What is BRICS and Their Goals?

TEMPO.CO, Jakarta - More countries are lining up to join the informal economics group, following the BRICS Summit 2024 last October. The majority of the nations showing interest in the BRICS hope for a lucrative journey manifested through collective benefits, including financial development as well as increased trade and investment. Read on to have a better look at BRICS definition, origin, members, and its overall objectives as cited from various sources. What is BRICS? BRIC, which stands for an acronym of Brazil, Russia, India, China, and South Africa, is an informal multilateral organization that was initially created in an effort to provide a platform for its members to challenge the Western-dominated world. According to Reuters, the term was first coined in 2001 by then Goldman Sachs chief economist Jim O’Neill in a research paper that emphasized the potential of the bloc’s original members. Initiated by Russia in 2009, the heads of state and government of the member nations gather annually to determine the group’s one-year rotating chairmanship. What Does BRICS Do? In order to challenge the Western-dominated world, BRICS focuses on different sectors of life, including geopolitics, economic cooperation, and the development of multilateral trade. Citing from The Council on Foreign Relations, BRICS also aims to reduce the dependency on the US dollar by increasing trade in local currencies or a potential common BRICS currency. Moreover, members of BRICS consistently demonstrate their commitment to bringing economic coordination on major issues like investment, export restrictions, and tariff policy. Aside from establishing the BRICS Interbank Cooperation Mechanism, BRICS are working in different geopolitical directions that include regional problems like conflicts in Syria, Afghanistan, and Libya. History of BRICS Although the term BRICS was first published in 2001, it was not until 2009 that the annual convene began. Russia's President Vladimir Putin was the first one to call for an official BRIC summit in 2009. The first summit resulted in the joint venture of the bloc’s founding members, Brazil, Russia, India, and China. South Africa followed suit as BRICS’s nations around 2010. BRICS Members According to Reuters, all the BRICS countries are part of the Group of 20 (G20) of major economies. Following the 2023 expansion, there are several new faces in the bloc’s scheme. As of today, BRICS comprises different countries below: 1. Brazil 2. Russia 3. India 4. China 5. South Africa 6. Iran 7. Egypt 8. Ethiopia 9. Uni Emirates Arab 10. Saudi Arabia The addition of Saudi Arabia and the UAE solidifies the BRICS dominance in oil-producing investments. On the other hand, Egypt and Ethiopia serve as the primary voices of the African continent.

TEMPO.CO, Jakarta - Russian Ambassador to Indonesia, Sergey Tolchenov, has clarified that Russia has not lobbied for Indonesia's membership in the BRICS group. He emphasized that the decision to include Indonesia as a member requires a consensus among all existing BRICS members. “This is a multilateral organization and we are just one of the members,” said Tolchenov during a press conference at his residence in Kuningan, South Jakarta on Monday, October 28, 2024. He further said that Russia cannot unilaterally invite Indonesia to join BRICS. The approval process involves a collective decision by all member countries. “This must be a joint decision of all members. It must be a consensus of all members,” he said. Tolchenov assured that Russia, along with other BRICS members, has engaged in discussions with Indonesian officials regarding the potential membership. “I believe our colleagues from China, Brazil, Saudi Arabia, India, and the Ambassador have discussed the issue of BRICS with our Indonesian partners,” he explained. The Russian Ambassador expressed enthusiasm about Indonesia's intention to join BRICS, considering it a significant step forward. “Indonesia's desire to join BRICS is an important step. I am very pleased that Indonesia will join this group,” he added. Tolchenov expressed hope that Indonesia's membership in BRICS would further strengthen bilateral relations between the two countries. He highlighted the potential for broader discussions on various political, economic, cultural, and socio-economic issues within the BRICS framework. Originally composed of Brazil, Russia, India, China, and South Africa, the BRICS group has expanded to include the United Arab Emirates, Iran, Egypt, and Ethiopia as full members. Indonesia officially expressed its intention to join BRICS during the BRICS Plus Summit in Kazan, Russia, on October 22-24, 2024. Thirteen countries, including Indonesia, have been accepted as official partner countries and are now working towards full membership.

