The BRICS (Brazil, Russia, India, China and South Africa) has emerged as the new destination for the global peace and development (GPDP) and bound to create a new space wedded to the idea of global sovereign equality (GSE) enshrined in Article 4 of the UN Charter.

BRICS constitutes the 50% of the worldwide population and nearly takes 1/3 of the global GDP (Gross Domestic Products) that makes it a catalyst to transform and propel the present world economy to higher growth in an unprecedented fashion. BRICS has the propensity to make it independent from the clutches of Bretton Woods’s institutions of 1944 and establish itself a viable alternative away from US Dollars propelled monetary system. Presently, this optimism remains shrouded in a theoretical construct owing to the existing political architecture of the BRICS that lacks politico-eco-geostrategic cohesion for Brazil, India and South Africa but makes the stay of Russia and China economically comfortable in the grouping. Though, BRICS got its identity and nomenclature from its antagonist in the western world called Goldman Sachs.

Historically, South Africa was not the part of this alliance initially but in 2001 immediately in the post-9/11 world scenario, Jim O’Neill (The Chief Economist of Goldman Sachs) coined the term “BRIC” (Brazil, Russia, India, and China) founded on his economic prognosis of the new emerging economies ready to dominate the financial canvass of the entire world by 2041 against the economic supremacy of the western countries. Subsequently, this prognosis has been revised and recast all the way to 2032, but in the present circumstances, it could materialize by 2025 or even before as the new Oil-For-Yuan and Gold Exchange markets are likely to be inaugurated in Shanghai soon. Predictably, these developments are being perceived as an end of Petro-Dollar and Dollar monopoly in the international market. Thus, the four BRIC nations realized their economic potentialities and power to shift the financial dynamics of the world and took over the reins of their control. Even Jim O’Neill did not have an inkling that BRIC would emerge as an economic adversary to the Bretton Woods institutions. The first formal BRIC Conference was organized in Russia in June 2009 to establish the BRICS as a new economic entity. In 2011, four countries; Brazil, Russia, India, and China along with the fifth one South Africa were recognized as the internationally fastest growing economies, and in 2013 South Africa was included in the grouping, and it has formally become BRICS.     

BRICS & Bretton Woods Economy

Presently, BRICS is confronted with many challenges including establishing itself as an alternative to the Bretton Woods’s economy or western economy. BRICS has to evolve itself as an integrated politico-diplomatic force having a global voice and vision that would drive the Asian century. Thus, BRICS must subscribe to a combined economic development approach (CEDA) that distinguishes the BRICS from the Bretton Woods Economy based on the nexus of Dollar and Euro convergence.  Therefore, CEDA must be a reality in near future if it is not possible now. Currently, Indian and Brazilian economies are being controlled by the Bretton Woods institutions which are the traditional system for monetary and exchange rate management established in 1944 to help reconstruct the devastated Post World War-II economy and to promote international economic cooperation. The Bretton Woods Institutions are the World Bank, and the International Monetary Fund (IMF) under the Bretton Woods Agreement at a meeting of 43 countries organized by the UN Monetary and Financial Conference in Bretton Woods, New Hampshire, the USA on July 01-22, 1944. In the last fall, India had witnessed disastrous economic debacle in the wake of demonetization that put 80% of the cash currency in circulation out of legal use and got it replaced with new bills with the twin objective of flushing out black money and digitizing the economy. But it is still unclear how many poor perished due to this reckless exercise. People without bank accounts suffered a lot as they were able to make digital or online payments as an alternative to cash currency. Indian economy sustained another jolt that failed a myriad of small businesses leaving the Indian economy in adversity of crisis ramifications.

There is a neo-liberal political leadership in Brazil confronted with corruption allegations which have been succumbing to the hawks of Wall Street and maneuvers of Bretton Woods’s systems. The BRICS 9th Conference at Xiamen on September 04-05, 2017 presented itself “BRICS: Stronger Partnership for a Brighter Future” but the partnership was not stronger, and future did not seem brighter rather it behaved like a private club where every member state was with a different agenda. Therefore, BRICS has to prove itself true to its name regarding economic accomplishments positively and constructively. Russian President Vladimir Putin ahead of the BRICS Xiamen Conference rightly opined that “it is important that our group’s (BRICS) activities are based on the principles of (sovereign) equality, respect for one another’s thoughts and consensus. Within BRICS, nothing is ever imposed on anyone, and the approaches of its members do not coincide, we work patiently and cautiously to coordinate them. This open and trust-based atmosphere is conducive to the successful implementation of our tasks.”   Therefore, these high averments jell well with the purposes and principles of the BRICS and UN Charter.

