Macroeconomic Color: BRICS Countries Meet in Kazan
The 16th BRICS Summit
The IMF/World Bank 2024 Annual Meeting (October 21-26) is in full swing. Coincidentally, the 16th BRICS Summit (October 22-24) is also being held in Kazan, Russia. The BRICS1 organization will also welcome five new members: Iran, Egypt, Ethiopia, Saudi Arabia and the United Arab Emirates, bringing the total membership to ten countries. Several other countries, including Turkey, are interested in joining. In total, 36 countries where represented at the Summit—20 of them by the head of state.
The Kazan summit was an opportunity for President Putin of Russia to showcase his ability to survive the efforts of the West to isolate Russia after its invasion of Ukraine in 2022. However, the Summit also underscored tensions within the organization and a lack of focus of its mission and objectives.
The BRICS framework emerged from the twin frustration of major emerging markets. First, the dominance of the dollar (aka the exorbitant privilege) allowed the weaponization of the U.S. currency and dollar-based system by successive U.S administrations through the increasing imposition of sanctions on countries and organizations deemed to act against U.S. interests. Second, the dominance by the Global North of the global financial institutions such as the IMF and the World Bank. As a result, led by China, the BRICS countries have established and expanded payment systems that bypass the U.S. dollar and the euro, thus challenging the dollar hegemony.
China, the Chinese currency and Chinese financial institutions remain at the core of this alternative global financial architecture. However, the BRICS framework remains a work in progress. In contrast to the closely allied G-7 countries, the BRICS countries are a group of widely differing political and economic systems. China is the dominant player in the organization. While China (as well as Russia and Iran) would like to consider the BRICS as an instrument in the new Cold War, other heavyweight emerging markets that are closely aligned with the Global North: Brazil, India, Saudi Arabia, South Africa and the UAE. This group of countries are seeking greater autonomy from the dollar—based system, while at the same time seeking to leverage the BRICS framework for a greater role in the existing global financial and economic institutions.
In conclusion, the BRICS framework can be seen as either as an anti-Western (and anti-dollar) cudgel and another weapon in the new Cold War, or a powerful voice of the Global South that can reform the current global financial architecture into a more equitable and balanced system. Ultimately, greater cooperation between complementary systems is needed to prevent a destructive fragmentation of the global economy. The BRICS foreign ministers’ Joint Statement of June10, 2024 (https://mid.ru/en/foreign_policy/news/1955719/) reiterated their commitment to multilateralism. This commitment should be met (and tested) by the G-7.
The original BRICS countries are: Brazil, Russia, India, and China,, later joined by South Africa