BRICS Summit 2023: Shaping equitable global order

World Friday 28/July/2023 10:15 AM
BRICS Summit 2023: Shaping equitable global order

Johannesburg: As South Africa anticipates hosting the eminent 15th BRICS Summit in Johannesburg, the world awaits with bated breath to witness the unfolding of this influential alliance on the global stage. Formed as BRIC and later joined by South Africa, BRICS stands as a beacon of economic optimism, presenting an alternative global order to challenge the dominance of traditional institutions.

With a track record of accomplishments through the New Development Bank and the Contingent Reserve Arrangement, BRICS draws interest from numerous nations seeking an equitable platform of representation. This defining moment summons unity and commitment, promising a future of fairness and prosperity for the Global South. South Africa is poised to host the prestigious 15th BRICS Summit in Johannesburg from 22nd to 24th August 2023 with great anticipation. Initially formed as BRIC, a visionary concept coined by Goldman Sachs economist Jim O'Neil in 2001.

The alliance was comprised of Brazil, Russia, India, and China - a collective representation of burgeoning emerging markets brimming with current and future economic prowess. In a momentous development in 2010, South Africa joined the ranks, bestowing the acronym BRICS upon this formidable bloc of nations.

Now, on the cusp of this landmark event, the world eagerly awaits the world awaits with bated breath to witness the unfolding of this influential alliance on the global stage.

As a consortium of the world's five fastest emerging economies, the BRICS exudes profound economic optimism. It was touted to present an alternative global order that would act as a formidable response to the Washington consensus-driven Bretton Woods Institutions. The heft of the group springs from the fact that it comprises 3.2 billion people collectively, that is, 42 per cent of the total world population.

BRICS economies represent 27 per cent of the global Gross Domestic Product (GDP) and over 18 per cent of global trade. These countries also register 50 per cent of the total global economic growth, making them the most significant countries propelling global growth.

Over the years, the BRICS has accomplished several achievements. The two notable ones are the New Development Bank and the Contingent Reserve Arrangement. The New Development Bank (NDB) was launched in 2014 with an initial capital of USD 50 billion, with member countries making an equal contribution of $10 billion each.

It is contended as a new multilateral bank that provides an alternative to Bretton Woods Institutions of the IMF and the World Bank. It also claims to have a fairer governance structure by being democratic as all the original members have equal votes and say in its functioning. The NDB is highly respectful of member states' laws and rules. It provides faster financing than the World Bank, and without imposing strict conditions like the IMF.

With a substantial investment of USD 32.8 billion already directed towards 96 projects within BRICS member countries, the NDB displays an impressive track record. Ambitiously, it seeks to broaden the horizons of its operations further. The NDB is open to new members as well and in 2021, countries like Egypt, the United Arab Emirates (UAE), Bangladesh and Uruguay became stakeholders by acquiring its shares.

The Contingent Reserve Arrangement works as a liquidity mechanism to support BRICS member countries that are facing balance of payment issues or struggling with payments. A series of swap arrangements were established among the BRICS member countries’ central banks.

This swap arrangement provided for an exchange of local currency for hard currencies such as the US dollar by the central bank of the member country facing a balance of payment crisis with other member countries of the BRICS.

These mechanisms are attracting many other emerging economies and developing countries that have had poor past experiences and lingering issues with IMF’s structural adjustment programmes and austerity measures. It has become one of the significant reasons why several countries have expressed their keen interest in joining the BRICS grouping.

This a resounding testament to the burgeoning legitimacy and significance of BRICS, as no less than 19 nations have already stepped forth to express their desire. Among them, Iran, Indonesia, Saudi Arabia, the UAE, Mexico, Argentina, and Nigeria, each enticed by the allure of the BRICS family, yearn to join the ranks of this prestigious alliance. United in their pursuit of prosperity and stability, they exemplify the appeal of this illustrious grouping, leaving an indelible mark on the global landscape.

With the changing geopolitical landscape that is challenging the traditional dominance of the US-led West, the relevance of BRICS is gaining salience. For years, the BRICS member countries have been seeking to reduce their reliance on the dollar and the process has been accelerated recently with Western sanctions on Russia following the Russia-Ukraine conflict.

Several other countries are also raising their concerns regarding their dollar-denominated debt and the fear of the consequences in case the USA defaults, especially in the wake of the Fed’s rising interest rate and the debt-ceiling crisis in the world’s leading economy. Thus, a process of de-dollarization and reducing the country’s reliance on the US dollar in international trade and finance is being witnessed across the world.

Another view that is being heralded by the BRICS is the creation of an economic and trade mechanism outside the dominance of the West-led systems to ensure the stability and security of BRICS and other like-minded developing countries. In this regard, the BRICS provides an alternative to the developing world that can counter their continued marginalization within the West-led institutions such as the World Trade Organisation (WTO) and the International Monetary Fund (IMF).

Although BRICS does face certain vulnerabilities such as the threat of it becoming a China-centric forum owing to its economic and trade preponderance. Still, this formidable alliance dares to present an alternative vision of the global order. A vision that reverberates with the resonant values of equity and sovereign equality, transcending the boundaries of economic magnitude. Here, the voices of all nations, regardless of their size, reverberate harmoniously, united under the banner of non-aligned institutions.

As the BRICS Summit gathers on South African soil, a defining moment arises. It beckons the member nations to seize this juncture and mould an unprecedented global economic governance system—one that is all-encompassing, efficient, and inclusive.

In the midst of turbulent geopolitical currents, the BRICS countries bear a profound responsibility. They possess the extraordinary chance to reshape the world order, bestowing greater equity and amplified voice upon the realms of the Global South.

This pivotal occasion demands nothing less than a grand display of strength, unity, and unwavering commitment to forging a more just and balanced tomorrow. The unfolding of events at the BRICS Summit shall resonate far beyond the realm of economic cooperation, echoing the profound impact of nations working hand in hand toward a shared vision of a better world.