2021 marks the 20th anniversary of the coining of the BRICS acronym and 15 years since their cooperation. Have they delivered on the promise of development as imagined by emerging market optimists?
Two decades ago, the investment bank Goldman Sachs came up with an acronym that was supposed to represent the shifting economic balance of power – BRICs (Brazil, Russia, India and China) – that would come to dominate the global economy and usher in a new era of multilateralism and global governance.
These large markets had not yet realised their full potential and were soon-to-be hotbeds for international investment. Soon, BRICS became all the buzz on Wall Street and the city of London.
There was reason to be optimistic: collectively the bloc represented 45 percent of the world’s population, nearly a quarter of global GDP, their leaders began to hold regular meetings, they started a $100 billion development bank, and invited South Africa to complete the acronym in 2008.
But twenty years since, Lord Jim O’Neill, former Chairman of Chatham House who coined the abbreviation, believes they haven’t lived up to expectations – apart from China and to a lesser extent, India.
“One of the most remarkable things is the performance of China in the past 30 years. It is also true that by and large India has essentially achieved the broad growth path that we outlined, and that’s why today China and India are so much bigger parts of the world economy than they were 20 years ago,” O’Neill remarked in an online session hosted by think tank Center for China and Globalization last Thursday.
Even the Indian economic engine has drawn to a halt in recent years after a series of missteps by Prime Minister Narendra Modi, who came to power in 2014.
“The Modi government abolished the country’s most used bank notes in a ham-handed demonetisation scheme, which disproportionately impacted the poor. It also failed in promising to create 10 million jobs a year,” said Aravind Joshi, who specialises in South and Southeast Asia affairs at Washington DC-based think tank Global Risk Intelligence.
“Any hopes to create a $5 trillion economy will have to be put on hold, as the knock-on effects of the Covid-19 pandemic have seen millions fall back into poverty,” he told TRT World.
Instead of undertaking deeper structural economic reforms, real growth has stalled under Modi while misgovernance has increased, as the momentum of market reforms unleashed by Manmohan Singh 30 years ago have dissipated, Joshi added.
Meanwhile, Russia and Brazil had a good first ten years but a poor second half, having missed their growth targets over the last decade. Both countries’ global share of GDP is back to where it was 20 years ago.
The dilemma for both has been the commodities curse – a problem for emerging economies trying to break through the middle-income trap, argued London-based political risk analyst Mikhail Sebastian.
“Brazil and Russia have been too dependent on the world’s commodities for their development. Domestically, they’ve had problems as well. Corruption scandals have set Brazil back and sanctions have been detrimental on Moscow,” Sebastian told TRT World.
“Russia’s population is shrinking, and some of the few social gains in areas like education and healthcare from the USSR-period have faded. Brazil’s progress under the Lula period was commended for its inclusive economic efforts, but subsequent governments, particularly now under president Jair Bolsonaro, have mismanaged those economic gains,” said Sebastian.
For South Africa, after nine years under Jacob Zuma’s rule almost $30 billion was looted from the state. Even before his imprisonment, there was popular anger brewing in a country where unemployment now stands at over 34 percent and its share of global output shrunk over the last two decades.
In another critical retrospective, O’Neill pointed out the bloc’s low trade integration, unequal growth, little assertiveness in the face of the international order, a lack of coordination concerning priority issues, and a missed opportunity to form strategic cooperation agreements.
“When is that influence going to show up?” he asked.
An alternative within the status quo
The BRIC foreign ministers first met in September 2006, and their first major summit took place in June 2009 during the dark days of the credit crisis. It explains why reforms of the global financial system were foremost in the bloc’s policy discussions, alongside multi-polar regionalism, combating climate change, and technological cooperation.
The ambition was to use their combined weight as a counterbalance to Western primacy and as a forum to raise issues that otherwise received no recognition. “It was a political platform as much as it was an economic one,” noted Sebastian.
But this level of assertion was eventually constrained by the leadership of the BRICS states and their hesitation to fundamentally challenge the prevailing economic status quo, argued economic researcher Dr Laura Brakenburg at SOAS, University of London.