TEMPO.CO, Jakarta - Prominent developing countries under BRICS will operate a development bank by the end of this year, the South African Finance Department announced on Friday, June 26, 2015, as reported by AFP. It was also announced that South African banker Leslie Maasdorp has been nominated as the Vice President of the bank. Brazil, Russia, India, China and South Africa that represent 40 percent of the world population and contribute a quarter of the world economy’s output decided in 2013 to establish a development bank to distribute loans for infrastructure projects. The bank that will be based in Shangha, China, aims at narrowing the gap between the industrial countries and is expected to have a total capital up to US$100 billion. The new development bank’s board of governors will meet for the first time in Ufa, Russia, on July 7 to confirm the lender management. Mr. Maasdorp previously served as an advisor to the current South African central bank director Tito Mboweni and supervised the privatization program in 1999-2002. ANTARA

Indonesia has expressed its desire to join the BRICS group of major emerging economies, which accounts for 35 percent of global economic output, as a means to strengthen emerging countries, its foreign ministry said in a statement. As BRICS world leaders convened in Kazan for a summit this week, Indonesia's foreign ministry said late on Thursday that the process of joining the group has begun. "Indonesia joining BRICS is a manifestation of its independent-active foreign policy," said Sugiono, the newly appointed foreign minister. "That does not mean we join a certain bloc, but we actively participate in every forum." Indonesia, the world's fourth most populous nation, holds a non-aligned foreign policy. President Prabowo Subianto, who took office on Sunday, has stressed repeatedly that he will befriend all countries, be they China or the United States, and that Indonesia will not be joining any military bloc. Sugiono added BRICS suits Prabowo's main government programs "especially with regards to food and energy security, poverty eradication, and the advancement of human resources," adding that Indonesia sees the group as a "vehicle" to further the interests of the global south. Russian President Vladimir Putin said more than 30 countries had expressed a desire to join the BRICS, though there was little immediate clarity on how the expansion would work. Current members include Brazil, China, Egypt, Ethiopia, India, Iran, Russia, South Africa and the United Arab Emirates. Yohanes Sulaiman, an international relations professor at Jenderal Achmad Yani University, questioned the benefits of Indonesia joining BRICS as they can be gleaned from bilateral relations, but it shows Indonesia does not want to miss out. "It's better to follow than to be left behind," he said, adding it does not necessarily mean Prabowo's foreign policy adheres more to the east than to the west. In a bid to attract more investment and trade deals from its members, Indonesia said earlier this year before Prabowo took office that it aims to complete the accession to become the member of Paris-based Organisation for Economic Co-operation and Development (OECD) within two to three years. The BRICS summit in Kazan touched on the war in the Middle East and Ukraine, though there were no signs that anything specific would be done to end either conflict.

As US-China rivalry hinders our ability to deal with crises, Brics is using open engagement to help create a more equitable international order The emergence of Brics – a bloc of developing economies named after early members Brazil, Russia, India, China and South Africa – reflects the Global South’s aspiration for a more inclusive and equitable world order. Rather than hinder this effort, the Global North should emulate the Global South policy of open engagement. At stake is not just the creation of a fairer economic system but also our collective ability to address urgent global challenges such as climate change, pandemics and the risks posed by artificial intelligence (AI). The Kazan declaration adopted at the 16th Brics summit advocates the reforming of the international financial architecture to be more open and just. This, coupled with the call for an alternative cross-border payment mechanism and the use of local currencies, has added to the perception of Brics as a movement aimed at addressing long-standing Global South concerns over the perceived inequities of the Western-centric economic system. Unsurprisingly, the United States views Brics as a challenge to its dominance. As more developing nations like Malaysia express interest in joining the China-led bloc, they risk being perceived as aligning themselves in the great power rivalry. But countries in the Global South deny they are taking sides. While critical of the Western-led order, these