The post-Cold War era has brought about an avalanche of complex changes and intimidating challenges in the international system. After the disintegration of the USSR, the world was left with a power vacuum which was filled by the sole superpower of that time, the United States of America. After the Cold War, international relations demanded a re-evaluation of the global political system, especially with reference to the geopolitical and geo-economical concerns. With the onset of the restructuring of the world-order, major powers began to focus on geo-economics rather than geopolitics.
Ever-increasing globalization, facilitation of free trade, and technological advancements have come together to boost regional development. Global South fosters multi-polarity with a rapid rise of southern economies i.e. Singapore, BRICS (Brazil, Russia, India, China and South Africa) and MINT (Mexico, Indonesia, Nigeria, and Turkey). An analysis of facts illustrates that these economic powers are developing individually but not along with their affiliates. For instance, China, Russia, and India are individually rising but BRICS’ boat is about to capsize.
Brazil, India, and South Africa are liberal democracies while China and Russia have different political systems. These political systems exercise influence on their economic systems. Russia particularly has been facing recessions since the past five years. Statistics point to the surge in oil prices as a positive indicator in helping Russia lessen the impact of the US and the EU sanctions but the recovery from recessions won’t happen instantaneously. The BRICS countries are all either in recession or have significantly missed their growth targets.
The BRICS can best be understood as a platform to express dissatisfaction with the policies of global governance but not as a platform to overturn the status quo. The reason behind this claim is the vacillating situation of three of their countries. In fact, the BRICS are likely to upend the world order by establishing new institutions with potential to set norms, codes, and regulations as per their interests. Their growth is more sluggish than anticipated because they have acquired a political momentum that transcends year-to-year economic growth.
In the nascent years of BRICS, their surge was bolstered by financial institutions such as the New Development Bank (NDB) which lent $100 billion for infrastructural projects. Furthermore, Contingency Reserve Arrangements (CRA) was made to cushion the BRICS economies. These institutions are growing but not as much as was expected. Reasons behind these developmental hiccups are a legion of financial complications, diverse political systems, bad debts, demographic changes and the catastrophic collapse of the Brazilian economy.
The central reason behind their relative descent on the global scale could be the decrease in demand for their products. One of the main factors that led to their sudden rise was the increased commodity-export reliance; one in which the traditional global players were reluctant to partake due to the recurring boom and bust while these 5 powers were not. The result was a level of growth unprecedented in any of these countries. However, in recent years, we’ve seen that the mechanics of the global economic system have finally caught up with them and the over-reliance of these economies on their commodity exports has been laid bare for all to witness. Russia’s over-dependence on its oil exports and a continued series of military conflicts bundled together with stricter sanctions from the EU and US have made it something of an economic headache for Kremlin. Another contributing factor has been the fall in global trade. States are more and more inclined towards domestic consumption and reliance rather than international bartering leading the export-driven economies of the BRICS to plummet down.
Aforementioned issues are just the tip of the iceberg as far as the most immediate problems for the BRICS are concerned. All 5 of these countries face political and economic challenges that differ both in their nature and their solutions. Russia and China for example have long felt the need to privatize state-owned inefficient firms that might generate much-needed capital which could jumpstart their somewhat stagnant growth rates. On the other hand, India faces a similarly distinctive issue. While prime Minister Narendra Modi did fulfill his promise of bringing in structural reforms in the early days of his reign, many observers still maintain that these reforms were inadequate and failed to address important issues more directly. Meanwhile, Brazil in an effort to boost cash flow within the country ended up easing the monetary policy domestically which ended up lowering the borrowing rate for everyone, and that in effect raised overall inflation in the country.
The repercussions of this sluggishness in the growth of the BRICS states might lead to riskier economic maneuvering from these states which might ultimately inflict irrevocably dangerous consequences. This is where China has distinguished itself from the other BRICS states. China, it can be argued, oversaw this economic bump and has in recent times reverted its attentions towards formulating a more sustainable economic model with a strong emphasis on its domestic consumption rather than the previously mentioned over-reliance on its credit borrowing or even commodity-led growth.
One of the reasons for their early success was the confidence global investors had in their emerging potential. By some estimates, the BRICS funds currently have 15-20 billion dollars invested in them. Rationally, all five BRICS states should work diligently towards increasing urbanization while bringing an increased number of the domestic population into labor. Brain drain has long been named a serious threat to any ambitions of global dominance for these states. Domestic initiatives that create lucrative opportunities not just for the domestic population but for more foreign investors need to be taken to bring in much-needed capital.
India’s economy is relatively closed and so it is not as vulnerable to the hiccups in world trade although this must change if it ever hopes to become a major economic player. Lower oil prices have benefited the country, inflation, interest rates, and deficits are falling, the government is trying to open up to more infrastructure spending, foreign investment and an array of improvement measures that should help the economy sustain growth rates of above 7%. Taking into account the vastness of resources, both human and natural, it would be foolish to dismiss the idea of BRICS altogether, especially as the declining US grows more absorbed and Europe’s confidence falters. However, economic performance is hardly the only yardstick to measure a bloc’s weight in the greater game. To occupy their rightful place in the 21st century, the BRICS countries must create more open, accountable, and trustworthy systems of governance.
So what is to become of this alliance? The enormous amount of political and economic barriers that exist between the countries historically point to the fact that in spite of seemingly common goals, it is unlikely that a free market setup akin to that of the EU will ever come into existence, neither will there be enough nexus to mirror that of the ASEAN. The most reasonable goal that the BRICS can have is to remain a substantial economic presence if not in the global aspect then regionally. If they don’t focus on that, they will linger on the same shores as of SAARC; existing for existence’s purpose without any practical gains. Their challenge is of leadership rather than that of profit and loss. BRICS has left space for Multilateralism in the emerging world order.