BRICS: The Global South Challenging the Status Quo

“New realities call for a fundamental reform of the institutions of global governance so that they may be more representative and better able to respond to the challenges that confront humanity.”
Cyril Ramaphosa

With this sentence, South Africa’s president, Cyril Ramaphosa, set the tone during last month’s BRICS summit in Johannesburg. The latest BRICS round of expansion shows the manifestation of the desire of Global South countries to claim their share in economic development and take a leading role in global governance. The BRICS are a force to be reckoned with and are poised to shape the global world order. Now, the countries of the political West and, in particular, the European Union will have to re-evaluate their model for cooperation and development with the Global South to avoid losing these countries as crucial partners in a world order that is increasingly marked by fragmentation and competition.

From BRIC to BRICS to BRICS+

The concept of BRIC was originally coined in 2001 by Goldman Sachs economist Jim O’Neill, who argued that the original four countries – Brazil, Russia, India, and China – were the emerging global economic powers. The term BRIC quickly caught on and led to the formal establishment of the group at their first official summit in 2009, where the four countries decided to enhance cooperation in matters of economic growth and development.

In 2010, South Africa was invited to join, and the acronym was changed to BRICS. Even though, at the time, South Africa was a rather economic lightweight compared to the other members, the addition of South Africa to the group reflected the growing economic and political importance of the African continent. At the time, the BRICS were the up-and-coming economies of the Global South, a term that refers to more than just a geographic location but rather describes the vast landscape of developing, emerging and newly industrialised countries around the globe.

Recently, the BRICS gathered in Johannesburg for the 15th BRICS Summit, where they announced the accession of 6 new members from Asia, Africa, and Latin America. A further 22 countries have formally requested to join the bloc, which has now been renamed BRICS+. Additionally, more than 40 countries have expressed informal interest in participating.

Following the latest round of expansion, the BRICS now represent close to half of the world’s population and make up 36% of the world’s Gross Domestic Product – more than that of the G7. The power of the Global South can surely no longer be denied on the big stage of world politics.

United in their ambition of enhancing economic development in the Global South, the group is still characterised by extreme political heterogeneity, with some members even being in open conflict with each other – as is the case between China and India, which are not only economic rivals but also in concrete territorial disputes. Still, the BRICS have clearly defined common economic interests and a common desire to change the global institutional model, from which they have felt side-lined for decades.

The group aims to have an equal voice in global politics, the world economy, and the financial system, as they believe that the current order – with its multilateral institutions, such as the International Monetary Fund and World Bank – is unfair and biased towards the traditionally Western countries.

To this end, they have established the New Development Bank, a financial institution that provides financial assistance to developing countries. Additionally, they set up a mechanism to support member countries in dealing with financial crises and are working on an alternative payment system in their own currencies.

BRICS will shape a multipolar world

Led by China and strongly supported by Brazil, the BRICS are striving towards a paradigm shift in the global currency hierarchy that is dominated by the US dollar, which the BRICS countries see as a major roadblock for their economic capacity to act. Brazil’s president, Lula da Silva, has thus been calling for an end of dollar-dependency as one of the priorities for the BRICS.

In this vein, China has doubled down on its global swap line network in renminbi while also pushing its digital currency, the e-yuan. While a complete de-dollarisation might be unrealistic in the near future, China has initiated several attempts for alternative payment settlements between the BRICS members. For instance, Brazil has offered to guarantee Argentine payments for Brazilian goods in renminbi, while new BRICS member Saudi Arabia is considering accepting renminbi for payment settlements in its oil trade.

The BRICS are also at odds with global financial institutions, such as the World Bank and IMF, that impose austere conditionalities on developing countries, thus hamstringing their economic development. This is supported, for example, by Oxfam research, finding that “for every dollar that the IMF provides to a poor country for social spending, it requires the country to cut four times more through austerity measures”.

The Global South’s dissatisfaction with the Western financing model might, therefore, explain part of the accelerating appeal of BRICS. China has been exploiting this dissatisfaction with Western-dominated institutions and has stepped in as an investor and lender of last resort for these countries, thereby strengthening its economic and financial ties with the Global South.