emerging economies remain committed to open trade. Malaysia, for example, welcomes investments from both the West and China. The refusal to choose sides underscores the Global South’s disagreement with the US’ portrayal of a battle between democracies and authoritarianism. Instead, developing countries see the global challenges as a non-ideological struggle for a more equitable international order, with the solution lying in open engagement. Herein lies the broader significance of the Kazan summit: the emergence of a Global South non-aligned movement, united by visions such as Chinese President Xi Jinping’s bid to build a “community with a shared future”, fostering cooperation and working for the common good. The US, constrained by a binary world view of good vs evil, continues to see China’s rise as a threat to its dominance. Although the Biden administration has pledged to both cooperate and compete, competition increasingly defines the US-China relationship. The US presidential election next month is unlikely to change this trajectory with both candidates, Kamala Harris and Donald Trump, expected to intensify the trade war with China. The US’ imposition of sanctions and tariffs on China has fragmented global supply chains, forcing countries to hedge and choose sides. Critics contend the trade war has caused major economic disruptions with no tangible benefits for the US. The tense US-China rivalry is also hindering our ability to deal with escalating global crises. Last month, US climate envoy John Podesta visited China, where both nations reaffirmed pledges for practical cooperation. But trade tensions, including US tariffs on Chinese electric vehicles (EVs), could impede not only US efforts but also the global green transition. In addition, concerns are mounting that a potential Trump re-election could derail any climate progress. In May, American and Chinese officials met in Geneva to discuss establishing guardrails to mitigate AI risks. These efforts, however, are hampered by the tech war. The Biden administration’s “small yard, high fence” strategy – restricting exports of advanced chips to China, heightened scrutiny of Chinese scientists and suspicions about security threats in China-made products – are all contributing to a lack of trust, making meaningful AI governance collaboration problematic. In August, a Chinese delegation visited the US to discuss collaboration on the fentanyl epidemic, but American scepticism persists over China’s efforts to curb the illicit drug trade. Earlier, in June, Reuters reported that during the Covid-19 pandemic, the Pentagon allegedly conducted a covert anti-vaccination campaign in the Philippines to undermine China’s Sinovac vaccine and limit Beijing’s influence. These incidents underscore the deep mistrust plaguing the US and China, complicating prospects for collaboration on global health crises. But while China’s efforts to cooperate with the US are hindered by mistrust, it is making notable progress in the Global South. Last month, Beijing hosted the Forum on China-Africa Cooperation Summit, where China reaffirmed its commitment to Africa by expanding its focus beyond the Belt and Road Initiative’s infrastructure projects to include the green energy transition and investments in local EV manufacturing. During the summit, Xi also pledged to bolster Africa’s healthcare sector, as part of the “health silk road” initiative, which aims to set up plants abroad to manufacture pharmaceutical and medical products which could help combat diseases such as malaria and enhance preparedness for future pandemics. In May, Beijing hosted the China-Arab Cooperation Forum ministerial conference, at which Xi said China was willing to work with Arab nations to deepen collaboration in a range areas. The United Arab Emirates, for instance, has enhanced its hi-tech partnership with China. This is expected to support the Gulf state’s digital transformation and mitigate AI risks. To be clear, the Global South is not exclusively focused on China; these countries are also actively engaging with Western nations to foster economic development, such as through the European Union’s Global Gateway infrastructure drive. The Brics summit concluded with a call for a fairer, more inclusive international financial system. But the broader significance of the China-led Brics movement lies in the Global South’s non-aligned strategy of open engagement, not only to enhance national economies but also to establish a more equitable global order. Like the Global South, the Global North – particularly the US – must be willing to set aside differences and pursue collaboration, especially with China, not just for the sake of global economic stability, but also so the world has the capacity to confront urgent global challenges, such as the escalating environmental crisis, future pandemics and AI risks.