BRICS Bank & Development Twigging

The BRICS Bank that is presently known as New Development Bank (NDB) has oozed out of an idea mooted at BRICS Summit in Durban in March 2013 that formally created the BRICS Bank in 2014 that was formalized into a treaty signed in July 2015. The treaty envisaged a BRICS Development Bank and establishes a “Reserve Currency Pool (RCP)” of US $ 100 Billion which was to be allocated to the five member states with an equal share of the US $ 50 Billion start-up investment to be expanded later to the tune of US $ 100 Billion.  Brazil, Russia, and India were to contribute the US $ 18 Billion each while China and South Africa were to provide US $ 41 Billion and the US $ 5 Billion to the NDB respectively. However, instant fiscal arrangement posed a problem regarding setting-up of initial capital and the Contingency Reserve Arrangement (CRA) in the US Dollars that was pegged at the US $ 100 Billion. Therefore, it would be immensely problematic for the BRICS to maintain its distinct and discreet identity if it does not secede from the Dollar based fiscal arrangements in the long run. While Brazil and South Africa are heavily indebtedness that too in US Dollars and South Africa has a current debt of US $ 153 Billion that is above 50% of its GDP which prevails just below the US $ 300 Billion. Therefore, Brazil and South Africa would have to borrow from Bretton Woods institutions or Wall Street to contribute to the Dollar-denomination propelled CRA. Such a situation is bound to create a Dollar thralldom for these countries, and their strings might be in claws of Bretton Woods’s institutions and the US FED contrary to the independent Asian Economic Order based on CEDA.

In 2016, South Africa’s interest on its foreign debt US $ 153 Billion got increased up to the US $ 5 Billion that is almost 52% of its GDP proximate to the US $ 300 Billion. The US $ 5 Billion foreign debt payments are higher than the South Africa’s expenditures on tertiary education budget gauged at R60 Billion equivalent to the US $ 4.6 Billion. Therefore, it is justifiable for BRICS to detach from a debt-centered monetary architecture. As an alternative, BRICS must strive to emplace its own financial and international payment system modeled on the existing Chinese International Payment System (CIPS) introduced to the world. The establishment of NDB would render industrialization to attain unprecedented heights in the BRICS member states and beyond the grouping in tandem with the proximal growth of trade and development. Presently, the NDB has sanctioned as many as seven investment projects in the BRICS Nations of US $ 1.5 Billion and 2017 NDB has to endorse the second slot of investment projects worth the US $ 2.5 - US $ 3.0 Billion.  Nonetheless, these plans do not precisely provide the objective of the investment, but NDB was contemplated to fund energy and infrastructure projects in the BRICS countries as these countries, presently, grappling with the problem of lack of infrastructure and free energy production that would accelerate the pace of industrial growth and trade in years ahead.

Economic Expansion beyond BRICS

The NDB is pivotal to BRICS collaboration, and it might exert a pull on new investments by invoking NDB influence. It was an understanding reached in Xiamen Conference. However, its contours remain shrouded, but India made a prognosis of anticipated 40% expansion in the next few years. In case of India or other member states of BRICS receives foreign investments, it would be challenging for them to distinguish between foreign direct investments (FDI) based on the new BRICS fortitude and ordinary unilateral or bilateral FDI as articulated at Xiamen summit. The economic expansion beyond the BRICS and investment branching out with connected trade has become more critical than ever before. There are many more countries desperate to become the members of the BRICS such as Argentina, Indonesia and Turkey and two countries from the OECD such as Mexico and South Korea and their membership is under active consideration. Presently, there is incremental trade bonhomie in the emerging developing economies and developing countries’ markets in addition to global average trade regulated under the WTO regime. Therefore, economic expansion and diversification among the BRICS Nations and beyond must be facilitated so that business could get an impetus in consonance with the idea of human rights and peace-oriented economy similar to the globalization with free from all trade barriers. The BRICS economy must visualize an Economic Governance Model based on the well-being of the people away from western war industry, and US Dollar drove elite model of economic governance.

In this context, the BRICS Nations must ponder over to have their currency consistent with the deliberations at Xiamen Conference. There was an understanding among five BRICS member states to “enhance and develop BRICS Local Currency Bond Markets and together institute a BRICS Local Currency Bond Fund, as a means of contributing to the capital sustainability of investing in BRICS countries, boosting the development of BRICS domestic and regional bond markets.”  It is likely to be similar to Euro before its present incarnation as European Currency Unit (ECU) that was subsequently converted into full-fledged virtual Euro in January 2002 and then becoming US Dollar like fiat money in the world market. It is now evident that the US pushed the establishment of Euro as its subservient currency that made the Euro unsustainable and put it on shaky ground as a single currency among the countries devoid of common political interests and the constitution except one common military alliance called NATO that perpetuates permanent war-mongering contrary to the purposes and principles of the UN Charter. Therefore, the BRICS has to guide itself with a strong vision based on economic, political and defense objectives for creating a congenial atmosphere for a common currency away from the occidental priorities. However, the BRICS countries at Xiamen also adopted the CEDA policy for “BRICS Economic Partnership and initiatives related to its priority areas like financial integration, trade and investment, infrastructure connectivity, manufacturing and minerals processing, science and technology, innovation and Information and Communication Technology (ICT) cooperation, among others” for achieving balanced, sustainable, and growth-oriented global order.

