World Economy
BRICS: Global Challenges and Integration Opportunities

The BRICS countries contribute to the balanced development of emerging markets and developing countries through the BRICS cooperation model, becoming a safe haven for many countries.

The BRICS strengthened the trend towards the formation of a multipolar system of international relations and the growth of economic cooperation among the states of the world. The development of the BRICS has contributed to the birth of a new economic system, based on the equal access of countries to financing and sales markets, a combination of state planning and a market economy. The value of the BRICS paradigm does not lie in expanding the capabilities or ambitions of the BRICS countries, but in a qualitative change in the economic development model of the Global South.

BRICS is an international association of five states — the Federative Republic of Brazil, the Russian Federation, the Republic of India, the People’s Republic of China and the Republic of South Africa, established in the mid-2000s. South Africa joined the association in 2010.

The BRICS concept is intended to explain the emergence and development of new world markets, which seem promising for future investors and are increasingly firmly established in international relations as a backbone. At the same time, areas such as: the development of infrastructure, transport and logistics systems, innovation, electronic data systems, and the expansion of public-private partnership mechanisms are also important areas of cooperation between the partner countries of the association.

On January 1, 2022, India handed over the BRICS chairmanship to China. The alliance has adopted the slogan "Strengthen BRICS Solidarity and Cooperation, Respond to New Features and Challenges in the International Situation” for the current year. The Chinese Presidency intends to expand work in the field of public-private partnerships in 2017. An initiative to create a BRICS Vaccine Centre has been under development over the past five years; the practical implementation of this project amid the current conditions can be a significant achievement of the PRC presidency and bolster the entire format of the association. In addition, industrial innovation may become a priority for the Chinese BRICS Presidency in 2022. Moreover, during the presidency, the Chinese will strive to come up with a number of breakthrough initiatives that will give new impetus to the BRICS partnership. This year, the construction of the New Development Bank (NDB) headquarters in Shanghai has finished, so new proposals are expected from the PRC on the development of its operations. In particular, it is possible to expand the number of shareholders of the bank.

China will focus on five areas: practicing multilateralism, fighting the pandemic, promoting economic recovery, promoting effective pragmatic cooperation, and accelerating the implementation of the UN 2030 Agenda for Sustainable Development.

Russia undoubtedly occupies a special place in the structure of the BRICS, since Russia was responsible for launching the format. The first ministerial meeting, then in the BRIC format, took place at the suggestion of Russian President Vladimir Putin in September 2006, on the sidelines of the UN General Assembly session in New York. Thus, the idea of ​​creating BRICS matured in Russia and was very positively received by its BRICS partners, including China. Beijing actively joined in its implementation and now, with all its resources and power, is able to pull this “train” together with its partners. Naturally, when pulling the "train", China (as its actions and rhetoric indicate) is promoting its own projects, including Belt and Road initiative. You need to understand the philosophy and capabilities of China: the country is spending the most financial resources. The Chinese highly appreciate the strategic importance of the BRICS. The Chinese still hope to “outplay” the United States over time, and are preparing for this. Therefore, the "harmony of interests" between China and the United States is an idea that does not quite correspond to the real state of affairs. There is a need for a serious reassessment of values ​​within the BRICS framework, a critical approach to the changing internal balance of power.

It should be noted that the COVID-19 pandemic has made the global economy more fragmented and regionalised. Another important development of the last few years has been the emergence of regional (inter-regional) blocs such as QUAD and AUKUS. In particular, QUAD seeks to expand the scope of its activities from military cooperation to economic partnership in an expanded QUAD + format. In the structural realm, the key trend of the past few years has been the emergence of the "platform economy", with enterprise platforms becoming the leading drivers of growth and innovation. Similar trends are observed at the regional level, with mega-regional integration agreements serving as platforms for bringing together a multitude of bilateral and regional free trade agreements.

All these events indicate the expediency of the further promotion of the BRICS platform on the basis of cooperation between regional integration structures and development institutions where the BRICS countries are members. This circle of cooperation could be supplemented by platforms between regional development banks/regional financial institutions and the NDB, and the pool of conditional foreign exchange reserves of the BRICS, respectively.

Thus, the authors of the Valdai Discussion Club report “The Platform World: From Corporates to Regions” in 2021 proposed the name and concept of new platforms G2R (government for the region), B2R (business for the region), С2R (consumer for the region) and others capable of uniting the population, business and government structures at the interregional level of integration associations. Within the framework of BRICS+, BRI, SCO, RCEP and GEP, such platforms could be coordinated, inter alia, by interregional structures and development banks (NDB and others).

Eurasian integration is determined by the need of continental countries to develop natural economic ties. Here, however, in addition to the external barrier, there is an internal obstacle. Integration is a movement, and it inevitably comes into conflict with the nation state and its real overlords, administrators. This has already happened in relations between Russia and Belarus, although these relations are closer and deeper than the broad Eurasian format suggests. At the same time, integration within the framework of the Eurasian Economic Union, which unites Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan, has great prospects for even deeper processes in the future.

