BRICS is developing in a direction that was never envisaged. The group was brought together by geopolitical rather than economic considerations and this can be seen in the strategic interests shared by Russia and China. It took them two decades to draw closer. Later, India joined Russia and China, thus changing RC into RIC, the entry of Brazil changed RIC into BRIC, and with South Africa as its member, the group became BRICS.
BRICS is actively involved in the efforts to change the world economic system by increasing the number of non-Western states in international financial institutes despite frantic opposition by the traditional distributors of world money. The BRICS countries decided to create the $100 billion BRICS Development Bank and a reserve currency pool worth over another $100 billion to offer an alternative to countries in the non-Western world when it comes to choosing the sources of funding for development or coping with serious economic crises.
The consequences of the Ukraine crisis for BRICS and the world cannot be overestimated. It demonstrates that the West has not abandoned the idea of a unipolar world and will continue building it up by drawing into its foreign policy orbit issues it calls “international” or even “common to mankind.” Many non-Western states look at this as a new wave of colonialism, which having abandoned the old slogans (“superior culture”) for new ones (“democracy”), uses the old methods and pursues the same aims. This will increase the desire of non-Western countries to enhance their coordination and perhaps the current conflict is already showing signs in this respect.
The BRICS states are different in many respects and their disagreements with the West are rooted in different historical and political circumstances. Brazil, which represents Latin America and has strong left socialist tendencies, disagrees with the West on social issues. Latin America is especially sensitive to diktats from the North and recurrences of the Monroe Doctrine. The situation in South Africa is the same: The local communists belong to the ruling coalition while the West is accused of abetting the old order. In Russia and India, people are not so much repelled by the political as by the moral values of the West. The Western political system causes much milder negative feelings even though there are differences in that field too. This means that the determination to oppose diktats plays an important role in the opposition to the West.
Given this context, the current crisis in Ukraine will consolidate BRICS as the group will make further efforts to become a real alternative to the West to create a real multipolar world.
The important question now is: Is there a rise of the RIC now within the BRICS? If one disaggregates BRICS into its geopolitical components within northern Eurasia, there are some interesting dynamics in play, revolving around the foreign ministerial triangular Russia-India-China (RIC) relationship. Dialectically, the fallout from Russia’s alienation from the G-8 group of nations (reduced to G-7), raises the prospect that — tactically at least — Russia, India, and China might be playing their own triangular integrationist card within BRICS at Moscow’s initiative. Neither India nor China (nor Brazil and South Africa) may be on board with isolating Moscow.
In fact, both the Asian giants — India and China — may stand to reap the “best of both worlds” as the Ukraine imbroglio plays out. Russia has every incentive to accommodate both India and China in the energy sector, especially in the case of the Beijing-Moscow axis that has been languishing in limbo due to the price of shipping gas to China. This could mean greater industrial and energy cross investments between Russia and India as well as between Russia and China. This will create a north Eurasian integrationist core within BRICS, whichever way Moscow’s relations with the US and Europe play out. Additionally, the proposed arrangement for rupee-ruble cross currency pairing could well be a harbinger of more concerted efforts to settle payments in non-dollar currencies with more countries looking at India’s sovereign Financial Messaging Systems (SFMS), while also remaining connected with a central system like SWIFT. This should also anchor India’s quest to build a dedicated payment mechanism for energy-related payments and settlements as a long-haul measure. This could change the contours of the global payments landscape and benefit the rupee immensely. People of the old school may still be basking in the dollar’s hegemony but there is no harm in pushing for rupee internationalisation.
Thus, Russia’s invasion of Ukraine appears to have unwittingly put India at the sweet centre of a diplomatic triangle in the Indo-Pacific. As the war progresses, New Delhi has been receiving a stream of high-profile visitors from around the world. This has included delegations from the US, Australia and Japan, India’s partners in the Quad. The foreign minister of Greece has also been to India and the Israeli prime minister is scheduled to visit soon. But in a surprising turn of events, even traditional rival China is making overtures to India at this time, with Foreign Minister Wang Yi’s visit. Another suitor is Russia, India’s trusted arms supplier for decades, which is now also becoming a supplier of discounted crude oil to India as Moscow recoils from sanctions enforced by western consumers of its natural gas.
New Delhi is basking in its well-deserved spotlight with well-crafted diplomacy. India could be looking at a new dawn. After all, RIC controls 22 per cent of the global GDP and 16 per cent of global exports of goods and services.
This column first appeared in the print edition on April 8, 2022 under the title ‘BRICS for a new order’. Ghosh is Group Chief Economic Advisor, State Bank of India and Chaudhuri is senior vice-president, Datamatics Global Services. Views are personal