Valdai Club

Realising the positive chances from the emerging new period of growth of the association, all countries need to remain diplomatic in promoting their priorities, and seek a delicate balance that will give the BRICS the required stability in the next development cycle, writes Valdai Club expert Dmitry Razumovsky.

BRICS, which was rapidly gaining momentum in the first decade of its operation, has, expectedly, over the past few years faced a certain crisis in its development (this crisis is understood not as a decline, but as a turning point, a transitional situation). At the level of official discourse, the word “crisis” was never used; the rhetoric continued to be predominantly optimistic, however, the expert community has increasingly called for a rethinking of the role of the association, overcoming the mounting internal contradictions. The very logic of the development of any association implies that periods of growth, expansion of the agenda, the predominance of centripetal forces, and crises will alternate, and that it is necessary to look for new foundations for rapprochement. The reasons for slippage, as is always the case, have been both external and internal. On the one hand, a fundamental transformation of the globalisation process has begun (and this process is only gaining momentum); there are calls for the basic principles and mechanisms which bring the BRICS countries together to undergo reform. This challenge is facing all global multilateral organisations today; BRICS is not unique here: the WTO, the G7, the G20, and even the UN and its structures — all of them are faced with the loss of their status as universal platforms for overseeing the global rules of the game. For BRICS, on the one hand, this is a problem of self-identification, since the countries have advocated the transformation of global mechanisms imposed by developed countries. At the same time, it is also an opportunity to “rebuild” the association, turning it into an alternative, new platform for uniting the entire developing world. The latter scenario inevitably implies the expansion of the union, both by accepting new members (which is already happening), and in the BRICS+ format that has become a permanent issue for the current Chinese presidency in 2022.

The difficulties of the BRICS were also caused by internal reasons. The test for BRICS was 2020, when the association, contrary to expectations, did hardly anything to assist in countering the COVID-19 pandemic. While initially considered a club of the most dynamic economies, the union of five countries has become internally highly heterogeneous. China and India continue to vie with each other as leaders of economic growth, while Brazil, South Africa and Russia have witnessed a systemic crisis since the mid-2010s, when the fall in GDP alternates with stagnant growth. Economic difficulties in Brazil and South Africa have led to a change of elites. The new leaders have sought to critically rethink their goals and priorities in unification.

In many respects, these considerations have dictated China’s desire to include Argentina and Iran in the union, despite all the well-known problems facing the economies of these countries.

The aggravation of contradictions between China and India, and along the China-Brazil line, has also led to a slowdown in active work in the BRICS. The rise of China, securing for it the role of the “main sponsor” of the BRICS (primarily as the main founder of the New Development Bank) presents a kind of challenge for Beijing, since the line between leadership and dominance, as the experience of other associations shows, is usually very thin. The accumulated dissatisfaction with the real results of the decade-long work of the association has also made its contribution: many initiatives, including the task of strengthening the voice of developing countries and reforming the global regulatory institutions, still remain only slogans.

To understand the prospects for BRICS, it makes sense to look at the evolution of approaches to unify the current government in Brazil. The victory of Jair Bolsonaro in 2018 was perceived by some experts as a moment of risk for the five, as the new elites in power made no secret of their desire to place their main stake on rapprochement with the United States. The negative scenarios did not materialise. However, Brasilia did significantly rethink its priorities, goals and objectives. Unlike his predecessors from the leftist camp (Presidents Lula da Silva and Dilma Rousseff), Bolsonaro was not close to the idea of uniting the Global South under the banner of reshaping the world order. However, more pragmatic, technocratic areas that are objectively beneficial to the country (technological cooperation, the fight against organised crime, digitalisation and the Development Bank) were chosen as priorities in the year of Brazil’s chairmanship in 2019. Paradoxically, such a narrowing of the agenda played a rather constructive role in the development of BRICS, since the quality of the elaboration of joint decisions was so high that Deputy Foreign Minister Sergey Ryabkov, Sherpa of the Russian Federation in the BRICS, even commended the brilliant organisation of the work, saying that there were far more specifics than general declarations. Paraphrasing the famous phrase of Alexander Gorchakov, one can say that the Brazilian presidency allowed BRICS to focus, to replace the extensive growth of the agenda of previous years with intensive progress in really important and compromise-driven areas.

