Bangladesh has recently submitted its application to join BRICS, a consortium comprising Brazil, Russia, India, China, and South Africa. BRICS serves as a forum for emerging economics to address their concerns and facilitate cooperation within a structured framework. The BRICS countries currently have a population of 3.42 billion, accounting for 42% of the world’s population. In 2021, this bloc contributed 31.5% of the global GDP, amounting to $26.03 trillion, and also accounted for 18% of global trade. Consequently, it represents an influential bloc of emerging economics that focus on economic cooperation and development. While there may not be immediate benefits due to it not being a trade bloc, BRICS membership promises substantial long-term advantages for Bangladesh but there are challenges to navigate.
Over the past few decades, the developing world has made remarkable strides and the figure of developing nations increased significantly. Subsequently, the BRICS initiative aims to unite all developing nations under a framework to attain socio-economic progress. The dominance of the dollar-based monetary system has prompted to explore alternative options, resulting in countries like Saudi Arabia, Iran, Argentina, United Arab Emirates, Iraq, Algeria, Egypt, Qatar, Kuwait, Bahrain, Indonesia, and Venezuela have expressed their desire to join the bloc.
Disappointments, undue conditions even ambitious, and the dollar-based monetary system of the advanced developing countries has driven other nations to establish alternative multilateral banks to meet their financial needs. Seizing this opportunity, BRICS established two such multilateral lending agencies, the Asian Infrastructure Investment Bank (AIIB) initiated by China and operational since January 2016 in Beijing and the New Development Bank (NDB) established by BRICS in 2015 and headquartered in Shanghai. These two banks serve as alternative multilateral banks to the Bretton Woods Institution, the World Bank (WB) and International Monetary Fund (IMF). Bangladesh became a member of both the banks.
The total capital of both the banks is $100 billion. AIIB has now 103 members across the world. Last 5 years, AIIB and NDB have approved $22.02 billion and $30 billion respectively for physical infrastructure development, improve connectivity, and integration among the member states. Bangladesh certainly would be considered as an important member of BRICS because of its test book example of spectacular economic development. AIIB has already approved $2.40 billion for 13 projects and has proposed of $1.73 billion for four more projects in Bangladesh.
Bangladesh’s decision to join BRICS comes at a very crucial time as the international economy is crippling mostly because of COVID-19 and western sanctions centering Russia-Ukraine conflict. The sanctions are exacerbating the sufferings of every country in the world. The Western restrictions are impeding countries from purchasing industrial raw materials, fuel, fertilizer even food grains. The Western powers use the dollar-based monetary system as a punitive tool against their rivals. Recently, the US Federal Reserve, the country’s Central Bank, has aggressively increased interest rate. This has exerted tremendous pressure on the currencies of many Global South nations. Such action has led to a global cost-of- living crisis that has driven millions of people into destitution and economic hardship.
BRICS member countries have long discussed introducing a common currency and the establishment of their own reserves. If it becomes effective, this would reduce dependence on the dollar. Dilma Rousseff, the NDB’s new chief, recently announced that the bank is gradually distancing itself from the US dollar. She pledged that at least 30% of loans would be provided in the local currencies of member states. It would help to avoid the negative impact of exchange rate fluctuations of dollar.
Membership in BRICS would grant access to additional external sources to get funds on easier terms and conditions, and strengthen their negotiation position. It would also help Bangladesh to diversify its foreign relations. Bangladesh will be able to take advantage of this if an alternative currency or an alternative trade system is introduced in the future among the BRICS countries. Moreover, BRICS investment in infrastructure, technology, and education would drive improvements in productivity, competitiveness, and job creation. Bangladesh would have the opportunity to be more proactive in global issues and contribute to setting agendas. It would enhance bilateral trade and foreign investment in Bangladesh.
The US and EU are two major trade partners for Bangladesh. So, after joining the alliance, Bangladesh may come under pressure from the west. A significant challenge for Bangladesh would be to avoid financing any disputed, less-viable, and environmentally detrimental projects. The relationships among member states are very complicated. Bangladesh, as a neighboring country, has to face the challenges on diplomatic relations with India and China.
The prospect of Bangladesh joining BRICS holds immense promises. Bangladesh would be significantly benefited by infrastructure development, market expansion, Technological advancements and diplomatic influence. So, Bangladesh needs to be more cautious on political and diplomatic relations among the BRICS members. Upholding the non-aligned principle of our foreign policy “friendship to all, malice to none” should be the only guiding force to move forward with BRICS nations.