Uneasy within, BRICS sets out to erect alternative economic order

Set to expand with Iran and Argentina as new members, the BRICS grouping, seemingly powerful on the surface, is riddled with inherent internal contradictions that can stymie the primary task, writes Sanjib Kr Baruah.

New Delhi: Thirteen years after the platform for emerging economies took shape with Brazil, Russia, India, and China as founder members and soon joined by South Africa, BRICS is now gearing up for a much bigger role in the global arena which has the potential to unleash forces that can stand up to the overwhelming dominance of the US dollar.

The grouping is now set to expand with Iran and Argentina applying for membership during the 14th BRICS Summit hosted virtually by China last week. While the possibility is strong that the grouping—with its presence in Asia, Europe, Africa, and South America—may further extend its growing footprint to West Asia and south Latin America, the combined strength of the members will make it a key force to reckon with for the established US-led world order.

The very close ties between Iran and Venezuela may also herald the entry of Caracas into the grouping—based on ideas of securing the energy trade. But what imperils the unity and integrity of the grouping, among other things, are key contradictions inherent among the founder members, the reconciliation of which appears difficult at the moment.

The relationship between Asian giants India and China—with more than 100, 000 soldiers and military equipment in ongoing deployment against each other across a blurry border and an abiding air of mistrust—certainly don’t bode well for the prospect of such a grouping.

With the legacy of war in 1962 and incidents of violence at the border as recent as in 2020, 15 rounds of senior commander-level military talks and diplomatic negotiations have failed to achieve a breakthrough till now.

The traditional warm ties between India and Iran had also nosedived in the recent past with India’s proximity to the US’ Donald Trump administration. It had resulted in Iran shedding its traditional pro-India stance and taking to vehemently criticizing India on the festering Kashmir issue.

Although ideologically close, the ties between China and Russia have often been viewed as a marriage of convenience that is tied by a common antagonism of the US and its allies. But there is no denying the grouping’s potential.

Population Dividend

India with 17.7% of the world’s population, China with 18.47%, Brazil with 2.73%, Russia with 1.87%, South Africa with 0.87%, and together with the populations of likely members Argentina 0.58%, and Iran with 1.08% would add up to 43.3 % of humanity. For perspective, the European Union (EU) represents only about 9.8% of humanity while the 30-member NATO alliance represents about 12.22% of the world's population.

Economic Might

The combined projected GDP for 2021 calculated from figures given by the International Monetary Fund World Economic Outlook for October – 2021 works out to 26.43%. The GDP list is led by China with 17.8% share of the world GDP, followed by India with 3.1% share, Brazil with 1.73%, Russia with 1.74%, South Africa with 0.44%, Argentina with 0.48%, and Iran with 1.14%.

On the other hand, the share of the EU as a share in the global GDP based on purchasing-power-parity totaled an estimated 15.4%. In 2020, the share of G-7 countries in the global GDP amounted to 31% while G-20 accounted for 42% of the global GDP.

Military Heft

According to the 2020 military strength of nations calculated by the ‘Global Firepower’ which ranks the US as the world’s mightiest power, Russia is in the second position, China in third, and India in fourth. Brazil is ranked at number 10th, South Africa at 29th, Iran at 14th place, and Argentina at 43rd.

So, four of the BRICS nations figure in the top-ten list of most powerful militaries.

Iran’s ‘Yuan Pool’

On Friday (June 24), speaking at the BRICS Business Forum virtual summit, Iran’s President Ebrahim Raeisi minced no words when he said his country can help connect the BRICS group of nations to energy chokepoints and major markets around the globe given Iran’s unique geopolitical and geo-economic position.

Underlining new crises such as the coronavirus pandemic, climate change, and regional and international conflicts, he said: “We are ready to share all our capabilities and potentials, including short and cheap transportation and transit networks, the exceptional asset of trained manpower as well as significant scientific achievements to (help) BRICS realize its goals.”

Accusing the West of “abusing sanctions” to maintain its “hegemony”, Chinese President Xi Jinping said the Ukraine crisis is a wake-up call for the whole world while Russian President Vladimir Putin said at the meeting that the growing cooperation in BRICS would enable the sanctions to be bypassed. Under US sanctions since 1979, Iran has experience in skirting around US-imposed sanctions.

With China, Iran has a Yuan-centric dealing. Iran sells oil to China in Yuan which is deposited in a China bank creating a ‘Yuan-pool’. The deposited Yuan is used to pay for Chinese imports to Iran. Interestingly, on April 9, at a BRICS ministerial meeting, Russian finance minister Anton Siluanov had called for an integration of the payment systems of the BRICS countries while using their national currencies for trade.

Siluanov had said: “This pushes us to the need to speed up work in the following areas: the use of national currencies for export-import operations, the integration of payment systems and cards, our own financial messaging system, and the creation of an independent BRICS rating agency.”