TEMPO.CO, Jakarta - Lecturer of International Relations at Andalas University (Unand) in West Sumatra, Virtuous Setyaka, evaluates Indonesia's effort to join BRICS could enhance Indonesia's influence in the international system, but it could also pose some challenges that need to be carefully considered. Hence, a thorough consideration is needed to make such decision. "Certainly, this has its positive impact, but challenges also need to be carefully considered," he said when contacted by Tempo on Friday, October 25, 2024. According to him, joining BRICS could offer Indonesia significant opportunities to expand economic partnerships. BRICS, representing around three billion people, offers potential export markets for Indonesian products, such as agricultural products, textiles, and electronics. "With trade tensions between the West and the East, diversification is important for our economic resilience," he said. This alliance will also help reduce the negative impact of global instability on Indonesia's economy. Furthermore, another major benefit is the access to the New Development Bank (NDB), a development bank established by BRICS countries. For Indonesia, which still needs significant investment in infrastructure, the NDB can be an alternative source of funding. "If NDB funds can enter underdeveloped areas, this will certainly boost regional economic growth," he said. In terms of geopolitics, if Indonesia joins BRICS, Indonesia's position on the international stage is predicted to strengthen further. As a member of BRICS, Indonesia will have direct access to international forums that allow advocating for the interests of developing countries in global issues, such as economic reform and climate change. "Indonesia's position will become more strategic, especially in advocating for more fair policies. This participation is also in line with Indonesia's long-standing active foreign policy," he said. On the other hand, joining BRICS also brings challenges. BRICS countries have diverse national interests and ideologies, often conflicting with Western countries. This could put Indonesia in a difficult position, considering the good relations that have been maintained with the United States and Europe. Another challenge is the risk of new dependency on the BRICS economy. If one country experiences a crisis or conflict, this could directly impact Indonesia's economic stability. "This dependency risk needs to be anticipated," he said. Furthermore, in terms of sustainability, infrastructure projects funded by the NDB need to adhere to strict environmental standards. Indonesia, facing environmental issues such as deforestation and pollution, needs to be cautious to ensure that rapid development does not harm the environment. Environmental activists emphasize that environmental standards are key to ensuring that this development does not damage the long-term ecosystem. Virtuous suggests that the Indonesian government carefully reconsider the decision to join BRICS. On one hand, there are promising opportunities, while on the other hand, there are challenges that require strategy and caution. Prior to the press release from the Indonesian Ministry of Foreign Affairs on Friday, October 25, 2024, Indonesia expressed its desire to join BRICS at the BRICS Plus summit in Kazan, Russia on October 23-24, 2024. With this announcement, Indonesia's process of becoming a member of BRICS has begun. BRICS is an informal group initially consisting of Brazil, Russia, India, China, and South Africa. The group was first initiated in 2006 to discuss current global issues. Its membership was expanded in 2023 with the addition of Ethiopia, Iran, Egypt, and the United Arab Emirates.

The members of the enlarged grouping would do well to arrive at a consensus on goals and ways to effectively reach them Goldman Sachs economist Jim O’Neill could not have foreseen that his acronym Bric (Brazil, Russia, India and China), used in his November 2001 paper “Building Better Global Economic BRICs”, would inspire those four emerging economies to form an organisation with the same name, holding their first summit in 2009. In 2011, South Africa was admitted to the bloc, thus changing its name to Brics. This year, more countries – Egypt, Ethiopia, Iran and the United Arab Emirates – have joined. Expansion of the grouping’s membership might be on the agenda for the 16th Brics summit in Kazan, Russia, scheduled for October 22-24. Nobody knows what the outcome will be but there are a few questions worth asking as the summit approaches. First, how will Brics carry out economic cooperation? Cooperation among members has been driven by the three wheels of political security, economics and people-to-people exchanges. With more members, can the grouping still make progress in these areas? For political cooperation, it’s not difficult to publish a joint statement at a summit outlining positions and objectives on global issues. When it comes to cultural exchanges, members can just as easily organise a sporting event or co-sponsor a film. However, economic cooperation is easier said than done. With the exception of the New Development Bank, there hasn’t been much to show for economic cooperation within Brics. As such, the group has been described by many people