BRICS

The BRIC grouping's first formal summit, also held in Yekaterinburg, commenced on 16 June 2009,[14] with Luiz Inácio Lula da Silva, Dmitry Medvedev, Manmohan Singh, and Hu Jintao, the respective leaders of Brazil, Russia, India and China, all attending.[15] The summit's focus was on means of improving the global economic situation and reforming financial institutions, and discussed how the four countries could better co-operate in the future.[14][15] There was further discussion of ways that developing countries, such as 3/4 of the BRIC members, could become more involved in global affairs.[15]

In the aftermath of the Yekaterinburg summit, the BRIC nations announced the need for a new global reserve currency, which would have to be "diverse, stable and predictable".[16] Although the statement that was released did not directly criticise the perceived "dominance" of the US dollar – something that Russia had criticised in the past – it did spark a fall in the value of the dollar against other major currencies.[17]

In 2010, South Africa began efforts to join the BRIC grouping, and the process for its formal admission began in August of that year.[18] South Africa officially became a member nation on 24 December 2010, after being formally invited by China to join[19] and subsequently accepted by other BRIC countries.[18] The group was renamed BRICS – with the "S" standing for South Africa – to reflect the group's expanded membership.[20] In April 2011, the President of South Africa, Jacob Zuma, attended the 2011 BRICS summit in Sanya, China, as a full member.[21][22][23]

The BRICS leaders in 2019. Left to right: Xi, Putin, Bolsonaro, Modi, and Ramaphosa.

The BRICS Forum, an independent international organisation encouraging commercial, political and cultural cooperation between the BRICS nations, was formed in 2011.[24] In June 2012, the BRICS nations pledged $75 billion to boost the lending power of the International Monetary Fund (IMF). However, this loan was conditional on IMF voting reforms.[25] In late March 2013, during the fifth BRICS summit in Durban, South Africa, the member countries agreed to create a global financial institution which they intended to rival the western-dominated IMF and World Bank.[26] After the summit, the BRICS stated that they planned to finalise the arrangements for this New Development Bank by 2014.[27] However, disputes relating to burden sharing and location slowed down the agreements.

At the BRICS leaders meeting in St Petersburg in September 2013, China committed $41 billion towards the pool; Brazil, India and Russia $18 billion each; and South Africa $5 billion. China, holder of the world's largest foreign exchange reserves and who is to contribute the bulk of the currency pool, wants a greater managing role, said one BRICS official. China also wants to be the location of the reserve. "Brazil and India want the initial capital to be shared equally. We know that China wants more," said a Brazilian official. "However, we are still negotiating, there are no tensions arising yet."[28] On 11 October 2013, Russia's Finance Minister Anton Siluanov said that a decision on creating a $100 billion fund designated to steady currency markets would be taken in early 2014. The Brazilian finance minister, Guido Mantega stated that the fund would be created by March 2014.[29] However, by April 2014, the currency reserve pool and development bank had yet to be set up, and the date was rescheduled to 2015.[30] One driver for the BRICS development bank is that the existing institutions primarily benefit extra-BRICS corporations, and the political significance is notable because it allows BRICS member states "to promote their interests abroad... and can highlight the strengthening positions of countries whose opinion is frequently ignored by their developed American and European colleagues."

In March 2014, at a meeting on the margins of the Nuclear Security Summit in The Hague, the BRICS Foreign Ministers issued a communique that "noted with concern, the recent media statement on the forthcoming G20 Summit to be held in Brisbane in November 2014. The custodianship of the G20 belongs to all Member States equally and no one Member State can unilaterally determine its nature and character." In light of the tensions surrounding the 2014 Crimean crisis, the Ministers remarked that "The escalation of hostile language, sanctions and counter-sanctions, and force does not contribute to a sustainable and peaceful solution, according to international law, including the principles and purposes of the United Nations Charter."[31] This was in response to the statement of Australian Foreign Minister Julie Bishop, who had said earlier that Russian President Vladimir Putin might be barred from attending the G20 Summit in Brisbane.[32]

BRICS Tower headquarters (former Oriental Financial Centre) in Shanghai.

In July 2014, the Governor of the Russian Central Bank, Elvira Nabiullina, claimed that the "BRICS partners the establishment of a system of multilateral swaps that will allow to transfer resources to one or another country, if needed" in an article which concluded that "If the current trend continues, soon the dollar will be abandoned by most of the significant global economies and it will be kicked out of the global trade finance."[33]

Over the weekend of 13 July 2014, when the final game of the FIFA World Cup was held, and in advance of the BRICS Fortaleza summit, Putin met fellow leader Dilma Rousseff to discuss the BRICS development bank, and sign some other bilateral accords on air defence, gas and education. Rouseff said that the BRICS countries "are among the largest in the world and cannot content themselves in the middle of the 21st century with any kind of dependency."[34] The Fortaleza summit was followed by a BRICS meeting with the Union of South American Nations president's in Brasilia, where the development bank and the monetary fund were introduced.[35] The development bank will have capital of US$50 billion with each country contributing US$10 billion, while the monetary fund will have US$100 billion at its disposal.[35]