For French president Emanuel Macron, the BRICS are a manifestation of the fragmentation of the global political system that carries a “risk of a weakening of the West and more particularly of Europe.” However, while the rise of the bloc reflects the dilution of Western dominance, the BRICS are still far from forming one homogenous group with clear political common interests and goals. Strong conflict lines exist between their members, exemplified by the geo-economic rivalry between China and India.

This was recently underlined by the absence of China’s President Xi Jinping from the latest G20 meeting hosted by India. One interpretation is that Xi’s absence from the G20 is to be seen as a direct affront against the host, India. Another explanation, however, could be that Xi wanted to take the opportunity to send a signal to the West that China values the BRICS summit as a more relevant global decision-making platform than the US-dominated G20 format.

The EU’s economic relationship with the Global South

From an economic standpoint, the BRICS are crucial partners for the European Union. Current economic trends indicate that the BRICS’ importance as a partner will increase soon. The blocs have deep trade integration with each other, with the EU displaying a growing import-dependency with the BRICS countries in recent years (figure 1).

Besides mostly primary and agricultural goods, the BRICS countries also provide an important value stream of critical raw materials for the EU. However, the BRICS aspire to be more than mere suppliers of basic products. As South African president Cyril Ramaphosa pointedly stated during the recent BRICS summit: “We want to export finished products, not rock and sand”.

There has also been growing dissatisfaction from the BRICS and the larger Global South with the EU’s trade restrictions and, particularly, with its “super-protectionist” agricultural policy that heavily constrains international trade. Again, China has been exploiting this by strengthening its trade relationships with the countries of the Global South and especially with the BRICS members. Against this backdrop, the EU aspires to finalise pending global free trade agreements, but negotiations with the MERCOSUR, for instance, are still in an ongoing stalemate.

For the EU, securing access to BRICS markets and value chains will be of vital importance in the coming years. Especially considering China’s aggressive moves for stronger strategic economic ties with other Global South countries. In view of this, the EU will need to provide viable alternatives for developmental finance and cooperation that can compete with China’s programmes, both in terms of volume and conditionality.

Otherwise, the Global South will turn to alternative financing options to fill the void, which could further alienate these countries from the EU. Following the recent BRICS summit, where its members pushed for an alternative BRICS development bank, Werner Hoyer, president of the European Investment Bank, stated that the EU and traditional Western institutions are “at risk of losing the confidence of the Global South unless they take more action and get more visible there“.

Against this backdrop, the EU’s pledge to collaborate with Global South countries to promote economic and industrial development will be put to the test. As a first major instrument to this end, the EU has set up NDICI – Global Europe, an 80 billion Euro instrument for promoting global development, as well as its current flagship development initiative, the Global Gateway strategy. A 300 billion Euro investment strategy for global infrastructure projects designed to rival China’s Belt and Road Initiative while promoting sustainable and democratic development on a global scale. Though the plan, launched at the end of 2021, is still in its early phases, and judgement is still out on its true impact and if it can deliver on its ambitious promises.

BRICS – Quo Vadis?

The current expansion of the BRICS certainly shows the growing assertiveness of the Global South on the international stage. However, the whole picture is, of course, hazier than that. The vast array of interests, values and political systems represented in the BRICS is too complex to be subsumed under one geopolitical entity.

Rather, the expansion of BRICS might reflect the ongoing process of global fragmentation. And while the movement is carrying strong momentum, what mostly unifies the BRICS is their rejection of the Western-dominated order as they see it. Still, as ever more Global South countries rally to join the BRICS to challenge the global status quo, the relationship between the traditional West and the Global South is at a crossroads.

In the absence of a multilateral and sustainable model for development and cooperation that credibly raises the prospects of long-term prosperity for the Global South, there is a real threat of further fragmentation. Therefore, the West would do well to bring the BRICS and the Global South to the table of global governance as partners on equal footing.

The inclusion of the African Union into the G20 was the first symbolic step in that regard. Now, the West and the EU, in particular, must follow through and rethink their model of cooperation and development with the Global South. Otherwise, they run the risk of losing the Global South in times of growing geopolitical tensions and global transformation challenges.

About the author

Lucas Resende Carvalho is a Junior Project Manager at the Bertelsmann Stiftung in the Europe’s Future Program.

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