The BRICS: Beyond the Hype
The BRICS grouping—comprising Brazil, Russia, India, China, and South Africa—is as contentious as it is misunderstood. Skeptics dismiss the BRICS out of hand, arguing that the coalition is all talk and no action. Enthusiasts, on the other hand, maintain that the BRICS portend a new global pecking order—one in which the emerging economies, led by China, will challenge and eventually overtake a West in decline. More sober analysis is hard to come by.
Last week’s summit of BRICS leaders in the Russian city of Ufa offers a timely opportunity to assess what the BRICS are, what they are not, and why it’s time for the United States to begin taking them—and the grievances they represent—seriously.
The BRICS grouping can best be understood as a platform to express dissatisfaction with shortcomings in the system of global governance, not a vehicle to overturn the system itself. In fact, the BRICS are more status quo than they’d like to admit. Their joint declarations may have a revolutionary tinge, but the BRICS are revisionist more in rhetoric than in reality. Far from seeking to upend the existing world order, these five countries have a vested interest in broadly preserving the institutions that have enabled their prosperous rise, while selectively reforming those areas where they are denied privilege and influence commensurate with their growing economic weight.
Whether Washington likes it or not, the BRICS aren’t going anywhere. In 2001, Goldman Sachs analyst Jim O’Neill coined the term “BRICs” to encapsulate what he predicted would be the four most dynamic emerging market economies of the new century. (South Africa joined their ranks in 2011.) Given the acronym’s origins in the world of finance, Western observers are predisposed to view the BRICS as a purely economic entity—one whose legitimacy depends on extraordinary growth rates and investment opportunities. That’s why many have been quick to assume that the BRICS’ uneven economic performance in recent years has cast doubt on the group’s relevance. But it would be a mistake to view the BRICS exclusively through the lens of economic indicators. It no longer matters that the BRICS’ growth is more sluggish than anticipated, or that emerging economies like Indonesia, Mexico, and South Korea could outpace Brazil, Russia, and South Africa in the years ahead. That’s because the BRICS have acquired a political momentum that transcends year-to-year economic growth.
That momentum is manifested in the new BRICS financial institutions formally launched last week in Ufa. These are the New Development Bank (NDB), a $100 billion lending platform that will finance infrastructure projects in the BRICS and other developing countries, and a $100 billion currency pool known as the Contingency Reserve Arrangement (CRA), which will aim to cushion the BRICS economies from global financial pressures. Many have taken these new institutions as evidence that the BRICS are bent on usurping the postwar economic order built and led by the West. But that’s hardly the case. In fact, the NDB and CRA mark the BRICS’ response to the widely acknowledged shortcomings of the existing global financial system. A common desire to reform global economic governance was the issue that drove the BRICS together and gave them legitimacy in the aftermath of the global financial crisis. For years, the BRICS have demanded an overhaul of the Bretton Woods institutions, where Western powers remain overrepresented at the expense of emerging economies. China, the world’s second-largest economy, has just 3.81 percent of total votes in the International Monetary Fund (IMF). To put that in perspective, France and the United Kingdom each have 4.29 percent, yet their economies are three times smaller than China’s, according to the latest IMF data. Clearly, some reshuffling is long overdue. But the IMF reform package negotiated in 2010, which would begin to address these imbalances, remains stalled in the U.S. Congress. Sadly, Washington’s failure to ratify IMF reform is emblematic of the BRICS’ grievances: existing institutions are increasingly outdated, and emerging economies—which represent a growing proportion of the global economy and population—demand to be treated as equals. Worse still, obstruction of IMF reform has only fueled perceptions that the United States is determined to keep down rising powers like the BRICS.