The BRICS represent 37% of the planet’s GDP and approximately half of the world’s oil and gas reserves.
Photo: REUTERS.
The BRICS summit begins today in Kazan. Once upon a time, this union consisted of several founding countries: Brazil, Russia, India and China, which were later joined by South Africa. This year, four more states joined the organization: Egypt, Iran, the United Arab Emirates and Ethiopia. Dozens of other countries are “knocking on the doors” of the association.
– Today, countries choose whether to lag behind the world hegemons, picking up crumbs from the table, or rely on their own strength, develop independently and join in alliances with equal and independent partners. More and more countries are choosing the second path and the BRICS are proof of this, says Boris Titov, Special Presidential Representative for Relations with International Organizations to Achieve the Sustainable Development Goals.
What is the economic strength of the BRICS? And how can the union help the Russian economy? Let’s solve this.
CAREFUL APPROACH
“The BRICS present themselves as a geopolitical and economic bloc, but it is their second incarnation that is the most significant,” says Vadim Kovrigin, deputy director of the Institute of Economics, Management and Law at Moscow State Pedagogical University. – In 2020-2021, its share of global GDP exceeded that of the G7 countries (for more details, see “Specific”). And judging by the growth rate, the gap will widen. The Chinese economy is growing especially fast: more than 5% annually. Western countries can only envy this pace.
– The rest of the world perceives the BRICS as a kind of free trade environment, free exchange of resources, technologies and capital. Where there is no guy who is above everyone and whose interests you must respect. How this happens in relations between the United States and Europe. BRICS is, above all, liberation from the dictatorships of world trade, says Nikolai Palchenko, director of the Capital Company.
According to businessman and member of Business Russia Oleg Nikolaev, BRICS countries can be useful to each other by creating more competition in the world.
– We talk a lot about multipolarity and it is a wonderful concept, especially in the economic field. It means the absence of dictates, the absence of global economic directives that squeeze the juice of some countries in favor of others, explains the expert.
It is true that, according to him, to reach the level of competition with the former hegemons, not with words, but with deeds, there is still a lot of work to be done. Western countries should not be underestimated either. Especially in terms of technology. But the BRICS can at least avoid the mistakes that developed countries made at the time.
– The BRICS, unlike the European Union, follow the path of free trade (opening internal markets to other members of the association) more cautiously. This is not necessary. Many mistakes can be made on the way to rapprochement; The EU experience has become a clear example. This has been a negative experience for less developed countries. For example, Greece, by providing its sales markets, only loses from its membership in the EU, says Vadim Kovrigin.
In his words, thanks to a cautious policy, BRICS countries with a smaller share of GDP remain economically protected and at the same time benefit from the international division of labor.
“A WAY TO LEVEL THE SANCTIONS”
This year Russia presides over the organization. There are many urgent issues on the association’s agenda. For example, new trade routes that can become an alternative to existing international corridors. These are, in particular, the Northern Sea Route and the North-South international transport corridor, which should connect Russia and China.
– This is how the world works, that all countries somehow come together and create common added value. As a rule, this leads to better and cheaper trade between them. Foreign trade is one of the main sources of economic growth. And economic growth means an increase in the well-being of the population,” says Georgy Ostapkovich, director of the Market Research Center at the Higher School of Economics.
According to him, additional contacts between the BRICS countries will bring economic benefits in one way or another. Even for our country.
“Thanks to its membership in BRICS, Russia neutralizes many sanctions, gaining access to foreign technologies and the benefits of international trade,” says Vadim Kovrigin.
ASK FROM THE EDGE
Does the union need a common currency?
One of the main issues that Russia is promoting is the creation of an alternative financial system that would allow it to not depend on the dollar and the SWIFT international payment system. The working title is BRICSBridge (bridge – bridge, English).
– The latest initiative to create a single settlement center alternative to SWIFT is a very useful step for everyone. BRICS members, by trading with each other, have the opportunity to significantly reduce the costs of cross-border payments with each other, says Vadim Kovrigin.
Avoiding the dollar has been practiced in Russia for a long time. But in recent years this process has accelerated. The development of financial technologies makes it possible to do this with minimal losses.
“This will allow not only not to use dollars in trade, but also systems that allow Western countries to control their trade,” says Nikolai Palchenko, director of the Capital company.
The BRICS summit begins today in Kazan.
Photo: REUTERS.
At the same time, there is no talk of creating a single currency to replace the ruble, yuan, rupee and other national currencies. This doesn’t make any sense. Developing countries are learning from the mistakes of the European Union. And they do not want to lose sovereignty in monetary policy. BRICS plans to create some kind of equivalent that all countries participating in mutual trade can exchange. And in the future also in other countries. That is, it can become a full-fledged global currency, without being tied to any specific state.
And if there are enough participants in such a monetary union, they will be able to use a single currency and a single payment system for foreign trade transactions. And completely forget about the toxic dollar.
FROM THE HISTORY OF THE QUESTION
The abbreviation BRIC appeared in 2001. It was invented by British economist Jim O’Neill when he worked at the American investment bank Goldman Sachs. He examined the economic potential of developing countries and selected the most promising, in his opinion: Brazil, Russia, India and China. It united them under the code name BRIC (based on the first letters of the countries’ names). And then everything was done thanks to the political will of the leaders of these countries: the organization was founded in 2006 as part of the St. Petersburg Economic Forum. The word BRIC is similar to the English word “brick”.
With the arrival of South Africa to the association in 2010, the letter S (South Africa) was added to the abbreviation. And the “brick” became “bricks.”
Four more countries (Egypt, Iran, United Arab Emirates and Ethiopia) joined the union on January 1, 2024.