The arrival of the Joe Biden administration in Washington in 2021 has led to a cooling of the enthusiasm among the Brazilian elites regarding the prospects for rapprochement with the United States. In Brasilia the incumbent American President’s threats, made during the election campaign, were well-heard: to impose sanctions against the Tropical Giant if it does not reconsider its policy toward the Amazon River. Bolsonaro is also worried about the inclusion of environmental issues in the NATO agenda. That is, the increased attention of the military alliance in the Amazon region is not ruled out, which is traditionally an extremely sensitive topic for Brazilians. In this context, the Brazilian leader is revisiting his previously restrained approach to the BRICS, recognising its importance and strategic significance for the country as a tool to counter isolation in the event that the risks of worsening relations with the US and the EU materialise. Following this logic, Bolsonaro today advocates expanding the association, including within the framework of BRICS +, and in official speeches he speaks of the need to reform the World Bank, IMF and the UN Security Council, which was difficult to imagine a few years ago.

Geographic expansion

Expansion through the inclusion of new full members has been talked about since the first years of the BRICS. Since the concept of BRICS as an alliance of civilizations initially prevailed, where each macro-region is represented by one leader, the inclusion of a large Islamic country was most likely. Indonesia, as the world’s largest Islamic country in terms of population, and Egypt were usually considered. The recent application for the entry of Shiite Iran alters this logic, since, apparently, when inviting Tehran to the recent 14th Summit, China was guided by the exceptional importance of the country precisely from the point of view of its energy potential as one of the leaders in hydrocarbon reserves.

The possibility of Argentina joining the BRICS was also discussed for a long time, but Brazil was interested in maintaining its role as a regional leader, representing all of Latin America. The possibility of competition from Buenos Aires did not rouse enthusiasm among the authorities of the Tropical Giant, even during the reign of the left, despite the friendly relations between the countries at that time. Argentina then did not yet face the economic problems that it is experiencing today; the country’s economy was one of the most dynamic in the region. At present, the countries are going through a difficult period in the history of their bilateral relations; the leaders have no trusting, friendly contact. In BRICS, any decision on the admission of new members is made by consensus, but how easy it will be to get the support of the Brazilian authorities for the entry of Argentina remains a big question. Argentina’s entry into the association will not only exacerbate political rivalry; the countries are the largest food producers, competing in many markets. The appearance of a second country from one continent in BRICS will finally move the organisation away from its original concept of uniting the political and economic leaders of their continents (or civilizations). However, these challenges also present opportunities. The new global situation requires developing countries to push old grievances to the background, so that they may work on the task of increasing the representative nature of the BRICS, expanding its potential in addressing the food and energy crises.

Without Argentina, achieving this goal will be much more difficult, since together the two Latin American countries are able to provide food for more than 1 billion people. Participation in the BRICS of another state of the region, especially a partner in Mercosur, despite the competition, creates more opportunities to convey the Latin American agenda and priorities.

At the time of writing, Jair Bolsonaro had not officially commented on his decision to support or not support the entry of Argentina, while the statements were limited to the words of the Minister of Economy Paulo Guedes about the possibility of connecting Buenos Aires to the New Development Bank. However, the mere fact of the official application for membership may indicate that there may be some informal arrangements between Brasilia and Buenos Aires.

The inclusion of new full members of the BRICS is a long process, which, even with the consent of all participants, could take several years. The Chinese approach to foreign policy is traditionally characterised by flexibility and action on several tracks at once. It is this “second track” that BRICS+ is intended to become. There are two approaches to the implementation of cooperation within the framework of this format. The approach of Russia is known, which promoted the concept of “integration of integrations”, which implies the cooperation of integration projects, where the participating countries are leaders (EAEU, Mercosur, South African Customs Union). China could participate through the Regional Comprehensive Economic Partnership. If to consider the concept of “integration” precisely as a formalized process of trade liberalisation, then at present individual regional integration blocs would really be interested in implementing deep forms of integration, for example, through the signing of free trade agreements (FTAs). Mercosur, having signed a Memorandum of Cooperation with the EAEU, consistently offers the Eurasian bloc the opportunity to start trade negotiations. China would also be interested in rapprochement with all associations, but many countries see significant risks from such agreements for their producers. It may seem paradoxical that the “integration of integrations” format was promoted by Moscow, whose foreign trade policy is conservative; the EAEU has only a few FTAs with third countries. Despite the optimism of many experts about the prospects for establishing such a network of trade agreements between integration blocs, the author sees such breakthroughs as unlikely in the medium term. Today, in many countries or associations, there is a growing demand for closeness and the protection of national producers in order to achieve greater industrial and technological independence. The willingness to actively cooperate in creating a common financial or logistics infrastructure does not mean the willingness of Brazil, Russia or perhaps Argentina to open their markets and increase competition with imports from China.