as being all talk and no action. It is unrealistic to form a free-trade area for Brics because of two main obstacles. Some members like India lack the political and/or economic will to do so. And Brazil’s ratification of free-trade deals is constrained by the country being part of the Southern Common Market (Mercosur), which mandates a common trade policy among its members. With more members, Brics might find it more difficult to reach a consensus on economic matters. Without economic cooperation, Brics risks becoming the developing world’s equivalent of the Group of 7. Second, can Brics be institutionalised? Unlike the Asia-Pacific Economic Cooperation (Apec) forum or the Shanghai Cooperation Organisation, Brics has no permanent secretariat. When a member undertakes the rotating presidency of the group, it is responsible for nearly everything, from hosting that year’s summit to setting the calendar of events. Yet the Brics presidency seems to lack both the authority and responsibility to scrutinise how decisions are implemented. Some might say a permanent secretariat increases bureaucracy, decreases flexibility and creates inefficiency. However, these arguments are not well-grounded. If run professionally, a permanent secretariat won’t necessarily cause such problems. In fact, institutionalising Brics has become more urgent as the group expands. Third, can Brics achieve the goal of de-dollarisation? The negative impact of dollar supremacy on the world economy is well-known. In recent years, the dollar has been increasingly weaponised. That is why Brics and many other countries wish to see de-dollarisation. But realising that goal is another story. China has made remarkable progress on internationalising the renminbi. However, it is too early to gauge the effectiveness of de-dollarisation efforts. While it is naive to imagine Brics creating its own currency, it is realistic for the bloc to set up a payment system based on members’ currencies. To adopt such a system, Brics must show strong political courage and address technical issues. Fourth, can Brics focus on a set of priorities? From the lengthy joint declarations at various summits, it is clear that Brics wishes to do everything from establishing a new world order to dealing with global economic issues, from curbing climate change to fighting against terrorism. But it is impossible for Brics to accomplish all of these goals. As a matter of fact, excessive ambition is counterproductive. Brics should stay grounded by pinpointing a few important issues to cooperate on, based on common interests. For now and even in the near future, Brics should focus on contributing in some way to world peace and dealing with issues of global governance for trade and finance, for example. Fifth, can Brics speak with one voice? Even before its recent expansion, Brics cooperation was stifled by members’ failure to agree on important issues. Now that it has more members, a consensus might be even more difficult to reach. Therefore, more dialogue and consultation mechanisms are urgently needed. India seems comfortable having its feet in two boats. The Brics member is also part of the Quadrilateral Security Dialogue, whose members include Australia, Japan and the United States. Apparently, the Quad is antagonistic towards China. So it’s difficult to see how India can join other Brics members in resisting US hegemony while embracing the Quad’s security goals. Last but not least, how can scholars contribute more to Brics cooperation? Academic research is important for Brics as the group’s leaders need feasible ideas. Oliver Stuenkel, a political scientist based in Sao Paulo who is an expert on Brics, said in 2013: “Not a single great idea has emerged from the many Brics Academic Fora that have been organised so far.” Maybe he was too pessimistic then. However, if think tanks had been more innovative and creative, Brics cooperation might have been more fruitful by now. Competent scholars must know as much as possible about Brics to offer good suggestions on how its members can cooperate. The exchange of ideas among scholars in member states is extremely important.

In championing economic inclusivity and strategic autonomy, pioneering financial innovation and promoting peace, Brics is a force for good The 16th Brics summit, held as the world marks 80 years since the Bretton Woods agreement, heralds an important development that is often misunderstood: Brics is not an anti-West bloc but a new platform to enable developing countries to engage in global governance. Involving more than 20 heads of state, the summit showed how emerging economies can contribute to global development. While Brics – named after early members Brazil, Russia, India, China and South Africa – represents around 30 per cent of the world economy and nearly half of the population, it has no intention of challenging existing institutions but seeks to enrich them instead through healthy competition and complementary development. In the evolving multipolar world order, Brics represents the first major platform led by developing countries for promoting development. While this might suggest competition with existing institutions, healthy competition drives innovation and progress. The bloc’s distinctiveness lies in