However, the collective West has a great influence on the integration processes of a number of countries. In the case of anti-Russia sanctions adopted after the reintegration of Crimea to Russia as a result of the 2014referendum, their goal was to change Russia’s policy towards Ukraine and reconsider the decision to recognise Crimea as part of the Russian Federation, and in the case of US sanctions, also to contain foreign policy potential Russia.

Thus, the restrictive measures taken by Western countries against Russia, and tightened after the start of the special military operation in Ukraine on February 24, 2022, have become the most ambitious in recent decades. As a result, Western countries and their allies have significantly expanded the sanctions pressure on Russia, including such measures as freezing assets and restrictions on the movement of persons included in the sanctions lists. They have prohibited companies from maintaining business cooperation with Russian counterparts from the “black list”, a ban on investments in transport, infrastructure, and energy projects with the participation of Russia, as well as a ban on European financial institutions issuing loans to sanctioned projects. All this and much more is an example of sanctions pressure with the goal, among other things, of influencing the political decision-making of the Russian leadership. Meanwhile, Russia has demonstrated a clear adherence to the course for the development of the country and the protection of the population. Russia also continues to consistently participate in the development of integration associations in the Eurasian space.

In the Eurasian space, the strategy of transition to a polycentric world order is being implemented in the creation of such coalitions of states as the Eurasian Economic Union (EAEU) and the Shanghai Cooperation Organization (SCO), the Greater Eurasian Partnership (GEP), and on a global scale — BRICS, a coalition of Brazil, Russia , India, China and South Africa. The countries of the Eurasian Economic Union, SCO, GEP, BRICS and APEC need to implement strategies for interstate cooperation in integration and innovation to disseminate existing technologies and promote access to new technologies embodied as technological products, social processes, scientific knowledge and education.

Russia and China, despite the obstacles introduced by the West, have already made significant joint efforts to preserve and expand the existing international system of control in the prevention of the militarisation of outer space and the production, trafficking, and distribution of drugs (which is based on the three UN anti-drug conventions). It is relying on the stability of cooperation between member countries, the SCO and BRICS in promoting anti-drug strategies in law enforcement.

The processes of interstate economic cooperation within the framework of the EAEU, SCO, BRICS and APEC is related to the provision of favourable conditions for the consistent creation of centres of attraction for innovations, investments, highly qualified personnel and the production of products competitive on world markets in the common interstate economic space.

This creates conditions for improving the quality of economic growth among member states in the long term; the use of integration tools and mechanisms will ensure the system-wide implementation of economic development plans, as well as the intensification of cooperation not only in raw materials, but also in the non-commodity sectors of the economy.

The BRICS will play a special role in the creation of conditions for the formation of the industries of the future, the consolidation of resources for the development of human capital, the modernisation of production, and ensuring the availability of financing, as well as the formation of a favourable living environment, necessary for conducting technological research and its commercialization. The search for ways to increase the growth rates of economies and the trend of regionalization also deserves attention.

Within the framework of cooperation between the BRICS countries and other integration associations, updated ideas are being promoted to establish, in international financial law, guarantees of trust and openness of the movement of capital. These include mutual recognition of non-discrimination in business, foreign exchange transactions and trade in systemic structural reforms, the protection of the competitive environment, the promotion of innovative investments and the financing of infrastructure capital investment. An important link is the development of ecosystems, as well as the introduction of a system of direct financial settlements between the BRICS member countries and their partners in bilateral and, in the future, multilateral formats, the development of digital currencies, and the gradual shift away from settlements in dollars and euros.

Thus, BRICS is one of the platforms of network diplomacy for discussing world problems. So far, there are no prospects for the BRICS to become either a military-political union or even an economic integration organisation. Today BRICS is a dialogue format. This form of cooperation, rather than an institutional association with a program and charter, has certain advantages. The dialogue set-up implies a certain freedom of action and at the same time the possibility forcooperation if its participants are interested. The BRICS countries actively advocate a collective approach to solving the global problems of our time.

In the modern world, the BRICS interaction format has repeatedly demonstrated its productivity. During its existence, the association has become a centre of attraction for many participants in world politics. Today, the BRICS association has become successfully integrated into the architecture of international relations and has strengthened its position on the leading interstate platforms for interaction, such as the UN and the G20. In the modern era, the BRICS association may be in demand to strengthen the multilateral format of international relations. The association can act as an important institution of global governance, which seeks not to weaken anyone or take someone's place, but to fill the governance vacuum in the world. The BRICS countries contribute to the balanced development of emerging markets and developing countries through the BRICS cooperation model, making it a safe haven for many countries.

World Economy
The ‘Multiplier Effect’ of BRICS+
Yaroslav Lissovolik
The possibilities offered by the “integration of integrations” track for BRICS+ are substantial, provided that such a platform is open, inclusive and ensures connectivity across regional integration arrangements – this will deliver the much needed “multiplier effect” in the process of economic cooperation and can set off a new process of globalization that connects regional arrangements in the developed and the developing world, writes Valdai Club Programme Director Yaroslav Lissovolik.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.