Although too early to discuss Russia’s rotating chairship of BRICS (Brazil, Russia, India, China and South Africa) plus six new members, its rotating presidency begins next year Jan 1, 2024. Obviously at a quick glance, it has two distinctive significance: the first is Russia takes over a new BRICS, and will inaugurate Egypt and Ethiopia (both Africa), Argentina (Latin America), Iran, Saudi Arabia and the United Arab Emirates into its fold.
Of course, new members give additional weight to the bloc, which already consists of resource-rich nations and highly industrialized economies. An expanded BRICS will be beneficial to extend its global influence and strengthen trade ties with a wide range of powerful, emerging market economies.
In the declaration, BRICS also committed to assisting Africa to accelerate industrialization and infrastructure development, which are pre-conditions for driving trade and investment on the continent. There is no doubt that the enlargement of BRICS will continue to benefit South Africa, an opportune time when it is implementing an economic recovery plan and structural reforms to make economy globally competitive, reduce cost of doing business, attract investment, and stimulate economic growth.
South Africa joined 2010, and has since then hosted three summits. That will bring to three African States in BRICS. It is the bloc’s first expansion in 13 years as it seeks to be an alternative to Western-dominated organizations, most especially with the global changes and emerging new economic architecture and political configuration.
And the second distinctive feature for 2024, Russia will hold its next presidential election. Wide speculation that Vladimir Putin will be continue as next president of Russia, as currently has no political rivals in the Russian Federation. He began his first presidency after Boris Yeltsin handed over the administration.
Kremlin administration eyes the representatives of three parliamentary parties to run in the election: the Communist Party, the Liberal Democratic Party (LDPR) and the New People (Sergei Mironov, the leader of A Just Russia, has already announced that his party would not nominate a candidate and would support Vladimir Putin). According to the Kremlin’s plan, Leonid Slutsky, the Liberal Democratic Party’s leader, should be the candidate.
Taking over officially from Jan. 2024, Putin has a lot of challenges, most of them have already been in the pipeline. For instance, the key priorities including deepening the Global South coalition as a collective force in pushing for the multipolarism, creating economic architecture and finding alternatives pathways for common currency and payment system.
Brazilian Luiz Inácio Lula da Silva, Indian Prime Minister Narendra Modi, and Chinese leader Xi Jinping, earlier in the course of chronicled speeches delivered at the summit, unreservedly (re)echoed the importance of the emerging tasks ahead of BRICS. Nevertheless, the challenges are known. What is necessary, at this point, is adopting a pragmatic approach and a make complete departure away from rhetorics while working diligently to move towards the transition unto an expected new stage.
South Africa strongly supports the intensification of intra-BRICS trade and the multi-lateral reform it advocates. South Africa sees BRICS as a means of promoting multi-lateral reform and cooperative economic growth, which will benefit the globe as a whole.
President Cyril Ramaphosa, in his speech preceding the summit, which sought to clarify the country’s foreign policy, allayed fears that the country’s membership in BRICS was in opposition to its relationships with the United States, United Kingdom and European Union.
He reiterates that South Africa is in favour of inclusivity, holistic economic growth and institutional reform. And in practical terms, South Africa depends on all countries. It is non-aligned and further believes in cooperation in the spheres of trade and investment, the peaceful resolution of disputes, and the struggle for democracy.
That however, many states around the around are still keep neutral, not taking noticeable sides. But BRICS basic principle remains the desire to create a multipolar world order wherein the rules of the game will not reflect solely the interests of the United States, European and its allies.
The reason why the US and its allies don’t accept BRICS is because they are reluctant to allow others to compete with Western economic and political institutions and seek to preserve their own monopoly and control over the global economy and political processes. In addition, the fact that it is China that plays a leading role in BRICS, and that followed by Russia. Western hegemony does not end now, as it would take decades towards building necessary institutional structures for a multipolar world.
At least, BRICS has established its own bank, that is supposed to take up such financial directions as done, over the years, by both the World Bank (WB) and the International Monetary Fund (IMF). It has been predicted that BRICS nations could surpass the G-7 economies, which comprise world’s advanced economies including Canada, France, Germany, Italy, Japan, United Kingdom, United States of America, and the European Union, which collectively contribute 46% to the world’s GDP.
In order to meet that prediction, BRICS has to fix its sub-institutions especially the financial system to reflect the needs for developing nations and trading system. As Russia prepares to take over the BRICS chairship, the bloc will continue pushing for equitable representation. It is essential for the BRICS members promote integrated trade network system, develop new value chains, and stimulate industrial and infrastructure development as stipulated in the Johannesburg Declaration.
It was very noticeable that BRICS leaders appear divided on the issues relating to de-dollarization and the creation of a common currency to rival the US dollar. “The creation of a currency for trade and investment transactions between BRICS members increases our payment options and reduces our vulnerabilities,” Brazil’s President Luiz Inacio Lula da Silva said at the summit.
The Brazilian leader has been one of the most vocal proponents of alternative trade settlement currencies. “Why can’t we do trade based on our own currencies?” he said in an April state visit to China, according to The Financial Times. “Who was it that decided that the dollar was the currency after the disappearance of the gold standard?”
Russia differed from Brazil. “We are working to fine-tune effective mechanisms for mutual settlements and monetary and financial control,” Russian President Vladimir Putin told his colleagues, and added that de-dollarization within the BRICS bloc is “irreversible” and gaining pace.
We also know that Putin has been pushing for more trade in local currencies following sweeping sanctions against Russia that have expelled the country from the US dollar-dominated global financial system. He said at a previous international meeting in July that it was important to establish an “independent financial system” based on local currency trade.
At the Johannesburg summit, BRICS leaders have given explicit marks to these questions. Putin also underlined these facts in his speeches. At one point, he suggested that BRICS becomes a trading bloc, and that was the most practical statement to come from BRICS so far. Once BRICS begins to function as a trading bloc with fair terms of trade, Africa may apply to join the bloc. If BRICS positions itself as a trading bloc with effective and open trade rules, it may very supplant World Trade Organization (WTO) in a generation.
China did not comment on the idea of a BRICS common currency, but President Xi Jinping promoted “the reform of the international financial and monetary system” in a speech at the summit. China has indicated it wants the Chinese yuan to play an outsized global role but hasn’t called for it to replace the dollar.
“No one has tabled the issue of a BRICS currency, not even in informal meetings,” South Africa’s Finance Minister Enoch Godongwana told Bloomberg on the sidelines of the bloc’s annual summit in Johannesburg.
“Setting up a common currency presupposes setting up a central bank, and that presupposes losing independence on monetary policies, and I don’t think any country is ready for that,” he added to the media outlet. Instead, South Africa appears to veer toward increasing the bloc’s trade in local currencies. Back in April, South Africa’s deputy president Paul Mashatile had said the BRICS bloc was looking to reduce its reliance on the US dollar.
As we already know, BRICS, which is made up of Brazil, Russia, India, China, and South Africa, is more than just an acronym. It is a bloc of influential emerging market economies that are collaborating to restructure the global economic multilateral order to make it fairer, inclusive, and equitable. These nations account for about 42% of the world’s population and 24% of the world’s gross domestic product (GDP).