At the risk of sounding like an old curmudgeon, I have to state categorically that the Brics summit held in Sandton recently was just another damp squib, an utter nonevent.
Of course, many other commentators will view the summit as a roaring success, especially as it managed to expand the bloc's membership by six to a new total of 11 member countries.
During the 15 years of Bric and later Brics meetings, the organisation achieved precisely nothing, but it is always full of rhetoric. Most of that is blatantly anti-West. The addition of these new countries will serve merely to make the organisation even more unwieldly, with the possibility of all 11 members eventually agreeing on anything being extremely remote. The new members are Iran, Egypt, Saudi Arabia, the UAE, Ethiopia and Argentina.
Brics was never a grouping that was established by its members. Rather, it came about in 2001 in a note from Goldman Sachs economist Jim O’Neill titled “Building Better Global Economic Brics”.
O’Neill projected that over the coming 10 years, the weight of the Brics, especially China, in world GDP would grow significantly, and thus so would the global economic impact of fiscal and monetary policy in the four countries that originally made up Brics. It admitted SA almost a decade later in 2010. So it’s raison d’être is questionable at best.
Brics is reminiscent of the Non-Aligned Movement (NAM), founded in 1961, and its offspring, the New International Economic Order (NIEO), formed in 1974. The NAM’s main thrust was during the Cold War when it played a key role in decolonisation and helping to establish democracies in newly-independent states. The NIEO has encouraged developing countries to trade more with each other in attempting to break free of the yoke of dependency on aid and philanthropy from developed countries. It has also sought to transform the Bretton Woods system of monetary standard revolving around the US dollar.
Brics formed a development bank but 90% of its funding comes from China. On trade, all of the Brics members trade with China but hardly any of them trade with each other to any great extent. So it’s not really a trading bloc.
Russia wants Brics to vilify the West and see if it can apply pressure to relax sanctions on it. China reckons that if Brics becomes big enough, it can demand trade concessions from Washington. Brazil appears to be adopting a genuinely neutral position in international affairs and even voted in the UN General Assembly last year to condemn Russia’s illegal invasion of Ukraine. SA seems to have no discernible consistency on foreign policy apart from wishing to run with the hares and hunt with the hounds.
Saudi Arabia has been a staunch US ally for decades so its membership of an unashamedly anti-US organisation such as Brics appears at first sight to be a bit strange. However, when one realises that the US has a decreasing appetite for involvement in Middle Eastern affairs, it becomes clear why the Saudis are looking for security in their backyard. It should be noted that the US, Saudi Arabia and Israel are now involved in negotiations to find a solution to Saudi Arabia’s need for security in the region.
Interestingly, by admitting oil producers Iran, Egypt, the UAE and Saudi Arabia into Brics simultaneously, Brics has ensured that they could expand the organisation without letting Iran, for example, veto Saudi Arabia’s membership in future. It also, however, further guarantees that the organisation will probably never agree on anything in the future.
Argentina is not a poor country but it has an insatiable appetite for debt — any debt. The only problem is it doesn’t much like repaying that debt. So at the risk of sounding cynical, it appears that Argentina is looking to Brics membership as a way of refinancing its crippling US dollar-denominated debt to the IMF and other creditors.
So Brics appears to be concerned mainly with advancing the interests of Russia, China and a few others. Hardly a recipe for success.
• Gilmour is an investment analyst.
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