“They prefer to operate by building trade relations among themselves and with the NBD to forge a development program for the Global South that revolves around their own growth agendas,” Brankeburg told TRT World. “In doing so, there has been no real challenge to Northern institutional hegemony nor neoliberal policy frameworks.”
This approach explains why academic and author Vijay Prashad once called BRICS a “conservative attempt by the Southern powerhouses to earn themselves what they see as their rightful place on the world stage.”
To understand the reasons behind those limitations, it is helpful to recall the historical trajectory of BRICS.
The assemblage’s ideological roots can be traced to the defeat of what was called the Third World Project, which historically expressed itself in 1955 when leaders of newly emerging nations came together in 1955 in Bandung, Indonesia, to advance their struggles in the international arena.
Grounded in ideas of economic independence and political non-alignment during the Cold War, a variety of institutional bases and multilateral platforms were built – notably the UN Conference on Trade and Development (UNCTAD) and UNESCO – where new nations of the formerly colonised world were able to assert their own ideological and policy views. An agenda to tackle colonial legacies and its resultant inequalities, most importantly through economic transformation, was central during the 1950s and 1960s.
By the 1980s, the project’s inherent contradictions coupled with the rise of neoliberalism would result in its collapse. The debt crises of the decade opened the door to the IMF’s structural adjustment programs that denied many nations the ability to control their own economic destiny.
With it came a new architecture for production and trade – globalisation – in which China became a key site for offshoring and the subsequent deindustrialisation of Western economies throughout the 1990s.
Ideas around South-South cooperation by the turn of the century were fundamentally non-confrontational. Rather, the assessment was that unfair practices embedded in Western-led global institutions around issues like subsidies, trade rules, finance and technology transfers impeded the Global South’s ability to develop.
When Goldman Sachs identified BRICs in the early 2000s, it was primarily viewed through the lens of rescuing a financially wobbly and industrially anemic West. The investment bank tabbed the grouping to become the main “engine of new demand growth and spending power,” which could “offset the impact of graying populations and slower growth in the advanced industrial economies.”
And so according to Prashad, while there is a partial connection between the “Spirit of Bandung” and the BRICS, the latter is a project that has shunned the pursuit of systemic change.
“Economic growth in these countries has come at the expense of ordinary working people and the environment, and the BRICS elites are not seeking to overturn the existing system of global governance, but merely to join it,” Prashad claimed.
Searching for a purpose?
Apart from dwindling intra-bloc trade as O’Neill pointed out, there have also been serious divergences concerning sensitive geopolitical issues in recent years, from Russia’s annexation of Crimea, Bolsonaro’s hostility toward Beijing, to an escalating border row between China and India.
And despite collaborative efforts that have been put into the formation of multilateral mechanisms like the New Development Bank (NBD) and the Contingent Reserve Agreement (CRA), the bloc has “balked at taking pragmatic steps in policy cooperation towards shared goals of not only advancing trade linkages but also tackling common challenges in global governance,” O’Neill explained.
Nevertheless, Joshi defends the BRICS as an informal club for managing tensions among its members and promoting cooperation through what he cites as “flexible multilateralism” in the vein of what academics Andrew Cooper and Asif Farooq have argued.
“BRICS is less a formal institution or alliance. It’s more a dynamic phenomenon that is constantly evolving according to each members’ strategies and initiatives,” he clarified.
Joshi further noted how during the pandemic, China and India were both at the forefront of vaccine development and personal protective equipment in Brazil and South Africa. At the BRICS 13th annual summit this September, Bolsonaro highlighted the importance of Chinese and Indian involvement in its national immunisation programme.
Accessing the BRICS trajectory as a heterogenous initiative than a pure trading alliance as O’Neill does, then gets to the core of what the quintet intends to achieve.
Both Joshi and Sebastian believe that moving forward as US hegemony erodes, the bloc will need to steer clear of political differences to become more unified so it can exert an active role in advancing a global development agenda.