Home » BRICS: New economic NAM

BRICS: New economic NAM

by Gayan Abeykoon
September 1, 2023 1:30 am 0 comment

The 5-nation group comprising the world’s biggest nations BRICS, Brazil, Russia, India, China and South Africa will expand itself by opening doors to another 7 countries on January 1, 2024 to make it a representative of half the inhabitants of the globe. The decision to expansion to include Saudi Arabia, Iran, United Arab Emirates, Egypt, Ethiopia and Argentina, will ensure BRICS get a virtual monopoly over gas and oil reserves.

This is an interesting development for Sri Lanka, which has close relationships with at least 4 of the BRICS members. As a country which was a pioneer of the Non Aligned Movement (NAM) and now strictly following a neutral foreign policy, Sri Lanka is in a position to get maximum benefit from this new economic alliance.

Western analysts say this formidable group could be a rival to the Group of Seven (G7) power bloc and capable of reshaping geo-economics and geopolitics across a range of issues, from Russia’s war in Ukraine to the status of the US dollar as the world’s reserve currency. However Indian Prime Minister Narendra Modi and Brazil’s President Luiz Inacio Lula da Silva said the grouping should not seek to rival the United States and G7 economies.

The Atlantic Council said that for Saudi Arabia and the UAE, inclusion in the group is potentially symbiotic, as both are looking to engage and deepen cooperation with non-Western countries and diversify their economic partnerships as an additional hedge against the United States. Riyadh and Abu Dhabi would probably view a decision to join as furthering their goal to be viewed as not just important regional leaders, but global ones. For the BRICS states, the inclusion of Saudi Arabia and the UAE would bring new investment and trade opportunities as the former seeks to quickly diversify and scale up its economy across a range of new, non-fossil fuel industries and the latter is home to the region’s leading financial hub in Dubai.

Dr. Rama Yade, a Senior Director of the Atlantic Council’s Africa Center and senior fellow for the Europe Center, said that the BRICS group should be taken seriously. The high-level attendance, from Xi Jinping to Narendra Modi, reveals a lot of the bloc’s big ambitions to build an alternative multilateralism, starting with challenging the dollar and strengthening the New Development Bank without conditionality.

Washington is monitoring the situation closely. Acting before NDB comes into effect, the Biden administration announced its willingness to strengthen the financing capacities of the International Monetary Fund and the World Bank on the occasion of the next G20 summit in India on September 9 and 10.

US National Security Advisor Jake Sullivan pointed out that IMF and World Bank proposals will generate nearly $50 billion in lending for middle income and poor countries from the United States alone. The expectation is that US allies and partners will also contribute. There are proposals ultimately leveraging over $200 billion.

India has close economic and strategic relationship with the US and is vary about China’s influence in BRICS. However Prime Minister Narendra Modi said his country “fully supports the expansion” of the BRICS group.

India is likely to would back plans to expand the BRICS beyond the five core members. Russia and China are championing expansion, with South Africa also in support, as President Cyril Ramaphosa confirmed.

Analysts have previously suggested that India and Brazil, countries which traditionally put non-alignment at the core of foreign policy, may not be as enthusiastic about expansion.

South African officials say more than 40 countries from the Global South have shown interest in joining BRICS, with more than 20 making formal requests to join.

With the inclusion of new members, the fabric of the BRICS will undergo reforms. It could change the structure of negotiations internally. BRICS makes decisions through consensus, and achieving consensus among eleven countries with diverse economies, geographies, and interests is far more difficult that achieving it among five.

Currently the South Asian Association for Regional Cooperation (SAARC) is deadlocked as rivals India and Pakistan will not come to a consensus on holding its summit.

Similarly all the BRICS members may not agree on some decisions. With the addition of new members will significantly slow down some of their more ambitious aspirations once they begin negotiating the nitty-gritty of those projects, for instance, that of a shared currency.

Western analysts believe that the addition of new members could move BRICS away from its geo-economics origins of five countries on similar growth trajectories to a more geopolitically charged organisation made up of different kinds of economies.

Russia and China led the calls for accelerated expansion, and attempts to position BRICS as a counterweight to the G7 will make countries such as India and Brazil, which are already walking a delicate balance with the West, uncomfortable, Atlantic Council’s Mrugank Bhusari said.

Of the new members, Argentina is struggling with historic inflation, a lack of foreign reserves and burdensome debt repayments as part of a $44bn loan deal with the IMF.

Brazil’s Lula criticised the IMF’s loans as “suffocating” and hinted at the possibility of the BRICS bank increasing lending to other countries with “different criteria” to stimulate their economies.

“We want BRICS to be a multilateral institution, not an exclusive club,” Lula said. Any new members would need to meet certain conditions, so the group does not become a “Tower of Babel”, he said.

For Sri Lanka, the expanded BRICS could be an important economic window as the proposed NDB will not have stringent conditions like the ones impose by the IMF.

Furthermore, it could be a forum for Sri Lanka’s two premier development partners – India and China – to settle issues and become leading economic powers in the grouping.

Prime Minister Narendra Modi and Chinese President Xi Jinping had a brief conversation as they shared the stage in South Africa during the BRICS Summit, China’s foreign ministry said the two leaders had a “candid and in-depth exchange of views” on the current relations between the two countries. Chinese Foreign Ministry spokesperson Wang Wenbin in a statement that the two leaders exchanged views on current China-India relations and other questions of shared interest. President Xi stressed that improving China-India relations serves the common interests of the two countries and peoples, and is also conducive to peace, stability, and development of the world and the region,” the statement said.

India’s Foreign Secretary Vinay Kwatra said Modi, while speaking to Xi, highlighted India’s concerns on the unresolved issues along the LAC. “The Prime Minister underlined that the maintenance of peace and tranquillity in the border areas, and observing and respecting the LAC are essential for the normalisation of the India-China relationship,” Kwatra said. He added, “In this regard, two leaders agreed to direct relevant officials to intensify efforts at expeditious disengagement and de-escalation.”

Sri Lanka, as a country situated in important East-West maritime route is keen to keep the Indian Ocean peaceful and free from power rivalry. The economic cooperation plans of BRICS will be ideal for Sri Lanka. Kotalawala Defence University researcher K P Jayawardena stressed the importance of BRICS for Sri Lanka. This is not only due to the economic and trade aspects of this group, but also due to their political and other security means in changing the world order. BRICS is recognised by the world today as a strong group optimistically strong enough to make a considerable pressure in the world politics. On the other hand, Sri Lanka as a pioneer state that defeated terrorism and is located in a strategic position in the Indian Ocean, she always demands that the current international institutions should adopt a more democratic approach, he said.

Both BRICS and Sri Lanka hold similar objectives regarding certain matters. In fact, Sri Lanka keeps strong bilateral relations with all the BRICS states and it is time it was taken to partnership level.

You may also like

Leave a Comment

Sri Lanka’s most Trusted and Innovative media services provider


@2023 – All Right Reserved. Designed and Developed by Lakehouse IT

Hutch Hutch