three key characteristics. First, its economic inclusivity brings together countries at varying stages of development. From major emerging economies to developing nations, all can engage in practical cooperation with no ideological prerequisite. This diversity, rather than being a weakness, shows the platform’s unique strength in fostering collaboration across the spectrum of development. The recent expansion of Brics’ membership to include Egypt, Ethiopia, Iran and the United Arab Emirates exemplifies this inclusive approach. With 30 other countries reportedly expressing interest in joining, Brics is not a closed club but a supportive platform committed to mutual aid and cooperation. Second, Brics continues to pioneer innovative solutions in global economic governance. There is Brics Pay, an international payment system under development which could help prevent the weaponisation of such systems. And there is Shanghai-headquartered New Development Bank, which has approved over US$35 billion for 105 development projects. In Kazan, Brics members endorsed the bank’s plan to fund more projects in local currencies to avoid exchange-rate fluctuations. The bank has funded projects in crucial areas including sustainable infrastructure, clean energy, digital transformation and social infrastructure, with a particular focus on meeting developing countries’ needs. It serves as an early-stage investment vehicle for developing countries, offering attractive opportunities for growth and cooperation, while complementing international financial institutions. Third, Brics upholds the principle of strategic autonomy. Members maintain their independence in choosing developmental paths suited to their national conditions. Beyond economic cooperation, Brics countries are increasingly playing a role in promoting global peace and stability, amid a turbulent international landscape and regional wars. This is exemplified by the “Friends of Peace” initiative, launched by China and Brazil, an inclusive framework for dialogue on regional conflicts such as Russia’s war on Ukraine. Seventeen countries, including Nato member Turkey, are part of the group. The signing of a joint communique by 13 of these countries after a meeting in September further reinforced the coalition’s commitment to dialogue and peaceful resolution. The foundation for this was laid by China and Brazil through their six-point peace plan, which shows Brics members’ growing role in conflict resolution. Brics leaders have also taken their own diplomatic steps to mitigate conflict. Notably, last year South African President Cyril Ramaphosa and other African heads of state visited both Russia and Ukraine to mediate. The recent Brics summit held in Kazan, Russia, further highlighted this commitment to peace-building, particularly through the China-India meeting on the summit sidelines, where both leaders showed a willingness to pull back from border tensions, displaying how the two largest nations of the Global South can work together. This cooperation between two of Asia’s giants adds tremendous stability to the Brics platform and strengthens its role in promoting peace. The evolution aligns with Chinese President Xi Jinping’s advocating of Brics as a force for peace, innovation and equitable global governance. As Brics emerges as an indispensable force in global economic growth and the voice of the Global South, some Western countries feel apprehensive. Yet Brics only seeks to build a more equitable world order. And Brics has become a crucial platform enabling Global South nations to engage more effectively with major institutions such as the Group of 7, Group of 20, European Union, Association of Southeast Asian Nations and African Union. The platform’s appeal extends beyond the Global South. French President Emmanuel Macron was reportedly interested in joining last year’s summit while this year, United Nations Secretary General Antonio Guterres was among the attendees. This reflects a broader truth about global governance: just as the G7 would benefit from including more emerging economies in its meetings, Brics welcomes developed nations’ engagement – marking a natural evolution towards true multilateralism. For the Global South, Brics is an important platform for cooperation and development, including establishing free-trade zones and industrial estates, as well as boosting poverty alleviation, the green power transition and infrastructure enhancement. The economic cooperation espoused by Brics members is more needed than the military or security alliances emerging in our more geopolitically challenging world. As the world moves towards multipolarity, the emergence of Brics as yet another pole can help to diversify and democratise international politics. Its efforts can help strengthen UN institutions and improve global governance by promoting a fairer world order. Economic cooperation among Brics members can also contribute to more balanced and inclusive economic growth globally. Brics will continue to address the world’s pressing challenges, from wars to climate change. This is, ultimately, a platform that enriches global governance by embracing diversity and fostering dialogue among nations, contributing vitally to a more balanced and sustainable world order.

