Johannesburg summit builds on BRICS’ power as a bloc

As expected, global trade was the main talking point at last week’s BRICS summit in Johannesburg, especially the disruption partially brought into play by US President Donald Trump, who has unilaterally imposed additional tariffs on imports of nearly $500 billion. This would impact practically all the major economies in the world, even if more than half of the punitive tariffs target China.

The BRICS nations resolved to act in unison to ensure that the rules governing global trade are preserved and notably reiterated their commitment to enhancing open trade not only between themselves but also with other countries around the world.

Another main point was the proposed restructuring of the International Monetary Fund to ensure its governance reflects the needs of the poorest economies in the world. This is a thorny issue as the current power-holders in the IMF – the G7 nations – are loath to give up their control over one of the most powerful financial institutions in the world. In Johannesburg, the BRICS upped the ante by committing to the deadline of 2019 for a revision of the quotas currently used in governing the IMF.

The summit also addressed several other issues such as increasing intra-BRIC investment as well as the new industry mantra – Industry 4.0 or the fourth industrial revolution, dealing with the Internet of Things. The leaders also agreed to strengthen intra-BRIC collaboration in dealing with other global priorities such as climate change, sustainable development, terrorism, peace and security.

The BRICS as a bloc have definitely emerged as a player on the global scene, and they are being taken seriously. One of the biggest achievements, even if a bit controversial, is the BRICS Bank, called the New Development Bank, set up to offer a platform of international finance that is not totally controlled by the developed economies. The NDB has already funded nearly $2 billion worth of projects in its member countries and has a target of taking this figure to $32 billion in the next four years. Now the NDB has also decided to fund sovereign projects in non-BRICS nations and will soon open its membership to new countries.

Another success indicator for BRICS is clearly the economic heft of the bloc. In 2017, BRICS countries’ GDP stood at about $17 trillion, or 23 percent of the global GDP, almost double the prediction made in 2003.

Despite a rather sterling economic performance, BRICS countries could find bilateral relations between two of the largest members – China and India – less than warm. India has steadfastly refused to join or support the BRI, seeing it as a way for Chinese hegemony to spread. The competition between the Asian giants for influence in Africa is set to heat up, and this could weaken their cooperation. The failure of the two nations to find a solution to their long-pending issue of border demarcation is also likely to remain a thorny one, as is the perceived Chinese support of Pakistan, with whom India’s relations seem to be going nowhere.

The other weak point relates to intra-BRICS trade, where the bloc has failed to live up to its potential. Being home to five of the world’s largest economies, the BRICS need to trade much more with each other, not only to keep their economies healthy but also to ensure that their stated objective of keeping global trade free and healthy is met by some concrete action.

•  Ranvir S. Nayar is managing editor of Media India Group, a global platform based in Europe and India, which encompasses publishing, communication, and consultation services.