• BRICS started in 2001 as BRIC, an acronym coined by Goldman Sachs for Brazil, Russia, India, and China. South Africa was added in 2010.
  • New Joinees of BRICS: Iran, UAE, Saudi Arabia, Egypt and Ethiopia.

New Development Bank:

  • It is a multilateral development institution, headquartered at Shanghai. It is conceived as an alternative to existing financial institutions like IMF and World Bank which are dominated by the western powers.
  • It emerged through the Fortaleza declaration, signed during the 6th BRICS summit.
  • Membership is open to United Nations members, including both borrowing and non-borrowing members.
  • The bank allows new members to join but the “BRICS” countries share capital can not fall below 55%.

Significance of BRICS

  • Multipolar Global Order: BRICS promotes a multipolar world with economic parity, representing 41% of global population, 28% GDP.
  • Global South Representation: BRICS empowers global south countries, like Egypt and Argentina, to influence international agendas.
  • Alternative to Bretton Woods: BRICS initiatives like the New Development Bank address developing economies' concerns outside Western frameworks.
  • Economic Decoupling: BRICS promotes de-dollarization by using local currencies, representing 23% of GDP, 18% world trade.
  • Oil Trade Engagement: BRICS-Plus, with six top oil producers, offers an alternative platform outside OPEC+

Challenges Faced by BRICS

  • Chinese Push for Favorable Expansion: China’s aggressive push for expansion aims to make BRICS more China-centric, often favoring debt-trapped nations like Belarus, which may undermine the group's collective goals.
  • Failure to Bring Impactful Reform: Despite its objectives, BRICS has not succeeded in significantly reforming global financial institutions like the IMF or World Bank, nor has it achieved substantial progress in de-dollarizing its economies.
  • Nature of Grouping: BRICS faces a critical choice between remaining a primarily finance-focused group or transforming into a broader geopolitical coalition, which risks diluting its focus.
  • Chinese Dominance: China dominates BRICS, accounting for 38% of the group's exports. This dominance has caused economic nationalism among other members, reducing their willingness to align with China’s vision.
  • Geopolitical Differences Among Members: Diverging national interests, such as India-China border disputes and Russia’s geopolitical isolation, create challenges in achieving unity and common agendas within BRICS.

Way Forward

  • Strengthening Institutional Frameworks: BRICS should build robust institutional mechanisms for transparent decision-making, collaboration, and effective implementation of initiatives.
  • Balanced Expansion Strategy: Carefully manage the inclusion of new members, ensuring alignment with BRICS' core objectives without compromising the group's balance or cohesion.
  • Promoting Equitable Leadership: Create frameworks that limit any single nation's dominance, fostering a balanced leadership structure to encourage mutual trust and cooperation.
  • Enhancing Economic Integration: Focus on intra-BRICS trade, investment, and initiatives like local currency trade to reduce dependence on external economies and enhance collective economic strength.
  • Addressing Geopolitical Divergences: Establish mechanisms for resolving bilateral and multilateral disputes among members to improve trust and solidarity.

Conclusion

BRICS has significant potential to reshape global governance, but its success hinges on addressing internal challenges and fostering stronger cooperation among its members. Balancing economic goals with geopolitical alignment is essential for its sustained impact.

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