BRICS

Historic remarks

BRICS is an acronym that started as BRIC in 2001, coined by Jim O’Neill (a

Goldman Sachs economist) for Brazil, China, India, and Russia. Later in 2010,
South Africa was added to become BRICS. Goldman Sachs claimed that the
global economy will be dominated by the four BRIC economies by 2050. The
main reason for such a claim was that China, India, Brazil, Russia, and South
Africa were ranked among the world's fastest-growing and emerging market
economies for years. The main comparative advantage of this group is their
low labour costs, favourable demographics, and abundant natural resources
at the time of the global commodities boom.

The Goldman Sachs thesis didn’t claim that BRICS would become a political
alliance or even a formal trading association. However, the report said that
BRICS has the potential to form a powerful economic bloc.

In 2013, BRICS accounted for around 27% of global GDP in purchasing

power. The five countries have a total population of 2.88 billion, accounting
for around 42 per cent of the entire global population. The countries in the
BRICS bloc cover 26 per cent of the total land area on earth.

How can Pakistan benefit from increased

cooperation with BRICS countries?
Increased cooperation with BRICS countries (Brazil, Russia, India, China, and
South Africa) could offer several potential benefits for Pakistan, though there
are challenges to consider as well. Here's a breakdown of both sides:

Potential Benefits:

 Trade and Investment: BRICS countries are major emerging

economies with significant consumer bases and growing industries.
Increased cooperation could open doors for Pakistani exports like
textiles, agricultural products, and manufactured goods. BRICS nations
could also invest in infrastructure projects in Pakistan, boosting
development.
 Technology Transfer: BRICS countries have made significant
advancements in various sectors like IT, agriculture, and renewable
energy. Collaboration could allow Pakistan to access these
technologies and improve its own capabilities.
  Financial Assistance: BRICS nations have established their own
development bank, the New Development Bank (NDB). Pakistan could
potentially access loans and financial assistance for infrastructure
projects or economic development initiatives.
 Political Support: Cooperation with BRICS countries could strengthen
Pakistan's position on the international stage and provide a platform to
advocate for its interests.
 Multilateral Cooperation: Collaboration on issues like climate
change, global governance, and regional security could benefit both
Pakistan and BRICS countries.

Challenges to Consider:

 India Factor: Pakistan's biggest hurdle is likely to be India, a member

of BRICS. Political tensions and historical rivalries between the two
countries could complicate cooperation within the BRICS framework.
 Internal Capacity: Pakistan might need to improve its infrastructure
and production capacity to fully benefit from increased trade with large
economies like China.
 Focus of BRICS: BRICS primarily focuses on cooperation among
member states. Pakistan might need to offer specific areas of mutual
interest to attract significant investment or partnerships.
 Debt Burden: Relying heavily on loans from the NDB could add to
Pakistan's existing debt burden, requiring careful management.

How Pakistan Can Move Forward:

 Focus on Areas of Mutual Interest: Pakistan can identify specific

areas where cooperation with BRICS members would be mutually
beneficial, such as infrastructure development, counter-terrorism
initiatives, or disaster management.
 Improve Domestic Infrastructure: Investing in infrastructure
upgrades like transportation networks and energy grids can make
Pakistan a more attractive partner for trade and investment.
 Strengthen Regional Ties: Building stronger relations with other
regional players like Iran and Central Asian countries could enhance
Pakistan's overall economic and political standing.
 Strategic Diplomacy: Pakistan can employ strategic diplomacy to
address concerns of BRICS members, particularly India, and highlight
the potential benefits of greater cooperation

BRICS expansion

Implications of BRICS Expansion on the World Order:

1. BRICS Offering the Global South an Alternative Global Order
which is a counterbalance to Western Order:
 The primarily economic bloc was originally created as an alternative to the
U.S.-led international order, with the goal of offering growing countries in the
Global South a counterbalance to Western institutions.(United States
Institute for Peace)
2. BRICS: A Geopolitical Counterweight to the G7 Countries:
 Brazil, Russia, India, China, and South Africa have invited six other
countries to join the BRICS grouping next year to create a geopolitical
counterweight to the G7 and potentially a framework to reduce dependence
on Western financial systems. (Centre for Strategic and International
Studies)
3. BRICS Countering US-led Initiative (Minerals Security Partnership)
through the inclusion of energy rich countries:
 Minerals Security Partnership (MSP), which is a U.S.-led initiative to
strengthen critical energy security for itself and 13 of its allies.
 Saudi Arabia made a $2.6 billion deal to buy a 10 percent stake in Brazil’s
largest mining company, Vale’s base metals division, to access various
critical minerals, including nickel and copper.
4. BRICS Controlling the Oil and Gas Supply and Energy Market of
the World by Including Energy Rich Countries:
 With the addition of Saudi Arabia, the UAE, and Iran, this expanded group
would include three of the world’s largest oil exporters and would constitute
42 percent of global oil supply.
 OPEC+ states have complained that Western energy sanctions on Iran and
Venezuela have constrained investment and export flows.
 EU-G7 Prices Caps and Sanction Mechanisms:- EU operators are only
allowed to provide maritime transport and related services for Russian crude
oil and petroleum products if these are sold at or below the relevant price
caps.
 An enlarged BRICS would include both oil and gas exporters and two of the
largest importers; China and India—both of which refused to join the “price
cap coalition” targeting Russia.
5. Countering the role of Western Financial Institutions:
 IMF, WB and ADP.
 New Development Bank

 BRICS Currency: Brazilian Proposal: In April 2023, during a Brazil-China summit,

Brazil proposed the creation of a common currency for the BRICS nations (Brazil, Russia, India,
China, and South Africa). This proposal has sparked discussions about its potential impact and
feasibility.

Arguments for a BRICS Currency:

  Reduced Dependence on US Dollar: Proponents argue that a BRICS currency would
lessen reliance on the US dollar in international trade. This could offer BRICS nations
more control over their economies and potentially lower transaction costs.
 Boosted Intra-BRICS Trade: A common currency could facilitate trade between
BRICS members by eliminating currency conversion hassles. This could stimulate
economic growth within the bloc.
 Greater Global Influence: A BRICS currency could represent a challenge to the
dominance of the US dollar in the global financial system. This could enhance the
collective economic and political clout of BRICS nations.

Challenges to a BRICS Currency:

 Uneven Economic Development: BRICS member states have varying economic

strengths. A single currency might not be suitable for all, potentially harming some
economies while benefiting others.
 Political Disagreements: Political differences and conflicting interests among BRICS
members could hinder cooperation on establishing and managing a common currency.
 Market Acceptance: Gaining widespread acceptance for a new reserve currency can be
a lengthy and challenging process. The BRICS currency would need to be deemed stable
and trustworthy to compete with established currencies.

Current Status:

The proposal for a BRICS currency is still in its early stages. While some member states, like
Russia, have expressed support, others, like India, seem more cautious. The feasibility and
timeline for creating a BRICS currency remain uncertain.

 Contingent Reserve Arrangement:- The objective of this reserve is to provide

protection against global liquidity pressures the five countries which form the BRICS
– Brazil, Russia, India, China and South Africa – agreed on the establishment
of their own financial institutions: the New Development Bank (NDB) and the
Contingent Reserve Arrangement (CRA). The New Development Bank is to
lend for infrastructure and sustainable-development purposes, both in BRICS
countries and other developing and emerging economies. In this context,
developing countries are looking for a new source of financing with more
flexible conditions. The CRA is an agreement among the BRICS' central banks
for mutual support during a sudden currency crisis. Financing approvals are
thus linked to IMF on-track arrangements, which undermines the CRA’s
significance. The CRA nonetheless holds the potential to be developed into a
viable BRICS alternative to the IMF in the long term.
1. Alternative Financial Institutions: BRICS has implemented
initiatives like the New Development Bank (NDB), which provides
alternatives to Western financial institutions like the IMF and the
World Bank1. The NDB aims to mobilize resources for infrastructure
 and sustainable development projects in BRICS and other emerging
economies and developing countries2.
2. Local Currencies for Global Trade: BRICS is working towards
using local currencies to dominate global trade, which could
potentially uproot the US dollar’s de facto reserve status 3.
3. Expansion of BRICS: The recent expansion of BRICS, with the
addition of six new members, gives the group a greater voice in
world affairs and challenges the domination of existing
institutions2. This expanded BRICS, with six out of ten of the world’s
top oil producers, provides a greater opportunity for the group to
influence global energy4.
4. Non-Sanctioning Posture: In the future, BRICS countries could
coordinate a mutual “non-sanctioning” posture while also seeking to
avoid the Western-led financial system2.
5. Influence on Global Economic Affairs: Large developing nations
are exerting greater influence in world economic affairs and are
beginning to build alternatives to Western-led institutions

