Many are inclined to view Brics as yet another talking shop in search of relevance and purpose. US President Donald Trump’s threat to levy an additional import tariff of 10% on any nation that aligns itself with Brics’s “anti-American policies” puts things in perspective.
Brics must be doing something that hinders America’s own arbitrary policies under Trump for it to draw his wrath.
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This could be taken as validation of the grouping’s relevance in the context of trying to advance the interests of the Global South. Critics point to contradictions and conflicts among member states. Can the group survive, they ask, let alone champion causes that developing countries hold dear?
This misses the crux of why nations form groups. For the first four-and-a-half decades of the United Nations Security Council, its five permanent members were split by ideology and geopolitics into two opposing camps; the Soviet Union and China were on one side, with the US, UK and France on the other.
This divide was apparent in a failure of the two blocs to see eye-to-eye on vital matters. But that did not render the body useless. It served as a forum to contain global conflict, even if it failed all too often to prevent it.
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Brics’s principal contribution would not be conflict resolution or geopolitical stability; it would be to give emerging markets greater wriggle room for economic growth and development by creating institutions for commercial interaction among themselves beyond the West’s control.
At the Brics summit held in Kazan last year, for example, a proposal arose to create Brics Clear, a digital framework for the settlement of cross-border securities transactions among developing countries, with assets held in depository accounts. That Western sanctions would not get in its way went without saying. Recall how the West froze Russian reserves held in Europe’s multilateral trade clearance and depository system after Russia’s invasion of Ukraine.
The hope is that Brics Clear will be free of clamps. Meanwhile, the Brics-backed New Development Bank has been financing clean energy and other infrastructure projects worth billions of dollars. A reinsurance body would be helpful, as would a channel to move money across borders that parallels the Swift system held in the West’s grip.
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For Trump, it is about the dollar. Or the very idea of an alternative global reserve currency and means of exchange. The case for one is clear: Any national currency playing this role carries the inherent risk of being abused by the nation that issues it. Big overspending at beautifully low cost is a subtle form of it, but at its most brazen, such a currency can be wielded as a weapon to extract behaviour change from others.
Today, a shield from Uncle Sam’s anger is in the self-interest of many countries. Brics might not be in a position yet to anchor a currency that can take on the dollar, but the group could promote an open debate on the subject and canvass support for an alternative.
One option is a stablecoin pegged to the value of IMF’s Special Drawing Rights, issued and run by the Bank for International Settlements, whose innovation hub in Hong Kong has test-run digital currency transfers on the borderless Ethereum blockchain.
The stronger the Brics, the greater its ability to persuade the US and Europe of a currency shift. Brics isn’t about building another wall to keep blocs apart for Cold War II, but about a less lopsided world.