On 15 July, the first day of the BRICS 6th summit in Fortaleza, Brazil, the group of emerging economies signed the long-anticipated document to create the US$100 billion New Development Bank (formerly known as the "BRICS Development Bank") and a reserve currency pool worth over another US$100 billion. Documents on cooperation between BRICS export credit agencies and an agreement of cooperation on innovation were also inked.[36]

At the end of October 2014, Brazil trimmed down its US government holdings to US$261.7 billion; India, US$77.5 billion; China, US$1.25 trillion; South Africa, US$10.3 billion.[37]

In March 2015, Morgan Stanley stated that India and Indonesia had escaped from the 'fragile five' (the five major emerging markets with the most fragile currencies) by instituting economic reforms. Previously, in August 2013, Morgan Stanley rated India and Indonesia, together with Brazil, Turkey and South Africa, as the 'fragile five' due to their vulnerable currencies. But since then, India and Indonesia have reformed their economies, completing 85% and 65% of the necessary adjustments respectively, while Brazil had only achieved 15%, Turkey only 10%, and South Africa even less.[38]

After the 2015 summit, the respective communications ministers, under a Russian proposal, had a first summit for their ministries in Moscow in October where the host minister, Nikolai Nikiforov, proposed an initiative to further tighten their information technology sectors and challenge the monopoly of the United States in the sector.[39]

Since 2012, the BRICS group of countries have been planning an optical fibre submarine communications cable system to carry telecommunications between the BRICS countries, known as the BRICS Cable.[40] Part of the motivation for the project was the spying of the National Security Agency on all telecommunications that flowed across the US.[41][42]

In August 2019, the communications ministers of the BRICS countries signed a letter of intent to cooperate in the Information and Communication Technology sector. This agreement was signed in the fifth edition of meeting of communication ministers of countries member of the group.[43] The agreement was signed at the fifth meeting of BRICS communications minister held in Brasilia.

The New Development Bank (NDB) is based in Shanghai.

The New Development Bank (NDB), formerly referred to as the BRICS Development Bank,[66] is a multilateral development bank operated by the BRICS states. The bank's primary focus of lending will be infrastructure projects[67][68] with authorized lending of up to $34 billion annually.[68] South Africa will be the African Headquarters of the Bank named the "New Development Bank Africa Regional Centre".[69] The bank will have starting capital of $50 billion, with capital increased to $100 billion over time.[70] Brazil, Russia, India, China and South Africa will initially contribute $10 billion each to bring the total to $50 billion.[69][70]

The New Development Bank (NDB) and Contingent Reserve Arrangement (CRA) were signed into treaty at the 2014 BRICS summit in Brazil.

The BRICS Contingent Reserve Arrangement (CRA) is a framework for providing protection against global liquidity pressures.[67][70][71] This includes currency issues where members' national currencies are being adversely affected by global financial pressures.[67][71] It is found that emerging economies that experienced rapid economic liberalization went through increased economic volatility, bringing uncertain macroeconomic environment.[72] The CRA is generally seen as a competitor to the International Monetary Fund (IMF) and along with the New Development Bank is viewed as an example of increasing South-South cooperation.[67] It was established in 2015 by the BRICS countries. The legal basis is formed by the Treaty for the Establishment of a BRICS Contingent Reserve Arrangement, signed at Fortaleza, Brazil on 15 July 2014. With its inaugural meetings of the BRICS CRA Governing Council and Standing Committee, held on September 4, 2015, in Ankara, Turkey[73] it entered into force upon ratification by all BRICS states, announced at the 7th BRICS summit in July 2015.

At the 2015 BRICS summit in Russia, ministers from BRICS nations, initiated consultations for a payment system that would be an alternative to the SWIFT system. Russian Deputy Foreign Minister Sergey Ryabkov stated in an interview, "The finance ministers and executives of the BRICS central banks are negotiating ... setting up payment systems and moving on to settlements in national currencies. SWIFT or not, in any case we’re talking about ... a transnational multilateral payment system that would provide greater independence, would create a definite guarantee for BRICS."[74]

The Central Bank of Russia (CBR) also started consultations with BRICS nations for a payment system that would be an alternative to the SWIFT system. The main benefits highlighted were backup and redundancy in case there were disruptions to the SWIFT system. The Deputy Governor of the Central Bank of the Russia, Olga Skorobogatova stated in an interview, "The only topic that may be of interest to all of us within BRICS is to consider and talk over the possibility of setting up a system that would apply to the BRICS countries, used as a backup."[75]

China has also initiated development of their own payment system called CIPS that would be an alternative to the SWIFT system. The Cross-Border Inter-Bank Payments System (CIPS) is a planned alternative payments system to SWIFT which would provide a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment.[76]

The group at each summit elects one of the heads of state of the component countries to serve as President Pro Tempore of the BRICS. In 2019, the pro tempore presidency is held by the president of Brazil.[86]

The theme of the 11th BRICS summit was "BRICS: economic growth for an innovative future", and the priorities of the Brazilian Pro Tempore Presidency for 2019 are the following: Strengthening of the cooperation in Science, technology and innovation; Enhancement of the cooperation on digital economy; Invigoration of the cooperation on the fight against transnational crime, especially against organized crime, money laundering and drug trafficking; Encouragement to the rapprochement between the New Development Bank (NDB) and the BRICS Business Council.[87]