6. China Promoting its Global Order through BRICS:

 BRICS Expansion a Victory of Chinese Model of Multilateralism.

Arguments Supporting China's Model:

 Focus on Developing Countries: BRICS prioritizes the concerns and interests of

developing nations, aligning with China's emphasis on South-South cooperation.
 Alternative to Western Dominance: The expansion of BRICS could be seen as a
challenge to the US-led global order, potentially creating a more multipolar world with
greater influence for developing economies.
 China as a Leader: China has been a vocal advocate for BRICS expansion, potentially
positioning itself as a leader of this alternative multilateral framework

 Global Security Initiative

BRICS as a Counterweight:

 Economic Clout: BRICS represents a significant collective economic power, potentially

rivaling the US-dominated economic order. China can leverage BRICS to advocate for
alternative economic models and institutions.
 Shifting Power Dynamics: BRICS cooperation challenges the current US-led global
order by promoting cooperation among developing nations. This could reshape global
trade, investment, and financial systems.
 Multilateral Influence: By working with BRICS, China gains a platform to amplify its
voice on the global stage and influence international norms and institutions.
The Global Security Initiative (GSI):

 Alternative Security Framework: The GSI presents a Chinese alternative to Western-

led security frameworks. It emphasizes non-interference in internal affairs and
cooperation over interventionism.
 Expanding China's Role: The GSI positions China as a leader in global security issues.
This could enhance China's international influence and potentially attract other countries
seeking alternatives to US-led security arrangements.
 Soft Power Projection: The GSI promotes China's vision for peaceful development and
a more just international order. This could improve China's image as a responsible global
power.

7. BRICS Expansion: A Beginning of Multi-polar era:

 Rise of Revisionist Powers: Russia, China, Iran etc
 Change of Power Structure.
 As Narayanappa Janardhan, an Abu Dhabi-based scholar with the Anwar
Gargash Diplomatic Academy, said in an interview: “The multipolar world we
knew has now shifted. It is no longer conditioned by superpowers alone. It is
just as likely to be conditioned by middle and smaller powers, who prefer
multi-alignment.”
8. BRICS and De-dollarization:
 Concept of BRICS Currency: Brazilian President.
 Trade and Investment in Common Currency.
As of January
 Oil rich countries can threaten the petrodollar system.:-
1st, the BRICS bloc officially welcomed Saudi Arabia, the
United Arab Emirates, Egypt, Iran, and Ethiopia as new
members of the alliance1. This expansion is seen as
accelerating the de-dollarization process as these countries
increase trade in local currencies and buy and sell oil not
using the dollar
Saudi Arabia has expressed interest in considering other countries
that want to buy oil in their local currencies 1. This development
could accelerate the collapse of the petrodollar system 1.
Moreover, there are reports that the United Arab Emirates is
considering ditching the U.S. dollar oil trade as it looks at individual
oil and gas deals with up to 15 countries based in local currencies 1.

