How the BRICS Got Here

Brazil, Russia, India, China, and South Africa have created a meaningful partnership over the last several years, but the rivalry between the bloc’s two most powerful members poses an obstacle to greater unity.

August 31, 2017

Leaders of the BRICS pose for a group photo during an October 2016 summit in India. Danish Siddiqui/Reuters
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The BRICS, a bloc comprising Brazil, Russia, India, China, and South Africa, has in its short existence rapidly expanded its diplomatic activities, advocated a larger voice in global economic and security forums for its members, and created brand new financial institutions. The member countries share a desire for the world to accord them a larger role, but despite their common platform for global reform, two of the five—China and India—have some deep differences between them.

From September 3 to 5, national leaders will gather in Xiamen, China, for the Ninth BRICS Summit. All eyes will be on the interaction between Chinese President Xi Jinping and Indian Prime Minister Narendra Modi, whose troops up until a few days ago were locked in a months-long standoff high in the Himalayas. The frosty bilateral security relationship has at times threatened to overwhelm their common pursuits.

The Origin of the BRICS

The conversion of the “BRICs” from an idea, originally coined in two early-2000s Goldman Sachs papers, into an institution began with the meeting of the then leaders of China, India, and Russia (Hu Jintao, Manmohan Singh, and Vladimir Putin) on the margins of the 2008 Group of 8 (G8) meeting in St. Petersburg. (Russia was a member of the G8 before its 2014 expulsion over its invasion of Ukraine’s Crimea, and India and China attended the gathering as part of G8 “outreach” to emerging economies.) The following year, the first summit of “BRICs” countries, excluding South Africa, took place in Russia. In 2010, at a foreign ministers’ meeting, the initial four agreed to invite the African nation; by its 2011 summit, the five-country organization—with the “S” now standing for South Africa—acquired its present shape.

“BRICS” as a shorthand nicely encapsulates the rise of emerging markets around the world. But it’s less clear whether this grouping also provides durable common interests for a multilateral organization, especially given the vast economic differences among the five. China and Russia, of course, enjoy two of the five permanent seats on the UN Security Council (P5), so they already participate in global security governance in a qualitatively different manner than their BRICS peers. Additionally, the pair—particularly China under Xi Jinping, and Vladimir Putin’s Russia—represent authoritarian systems of government, not democracies. For this reason, India, Brazil, and South Africa have their own separate trilateral consultation known as the “IBSA Dialogue Forum.”

BRICS

What Does the BRICS Do?

In the early days, at least if assessed by their joint statements issued at summits, the BRICS focused on highlighting the need for emerging powers to have a greater voice in global governance.

In the wake of the global financial crisis, the 2009 joint statement contained strong declarations on the importance of coordinating financial policy through the G20. But it also made several specific points about the need to reform international financial institutions to create “greater voice and representation” for emerging economies, including a more transparent process for leadership selection. These statements also addressed the longstanding traditions in which the World Bank’s president has been an American, the IMF’s Managing Director a European, and the developed Western economies have had the most weight in the voting and quota shares.

The third summit’s joint statement (2011) included the phrase that “China and Russia reiterate the importance they attach to the status of India, Brazil, and South Africa in international affairs, and understand their aspiration to play a greater role in the UN.” That said, neither China nor Russia appear to have actually done much to help their BRICS compatriots join them as permanent members of the Security Council. By the fourth summit, held in New Delhi in 2012, the collective arrived at the phrase that echoes in many subsequent communications: the BRICS represents “43 percent of the world’s population,” signaling clearly their concern for more representation in global institutions.

With each passing year, the BRICS diplomatic calendar has expanded, with a host of interactions to both coordinate policy positions as well as expand official and people-to-people dialogue, generally on non-contentious topics. What began with summit-level gatherings and, separately, meetings of foreign ministers, now includes meetings during the year for finance ministers and central bank governors, national security advisors, science and technology ministers, agriculture ministers, environment ministers, disaster response authorities, health ministers, labor ministers, a Business Council, a Think Tanks Council, a Parliamentary Forum, a Culture Festival, and a “Friendship Cities and Local Governments Cooperation Forum.” In turn, the joint statements have ballooned to reflect all this activity: last year’s ran twenty-seven pages, and in 2015, a bloated forty-three.

