On July 15, the leaders of the five BRICS countries—Brazil, Russia, India, China and South Africa—will convene in Fortaleza, Brazil. This will mark the sixth official meeting between the member nations since the creation of the group in 2009.
Only two days after the final of the World Cup, Brazilian President Dilma Rousseff has the opportunity to extend the global spotlight on her country by hosting the BRICS leaders.
For Prime Minister of India Narendra Modi, this will mark his first visit to Brazil and only his second international tour since entering office in May—so Indians will be listening closely to hear his public stance on various issues. Chinese President Xi Jinping will also be making his first trip to Brazil, though he is in no way a stranger to Latin America, an important source of raw materials for China and target for foreign direct investment. Russian President Vladimir Putin will likely be thankful for the change in landscape after receiving such negative attention from the West for Russia’s policies toward the Ukraine. And President Jacob Zuma of South Africa is hopeful that the sixth Summit will produce results that were envisioned in the fifth meeting he hosted last year in Durban.
When the “BRICS” acronym was conceived (originally as “BRIC,” sans South Africa) in 2001 by Jim O’Neill, formerly of Goldman Sachs, the countries were meant to be an economic grouping, rather than a geopolitical one. And while the combined gross domestic product (GDP) of the BRICS accounts for nearly 20 percent of global GDP, the real significance of their reunion has been symbolic, challenging the post-World War II political and economic order. As only China and Russia are permanent members of the UN Security Council and none of the BRICS countries are members of the G7, these BRICS summits offer an alternative stage and voice to impact global policies and norms.
There are concerns that the internal BRICS power structure may become heavily weighted toward China, as the country accounts for 70 percent of the entire BRICS GDP. According to China expert Yukon Huang, China has more trade with its neighbor, Malaysia, than with any one BRICS country, and more trade with South Korea than all the BRICS countries combined. In comparison, China is the first- or second-most important trading partner for Brazil, Russia and India. Therefore, China does not necessarily need the BRICS in order to promote its global agenda—but its presence in the group does demonstrate China’s ability to cooperate with other non-Western global leaders instead of going it alone.
At this sixth summit, one of the major goals is to formalize the establishment and terms of the BRICS-lead “New Development Bank,” which would offer an alternative to Washington-based financial institutions. As hinted by Russia’s Minister of Finance this week, the New Development Bank will begin lending in 2016, be funded equally among the partners ($2 billion per country over the next seven years), focus on BRICS infrastructure projects, and have headquarters located in either Shanghai or New Delhi. But final decisions have yet to be made, and differences of opinion over location and funding may arise.
Many wonder how this development bank will differ from others. Besides offering an alternative source of financing, will the actual product look any different? Will it have fewer bureaucratic and regulatory boxes for borrowers to check? If so, could this lead to fewer environmental regulations and protections for at-risk populations—which seems contradictory to the theme of the sixth Summit, “Inclusive growth, sustainable solutions”? We are likely to see activists in Fortaleza pressuring BRICS leaders to include these standards in the BRICS decision-making process.
Thus far, being a member of the BRICS has come at little cost. The countries are under no obligation to agree with each other on foreign policy, trade or investment decisions (unlike the EU or MERCOSUR). In fact, many of the BRICS countries have had difficult historic relations with one another, due to differing views on communism, apartheid, and support over permanent membership on the UN Security Council, among other things.
So, is there enough clout in this sixth summit to turn the relationship into something more meaningful? After five symbolic meetings, it is time to produce tangible results. If structured right, the New Development Bank could be that golden ticket.