 Russian President Vladimir Putin confirmed: that getting rid of the dollar as
a global currency is an irreversible issue.
  China established its own interbank payment system, seeking to make the
yuan an international currency of exchange and payment: Cross-Border
Interbank Payment System.
Challenges to the BRICS:

1. India-US Strategic Partnership.:- The India-US strategic partnership

presents several challenges to the BRICS (Brazil, Russia, India,
China, and South Africa) alliance. Here are some key points:
1. Multi-Alignment Strategy: India’s internationalist foreign policy
has been exhibited by its recent participation in a series of summits,
such as the BRICS, Quadrilateral Security Dialogue (QUAD), and the
G7 meeting1. India has worked to engage with the United States,
Japan, Australia, Europe, and Russia, manage ties with China, forge
ties with the developing world, and expand its neighborhood
policies1. This multi-alignment strategy could potentially create
conflicts of interest within the BRICS alliance.
2. India’s Influence in BRICS: There are concerns that India’s
influence within BRICS is waning23. The expansion of BRICS,
particularly with countries having deepening strategic ties with
China and Russia, puts India in a bind 23. This could potentially turn
the BRICS into a club of nations aligned against the West and
challenging U.S. hegemony2.
3. Challenges to US-India Strategic Cooperation: Some of the
main challenges to US strategic cooperation with India include
Russia’s domination in Indian defense and commercial market and
cooperation in the Arctic region, Indo-Iran cooperation, and Pakistan
factors4.
4. India’s Strategic Autonomy: India’s attempts to remain outside
bloc politics and resolute in its intent to practice strategic autonomy
could be tested within the BRICS alliance

2. China-India Strategic Confrontation.:- The strategic confrontation

between China and India indeed presents a significant challenge to
the BRICS (Brazil, Russia, India, China, and South Africa) alliance.
Here are some key points:
1. Border Disputes: India and China have a long-standing border
dispute, which has led to military standoffs 12. This tension can
potentially paralyze the BRICS association1.
2. Trade Conflicts: Trade conflicts between the two nations can also
strain their relationship within the BRICS1.
3. Information War: The two countries have locked horns over issues
in their bilateral relations, ranging from border security to trade
conflicts and information war1.
4. Geo-political Rivalries: The expansion of BRICS to include
countries with deepening strategic ties with China and Russia puts
India in a bind34. India is concerned about losing its influence if the
BRICS group admits too many new members closely aligned with
China’s agenda3.
5. Divergent Interests: The BRICS group navigates its members’
convergent and divergent interests5. The strategic competition
between China and India poses risks for the wider BRICS’ agenda of
overcoming the structural challenges in the global architecture

3. Saudi-US Strategic Partnership.:- Moreover, the BRICS’ pivot away

from the US dollar in favor of local currencies is not merely a
financial strategy but a statement against the unipolar world
order1. This could potentially undermine US power in the
process

Generating consensus among BRICS members a hard nut to crack.:-

1. Diverse Political Systems: The BRICS countries have very

different political systems, which can make it difficult to
reach a consensus on certain issues1.
2. Geopolitical Differences: Geopolitical factors also make
consensus more difficult. For instance, India is a member of
the Quadrilateral Security Dialogue, a Western-led alliance
designed to counter China in the Indo-Pacific region 1.
3. Economic Disparities: There are significant economic
disparities among the BRICS nations, which can lead to
differing priorities and interests1.
4. Currency Challenges: The BRICS cannot be an effective
counter to the dollar-dominated global economy without a
single competing currency, whether a new currency or the
Chinese yuan1. However, reaching an agreement on a single
currency similar to the euro requires consensus around
member states’ general monetary and fiscal policies 1.
5. Expansion of BRICS: The recent expansion of BRICS to
include new members has added to the complexity. While it
provides more opportunities for its members to diversify their
partnerships, it may also deepen and complicate differences
within the group and weaken 3its ability to make influential
decisions collectively

1. 5. Saudi-Iran Strategic Competition:-

2. Regional Rivalry: Saudi Arabia and Iran are regional rivals
in the Middle East, with differing political, religious, and
strategic interests1. Their rivalry could potentially create
divisions within the BRICS, making it harder for the group to
reach a consensus on certain issues1.
3. Energy Market: Both Saudi Arabia and Iran are major
players in the global energy market 1. Their competition could
influence the energy policies of the BRICS nations, potentially
leading to conflicts of interest1.
4. Political Alignments: Saudi Arabia is traditionally aligned
with the West, while Iran has often been at odds with
Western powers1. These differing political alignments could
create tensions within the BRICS, particularly given the
group’s aim to challenge Western dominance in the global
economy.
Conclusion