New Institutions Mark Turning Point

If in 2010 the group could be easily dismissed as yet another entrant in the “alphabet soup” of global institutions, today it’s harder to say the BRICS doesn’t matter. These five countries have rapidly used the BRICS format to signal to the world that the old twentieth-century institutions have to change. And in 2012, they took that signal from word to action.

Of all the BRICS’s collective efforts, the creation of its own modestly named New Development Bank, along with a Contingent Reserves Arrangement, is the most significant. These institutions represent the organization’s pivot to action after long-pending IMF and World Bank reforms failed to materialize between 2010 and 2015. Much has been written about the creation of the China-led Asian Infrastructure Investment Bank—perhaps because it has signed up more members, or perhaps simply because the “China rising” storyline garners more eyeballs. But the NDB emerged from the same impulse for representation and voice, in this case in the operations of development finance.

Today, the NDB is fully operational. Each of the five countries has contributed an equal share of the $50 billion initially subscribed capital, and each has an equal voice. The bank’s headquarters are in Shanghai; its first president is K.V. Kamath, a former CEO of India’s ICICI Bank; and the governance structure emphasizes equal and rotating representation. In April 2017, just under five years after the idea of the NDB came out of the Delhi summit, the bank signed its first development loan agreement in Brazil.

The $100 billion Contingent Reserve Arrangment, agreed to at the 2014 summit in Brazil, provides emergency lending in the case of a liquidity crisis. It, too, was created specifically as an institutional alternative to the IMF, as the Indian government’s press statement about its founding explicitly noted.

India-China Tensions Strain BRICS Unity

The upcoming summit in Xiamen convenes against the backdrop of tension between the two giants China and India. Indian and Chinese troops spent the summer months in a Himalayan standoff in territory disputed by China and Bhutan, an ally of India. The standoff was noteworthy for its length as well as for the strident language in Chinese state media directed at India. 

Differences between China and India underline that not much binds the five members except that they are large and non-Western. It’s hard, thus, for the BRICS to maintain a unified agenda beyond noncontroversial subjects when two of the organization’s five members have a history of conflict that still flares occasionally into the outrightly adversarial. At times New Delhi and Beijing have made common cause to advocate for global governance reform—as they have done with the BRICS—but this too has its limits. To this day, China remains the sole P5 member to not explicitly endorse India’s bid for UN Security Council permanent membership.

Despite this sometimes turbulent relationship between its two largest members, the BRICS has emerged as a unique institution for cooperation. Much of that cooperation—in addition to high-profile gatherings—concerns the domestic subjects noted previously, such as agriculture, education, health, and tourism, to name just a few. Given the emphasis on economic growth and development among the five, this priority hardly surprises.

The organization has nodded toward cooperation in the security arena as well, with an annual meeting of “high representatives” on national security, and coordination at the United Nations. This past July, the informal leaders’ summit on the margins of the G20 meeting, a prelude to the Xiamen summit, resulted in a statement from the Indian prime minister that urged “strong and definitive action” among the five on counterterrorism. But the Chinese summit hosts have declined to put terrorism emanating from Pakistan on the agenda for Xiamen.

The BRICS’s flourishing activity roster appears overwhelmingly situated within a comfort zone of subjects neither controversial nor likely to precipitate bilateral differences. Witness the emphasis on the five countries’ collective representation of 43 percent of the world’s population, or their intensive concern for more representative global governance, especially financial. Expanded consulations now cover subjects like think tank and business forums, “Friendship Cities,” or innovation—nary a topic of conflict among them. As rapidly as these five countries have created a new institution, they have not yet trained their sights on inherently divisive challenges.   

Looking to Xiamen and Beyond

Each year, the host country crafts a summit theme. The Chinese have dubbed the Xiamen summit, “BRICS: Stronger Partnership for a Brighter Future.” The BRICS countries indeed have deepened their partnership over the past eight years, developing a real organization out of a mere idea, and showing their capacity to create new financial institutions that they can control. But this will be the first gathering of leaders in which two members have just emerged from a prolonged military standoff. How the five handle the aftermath of recent India-China tensions will inevitably set the tone for where the group heads next. In other words, does the BRICS have “a brighter future” as a collective if it cannot confront a serious difference between its two giants?

If it cannot, the BRICS as an institution will show itself to be united in creating alternatives to Western-led international financial institutions, but a weak organization when it comes to solving serious problems among its members. The outcome of the Xiamen summit will illustrate whether this organization will continue to grow, or whether it will trundle on with a least-common-denominator focus.

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