BRICS & SCO Trade Integration

Now, there is an emerging tendency in the BRICS and SCO (Shanghai Cooperation Organization) Nations to have their integration as few countries are common in both the organizations. China and Russia are in SCO, and recently India has also joined the SCO, and it has many countries from central Asia, the nations of the Commonwealth of Independent States (CIS) led by Russia, and new member states like Pakistan and Iran. Moreover, the SCO has devised a geostrategic defense vision in advance based on common long-term objectives of CEDA orientation.  Recently, Presidents Putin and Xi advocated the idea of BRICS and SCO integration at the EEF (Eastern Economic Forum) Meeting on September 06-07, 2017 at Vladivostok. They were of the view that fusion between EUAU (Eurasian Economic Union) and the new Silk Road popularly known as OBOR or OBI (One Belt, One Road or One Belt Initiative respectively) must be translated into action with immediate effect. Primarily, the China drives OBOR and Russia propels the SCO and EEU countries are part of the SCO, therefore, if these nations take an economically well-integrated and politically united stand, Western hegemony destined to be decimated and buried in the ground for once and all.

This would usher the world in new global trade environment free from Dollar domination, Bretton Woods Organizations, and occidental economic blockade of countries who do not subscribe to outrageous western oppressions, preposterous predilections, and illegal economic sanctions in violation of sovereign equality as enunciated in the UN Charter and international law. Now, there is a multitude of global scholarship well-grounded on unity, unanimity, and ubiquity of economic thought that 21st century belongs to Asia. It is, unfortunate that Eastern countries always paid Western countries’ avarice, greed, and domination and subjugation of Asian people to the hilt. Therefore, Western world must realize the fact that they are no more in a position to dictate the developing world and if they stick to their archaic and obsolete policies, they are destined to doom in the quagmire of ill-conceived nostalgia of a reflected glory. They must engage themselves with the Asian world on equal terms while abdicating their supremacist tendencies and exploitative agenda.

Conclusion

It is axiomatic from the ongoing discussion that the BRICS NDB has the propensity to match with the Bretton Woods Organizations. There is a requirement to have a delicate balance between economic austerity measures and neo-liberal economic policies that demand fiscal discipline for economic development and people-oriented development directed at equitable wealth distribution and just income. The fundamental problem has been the initial capital and the CRA installation in US Dollars. The BRICS member states’ debts as adumbrated hereinabove are another irritant that must also be repaid and removed within a well-stipulated time frame before switching over to new BRICS arrangements on its potential currency. On the other hand, Chinese AIIB (Asian Infrastructure and Investment Bank) establishment with an initial capital of US $ 100 was also set-up in a Western hegemonic currency called Dollars. Therefore, NDB and AIIB would have to work collectively to dismantle the well-entrenched Bretton Woods financial wherewithal in the world that has been designed to usurp the Asian economies. Although, the BRICS and AIIB have already taken a step ahead in this direction with enacting the Chinese Petrol Exchange in Shanghai at which trading would be in gold-convertible Yuan and discarded the trading in US Dollars. Thus, the BRICS and SCO fusion is the potential solution that may be analogous to the IMF’s SDR (Special Drawing Rights). The SDR presently comprises five world currencies such as US Dollars, British Pound, Euro, Yen, and since 2016 Chinese Yuan and same must be commenced and pressed into international trade as a viable alternative while maintaining the sanctity of their national monetary systems for a bidding and enterprising future.

Dr. Nafees Ahmad

Ph. D., LL.M, Faculty of Legal Studies, South Asian University (SAARC)-New Delhi, Nafees Ahmad is an Indian national who holds a Doctorate (Ph.D.) in International Refugee Law and Human Rights. Author teaches and writes on International Forced Migrations, Climate Change Refugees & Human Displacement Refugee, Policy, Asylum, Durable Solutions and Extradition Issus. He conducted research on Internally Displaced Persons (IDPs) from Jammu & Kashmir and North-East Region in India and has worked with several research scholars from US, UK and India and consulted with several research institutions and NGO’s in the area of human displacement and forced migration. He has introduced a new Program called Comparative Constitutional Law of SAARC Nations for LLM along with International Human Rights, International Humanitarian Law and International Refugee Law & Forced Migration Studies. He has been serving since 2010 as Senior Visiting Faculty to World Learning (WL)-India under the India-Health and Human Rights Program organized by the World Learning, 1 Kipling Road, Brattleboro VT-05302, USA for Fall & Spring Semesters Batches of US Students by its School for International Training (SIT Study Abroad) in New Delhi-INDIA nafeestarana[at]gmail.com, drnafeesahmad[at]sau.ac.in

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