As more countries join bloc, President Xi Jinping is urging members to take green, low-carbon route and practise ‘true multilateralism’ The annual summit of the Brics group of nations welcomed five new full members last week, doubling membership to 10. It underlined the growing challenge to the Western-led world order from emerging nations, with 13 more invited to become “partner countries”, and Russian President Vladimir Putin revealing that more than 30 others had expressed an interest in joining. Brics, named after the founding members Brazil, Russia, India and China plus South Africa, now covers more than 40 per cent of the world’s population after Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates joined. The expanded membership found common ground at the summit in the Russian city of Kazan on a range of global issues, with the exception of Russia’s proposal to delink the world’s financial system from the US dollar. Few members are ready to embrace an alternative to a currency that remains deeply entrenched globally. At his keynote summit speech, President Xi Jinping spoke out against stalled reform of international governance, and outlined an agenda for a new world order including an international financial system that better reflects changes in the global economic landscape. China, which accounts for around 17 per cent of the world’s gross domestic product and contributes some 30 per cent of global growth, is under-represented in key institutions. Its voting power in the International Monetary Fund, for instance, is now 6.08 per cent, compared with 6.14 per cent for Japan and 16.49 per cent for the US. Xi told the summit China wanted to work with fellow members to promote green industry and clean energy. “Green is the background colour of this era,” he said, adding that Brics states should “actively integrate into the global green and low-carbon transformation”. He also said members should practise “true multilateralism”, including the reform of global governance with fairness and justice in mind, and highlighted the importance of representing developing countries. This echoed a previous call to rewrite and uphold international rules based on the United Nations Charter, rather than be “dictated by those with the strongest muscles or the loudest voice”. Xi also called for an “innovative Brics”, and said China was ready to work with the bloc to “release the energy of AI”, or artificial intelligence. He urged members to build a “peaceful Brics”, including a de-escalation in Ukraine and ceasefire in Gaza. At the end of the summit, Putin clarified that Brics countries were not creating an alternative financial settlement system. Instead, speeches by Xi and Indian Prime Minister Narendra Modi indicated a broader intention to improve financial integration and cooperation among member countries. In the long run that is a more constructive road to reform that is important for global stability.

Though Vladimir Putin has called for the group of emerging economies to develop an alternative payment system, enthusiasm appears limited While there are growing concerns among the Brics bloc of emerging economies over the scope of financial sanctions from the United States, few countries in the grouping seem ready to ditch the US dollar despite Russian President Vladimir Putin’s recent efforts to encourage an alternative system of payment among members. Following an expanded summit for the bloc hosted in his country – and a communique indicating little progress had been made on such a system, analysts said – Putin appeared to concede the matter, saying the bloc’s constituent nations “have not and are not” pursuing the idea. His stance by summit’s end on Thursday was a marked contrast with his opening speech for the gathering the day before, where he issued a call for an international payments system that could prevent the US from using its dollar as a political weapon. One reason an alternative system has not been adopted is that few countries are willing to give up the US dollar entirely, said James Chin, a professor of Asian Studies at the University of Tasmania in Australia. “It’s very difficult to bypass the US dollar,” Chin said. “A bilateral currency agreement seems to be the easiest way. In some ways, it is a bit clumsy, but it can be done if the amount is big enough.” Chin was referencing efforts by the People’s Bank of China, which has agreed to 40 bilateral swap lines with other central banks enabling them to exchange their local currencies for the yuan. Before the summit in Kazan, Russia sketched an outline for a payment platform in national Brics currencies that would include a new messaging system and a network of national commercial banks linked through the Brics central banks. The incentive for alternatives to the US dollar is stronger for Russia than most other Brics members; it is grappling with unprecedented US-led sanctions levied after its invasion of Ukraine in February 2022. Delays in trade payments have become a major headache for Russian companies and banks, even with major partners like China or Turkey, as banks everywhere come under pressure from Western regulators to scrutinise transactions. As geopolitical frictions continue to mount, financial institutions in China and Russia are looking to minimise their exposure to the US-led financial order – particularly the Society for Worldwide Interbank Financial Telecommunication, a messaging system that facilitates rapid cross-border payments. A higher reliance on barter trades and Russia’s home-grown Mir payment system, set up by the Bank of Russia as an alternative to Visa and Mastercard, are two of several possibilities that have been discussed between the two neighbours. Former PBOC governor Zhou Xiaochuan said the focus for China, Southeast Asia and the Gulf states should be to “strengthen the cross-border use of local currencies”, while still acknowledging the importance of the US dollar assets and the depth of US capital markets. Zhou cited the example of mBridge, China’s cross-border digital currency initiative, as a means of filling vacancies in the international payment system. “Using local currencies for cross-border payments is very important for implementing independent monetary policies and maintaining monetary sovereignty,” said Zhou at a forum in Beijing on Wednesday, according to a Thursday report by the Beijing News. “Whether the US dollar can continue to be used as a reserve currency and international trade settlement currency depends largely on the US government itself. If the US uses the dollar as a weapon, it will reduce the willingness of other countries to use the dollar.”