seemingly opposing alliances. Given this situation, it is not surprising that BRICS has difficulty speaking with one voice.
Finally, how can academics contribute to BRICS cooperation? Academic research is crucial to the group’s progress, as leaders need actionable ideas from think tanks. Expert Oliver Stuenkel noted that so far, the many BRICS Academic Forums have not generated any great ideas. While this may seem like a pessimistic assessment, it is clear that think tanks More innovative and creative approaches could foster more effective cooperation. Academics who are knowledgeable about the member countries are better able to offer valuable suggestions, making the exchange of ideas between them essential to the success of BRICS.
*Jiang Shixue is a professor of international relations at Sichuan University of International Studies (China).
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