It has been 15 years since its first summit. back then. Brix was brix. And now, it is not just BRICS but BRICS+. The summit in Kazan has increased the number of member states from five to nine, with another Saudi Arabia also invited to join. According to Russian Foreign Minister Sergei Lavrov, there are 30 more countries that are in contact to join BRICS+ in some format.
When Goldman Sachs economist Jim O’Neill coined the acronym BRIC and predicted that the economies of the four member countries – Brazil, Russia, India and China – would dominate the global economy by 2050, his estimate was based only on growth . Four nations. Russian Foreign Minister Sergei Lavrov said on the eve of the summit that the grouping now represents a combined GDP that is “about 5 percentage points” higher than the G7. A briefing note from the European Parliament, titled BRICS expansion: exploring broader global impactsays that BRICS+ accounts for 37.3% of the world’s GDP. This is more than half the EU’s 14.5%.
“Artificial efforts to maintain dollar status”
Lavrov also attacked the US-led world order, saying, “The United States is not willing to give up the reins of power, which it has held since World War II through the Bretton Woods institutions and the role assigned to the US dollar.” In the international monetary system, the leading position of this currency has been maintained by efforts that are largely artificial, even after the free exchange of the US dollar for gold was abolished.
BRICS+ is in the process of taking the first steps to break the dollar’s dominance, with the proposed launch of an international payments system that could rival the dollar. India’s Foreign Secretary Vikram Misri confirmed that discussions were ongoing on settlement systems and payment systems. However, he said that as per his understanding, no final agreement has been reached yet. “Yes, basically, I think it is a fact that countries have stressed the importance of using local currencies for settlement purposes, especially as it relates to trade. So, the correspondent banking network between BRICS partners is to be strengthened and settlements in local currencies are being encouraged,” he said.
threat of sanctions
With Western sanctions imposed on Russia in the wake of the war in Ukraine, Moscow is keen to push the idea not only to break the dollar’s dominance but also to show the West that it still has allies and partners. New BRICS+ member Iran also faces severe US sanctions and Moscow hopes for support from members who have increasingly realized that the Western-dominated economic system has not made much difference to the rest .
Ahead of the summit, Russian Finance Minister Anton Siluanov also called for new institutions similar to the Bretton Woods institutions, saying that the International Monetary Fund (IMF) and the World Bank were not playing their roles. However, the bigger question is whether a member state like China, which has been a beneficiary of the current global world order, will look for an entirely new parallel system while pushing for reforms with countries like India.
IMF reforms
Former Central Bank of India Governor Raghuram Rajan, in a recent IMF publication, called not only for quota reforms in the IMF but also for changes in the governance of the body to make it fairer and more representative of current global realities. Could. He said that if members reform quotas and governance together, an independent IMF could bring the fragmented world together on key issues. “Such comprehensive reforms must happen soon; otherwise the rest may assume this is an attempt by the Western alliance to maintain some influence when power is finally changing.”
However, BRICS+ has also finished its work. A lot will also depend on the outcome of the US presidential election. For example, Donald Trump has said he would punish countries moving away from the dollar by imposing 100% tariffs on their goods.
According to the IMF, the dollar remains a dominant force with 59% of official foreign exchange reserves in the first quarter of 2024, and the euro in second place with about 20%.
Amidst all the speculation, all eyes are on Russia for any indication in this direction during the two-day event. The announcement, if any, will be even more significant because it will come from a country that is in direct conflict with the Western world.
(Maha Siddiqui is a journalist who has reported widely on public policy and global affairs.)
Disclaimer: These are the personal opinions of the author
