Jim O’Neill, a British economist and former chairman of Goldman Sachs Asset Management coined the term “BRIC” (Brazil, Russia, India, and China) in 2001 publication 'Building Better Global Economic BRICs' to describe the four emerging economies that would challenge the global economic power of the developed G7 nations. It wasn’t until 2009 that their leaders met and formalized their relationship, later inviting South Africa to join in 2010.
The BRIC nations were projected to dominate the global economy by 2050, with the acronym emphasizing their investment potential.
The aim of the alliance is to challenge the economic and political monopoly of the West. BRICS aims to amplify the interests and voices of developing and emerging countries on the global stage while strengthening cooperation and solidarity among its members. Some of its key achievements include:
The New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA): These institutions provide alternative funding and liquidity sources for BRICS nations and other developing countries, complementing global financial bodies like the World Bank and IMF.
The BRICS Partnership on New Industrial Revolution (PartNIR): This initiative promotes innovation, digitalization, and industrialization, helping BRICS nations and other developing countries address the challenges and opportunities of the Fourth Industrial Revolution.
The BRICS Counter-Terrorism Strategy: This strategy sets out shared principles and approaches to combat terrorism and extremism, enhancing cooperation and coordination among BRICS nations and other international partners in the fight against these threats.
BRICS’ Expansion:
In early 2024, BRICS group expanded to include Iran, the UAE, Ethiopia, and Egypt. Saudi Arabia was also announced as a new member, though the kingdom has yet to make a final decision on joining.
BRICS vs G7: The Battle for Global Influence
BRICS has become an economic rival to G7. Several of their initiatives include building an alternate global bank, with dialogue underway for a payment system and new reserve currency.
A major contributing factor to BRICS’ rise is Chinese and Indian economic growth.
The BRICS grouping has made significant strides in recent years, with its combined GDP exceeding $60 trillion, surpassing the G7’s corresponding figure. In 1992, the G7 accounted for 45.5% of global GDP, while BRICS countries accounted for 16.7%. By 2023, BRICS’ share had grown to 37.4%, while the G7’s share declined to 29.3%.
De-dollarization
De-dollarization entails a significant reduction in the use of dollars in world trade and financial transactions, decreasing national, institutional and corporate demand for the greenback. This would diminish the dominance of the dollar-denominated global capital markets, in which borrowers and lenders around the world transact in dollars.
Gold has emerged as a key element in the coalition’s strategy to challenge Western economic dominance. As BRICS+ countries increasingly rely on gold to diversify reserves and hedge against inflation, they are signaling their intent to transform global trade and finance. This expanded coalition, composed of diverse economic powers, is unified in its aim to diminish Western influence and establish parallel financial systems.
A recent report by the World Gold Council reveals that the BRICS nations now hold over 20% of the world's gold reserves. This substantial accumulation underscores the growing economic power and influence of these emerging economies. The shift in gold reserves is not merely a financial trend; it signals a broader geopolitical shift. As Western vaults deplete and Eastern reserves grow, the global balance of power may be tilting, with the East gaining significant economic leverage.
Project mBridge, the Bank for International Settlements' digital currency initiative, has sparked discussions about exploring alternatives to the current dollar-based oil payment system. The country has also expressed openness to using the petroyuan for oil settlements.
If NATO member Turkey joins BRICS at the ongoing summit 2024, then other NATO and EU nations might follow suit, further embarrassing the West.
BRICS' Role in India-Canada Relations
India’s relations with Canada have deteriorated significantly in recent years, with the expulsion of diplomats and a deepening diplomatic rift. In this context, BRICS emerges as a vital platform for India to counterbalance Canada’s influence and promote its interests.
How BRICS can help India:
Counter-Terrorism Cooperation
BRICS has a dedicated joint working group on counter-terrorism, which India has actively participated in since 2019. This platform enables India to share intelligence and best practices with other member states, particularly China, to combat terrorism. Canada’s alleged involvement in supporting Sikh separatist groups, as highlighted in recent diplomatic tensions, can be addressed through BRICS’s counter-terrorism efforts. India can leverage BRICS to:
Share intelligence on terrorist financing and radicalization
Develop joint strategies to counter online terrorist propaganda
Enhance capacity-building for law enforcement agencies
De-Dollarization and Alternative Trade Settlement
BRICS has been working towards a new trade settlement system, bypassing the US dollar. India, as a key player in this initiative, can benefit from:
Reduced dependence on the US dollar for international trade
Increased economic autonomy and reduced vulnerability to US sanctions
Enhanced cooperation with China, Russia, and other BRICS members on trade and investment
Canada’s strong ties with the US and its reliance on the US dollar make it less likely to support India’s de-dollarization efforts. BRICS provides India with an alternative platform to promote its economic interests and reduce its dependence on the US dollar.
Geopolitical Counterbalance
BRICS’s growing popularity and expansion, with over 30 countries expressing interest in joining, create a counterbalance to Canada’s influence. India can use BRICS to:
Strengthen its relations with other BRICS members, particularly China, to counterbalance Canada’s ties with the US and the Five Eyes Bloc
Promote its interests in regional and global forums, such as the Shanghai Cooperation Organization (SCO) and the G20
Enhance its diplomatic presence and influence in international organizations, including the United Nations
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