BRICS is built on economic grievance, not geopolitics

As the BRICS summit comes to a close in Delhi, the big question on an observer’s mind continues to be this: what is BRICS’s identity all about? Some say it is just a coalition of like-minded “Global South” countries, while others contend that it is an upending alternative to the dominance of the West. Such competing views have produced very different expectations of what BRICS is, and what it can become.

Fundamentally, none of these approaches to BRICS helps to understand its true nature. If it truly were all like-minded partners, the divergent stances on whether the group is anti-West, per China, Russia, and now Iran, or “non-West”, per India, Brazil, and South Africa, would not have been so evident. If it truly wanted to upend Western dominance, it would not have continued to conduct its business in dollars, or even have most of its member states (including China) proudly display great proximity to many Western countries and their leaders.

A grouping built on grievance 

When BRICS started out, its five members contributed 20% of global GDP, but their share at the International Monetary Fund (IMF) was 11%. Today, the expanded grouping accounts for nearly 40% of global GDP and nearly half the world’s population, yet its IMF voting share stands at only about 17%. That is barely enough, if all members voted as one, to block decisions requiring an 85% majority, and nowhere near enough to shape them.

This rather specific context, more than anything else today, should be the yardstick against which BRICS’s failures and achievements are measured. The grouping’s founding is based on grievance as its organising principle, and a recognition that a reform of the global financial system is overdue.

BRICS can push for voting shares at the IMF and World Bank to be realigned with the collective economic weight of developing economies. It can also push for an end to the “gentlemen’s agreement” under which an American heads the World Bank and a European, the IMF. Because such reform has been slow-moving, the grouping also built its own tools — the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA).

Beyond that organising principle, BRICS does not, and will never, possess a coherent geopolitical identity. To expect otherwise is to misread what kind of grouping it is. NATO responds to a common threat. The African Union and the Gulf Cooperation Council rest on a semblance of regional alignment. The Quadrilateral Security Dialogue (Quad) asks its members to build domestic capabilities so they can support one another across conventional and non-traditional domains. BRICS goes the other way round.

It begins with the pooling of resources, which then caters more to individual than to group needs. Its successes and failures must, hence, be judged along two parameters — its ability to mobilise a greater share for the developing economies in the current global financial order, and equally, or perhaps more importantly, to de-risk and safeguard the grouping from the vagaries of the dollar and the wars of Europe and West Asia.

So the members’ concern and the global community’s expectation should not be the grouping’s “anti-West-ness” or its inability to piece together a unified geopolitical identity. The concern should be that the reform agenda has moved slowly and the tangible tools BRICS has built are underutilised.

Take, for example, the NDB. Less than a quarter of its financing has been in members’ local currencies, inching slowly towards NDB’s 2022-26 General Strategy goal of at least 30%. That makes the dollar’s share in the Bank’s active portfolio two-thirds. Meanwhile, the new target for 2027-31, which NDB president Dilma Rousseff has made public, stands at 40-50%. Further, to protect its credit rating and avoid falling foul of Western sanctions, the NDB has extended no new credit to Russia since March 2022. Ironically, this is the case even as Moscow and Beijing preach de-dollarisation.

A similar situation plagues the CRA, where, in the decade since its creation, not one member has drawn from its US$100 billion pool. Not only did members not rely on it during the Covid-19 pandemic, but even today, with the economic pain caused by the closure of the Strait of Hormuz, there are no requests to withdraw. Part of the reason is design, since any member that wants to draw more than 30% of its own CRA share needs to have an approved parallel IMF programme. 

Even as India’s chair term comes to an end, the grouping’s consensus-based structure requires Delhi to continue pushing for a three-part solution. The first part focuses on reaching a meaningful agreement on mobilising the NDB and the CRA. The second is to push simpler, practical fixes to local-currency challenges, since that pathway is the most secure one towards financial de-risking. The third is to champion interoperability between members’ central bank digital currencies (CBDCs) as a more useful, less provocative alternative to a singular BRICS currency. 

In the case of India-China ties, of course, this may be the most one can realistically expect from BRICS geopolitically: that its summits provide platforms for major announcements on breakthroughs in bilateral tensions. Xiamen 2017 and Kazan 2024 are examples of this. That speeding up and signalling value is where the buck must stop.

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