China’s approach to the implementation of the BRICS+ format implies rather a “union of regionalisms”, when not trade blocs, but regional associations (SCO, CELAC, African Union) participate in the dialogue. China has established a dialogue with all these organisations (or being a member); there is a broad agenda of cooperation related to economic, political, scientific and technological areas and other topics. Obviously, the advantage of the Chinese approach is flexibility, as there is no need to talk about trade agreements by imposing rigid standards. The only formal obstacle to the implementation of the model today is the non-participation of Brazil (by Bolsonaro’s decision) in CELAC since 2019, the return of the country to the organisation has not yet been discussed. However, it is possible to expect that the position of the Brazilian leader in a reasonable perspective will change amid disappointment in the stalled rapprochement with the United States. A softening of the position is also noticeable in relations with the left-wing radical governments of Latin America, primarily Venezuela (it was precisely the preservation of this country’s participation in CELAC that became the reason for Brazil’s withdrawal). In any case, the decision on the possible resumption of participation in the regional union, if it is made, looks most likely after the elections in October 2022. If the left-wing politician Lula da Silva wins, the country’s return to CELAC can be considered a foregone conclusion. Therefore, Beijing is ready to bide its time. Chinese approaches to diplomacy and international politics are known for their strategic vision for the long term, the current formal obstacles to the implementation of their plans are perceived as temporary, and simply to be waited out. When communicating with our Chinese colleagues dealing with the topic of BRICS, one can feel a similar conviction in the objective mutual benefit and usefulness of the format for all participants.

New realities — new agenda

In the year of its presidency, China was noted not only for initiatives to expand the BRICS; it also significantly developed the agenda, including 23 priorities in 5 areas. There have not been such a number of initiatives within the BRICS for a long time, although most areas of work continue to develop the previous priorities. However, attention is drawn to the surprising similarity of the agenda of all major international forums in 2022. For example, within the framework of the 9th Summit of the Americas, held in early June under the chairmanship of the United States, Washington promoted an agenda that included the problems of post-pandemic recovery, combating the food and energy crises, cooperation in the field of healthcare, innovation, security, ecology, and trade. The intersections with China’s priorities in BRICS are significant. Washington’s main message during the Summit can be formulated as a desire to limit the presence of external players in the zone of their traditional interests. China, which did not participate in any way at the Summit of the Americas and was not mentioned by US officials in speeches, was in fact invisibly present. During his keynote speech at the opening of the forum on June 6, Joe Biden, after the announcement of new proposals for cooperation, emphasised, clearly in defiance of China, that the Western Hemisphere has enough of its own resources to solve all its main problems. The competition of the main financial development instruments is also obvious. For example, the United States promised to capitalise the Inter-American Development Bank (IADB) as it is concerned about the growing presence of the Chinese New Infrastructure Investment Bank and the BRICS New Development Bank, financed mainly by Beijing.

Certain signs of rivalry with China can also be seen on the agenda of the 48th G7 summit at the end of June. Developed countries, largely in opposition to the Chinese Belt and Road project, announced their own infrastructure development project in developing countries. There was also talk about the food crisis and assistance to poor countries in counteracting rising prices, where Argentina was also invited to participate.

For Russia, such a transformation and expansion (geographical and thematic) of the BRICS is obviously beneficial. The intensification of work on the creation of independent financial mechanisms (a new international currency, a pool of reserve currencies, the BRICS Pay payment system) is of interest not only to Moscow, which seeks to reduce its dependence on the monetary infrastructure of the West. The possible inclusion of new members, like Argentina and Iran, demonstrates the failure of the policy of isolating Russia. The Kremlin is ready to move away from the previous logic of the BRICS, when the association was emphatically positioned neither as an alternative to the West, nor as a coalition against it. Today, such positioning is no longer relevant for Russia and China. The latter confirmed this by inviting Iran to participate in the Summit, a country that is in a long-standing conflict with the US, but at the same time has almost 9% of the world’s oil reserves and 17% of its natural gas.

However, such an anti-Western projection of the BRICS is not beneficial to all its participants. Significantly, India, as well as candidate Argentina, took part in the G7 Summit. Argentina depends on the position of the IMF because of its debt problem; it discusses the possibility of obtaining assistance from developed countries. India seeks to pursue a multi-vector policy by participating with the US, Japan and Australia in the Quadripartite Security Dialogue (QUAD). Its interest in achieving the common goals of improving global regulation and interaction for the sake of development does not mean that all BRICS members are ready to oppose the countries of the West. Realising the positive chances from the emerging new period of growth of the association, all countries need to remain diplomatic in promoting their priorities, and seek a delicate balance that will give the BRICS the required stability in the next development cycle.