South Africa BRICS Summit Yields Major Developments

Brics Leader’s Family Photo on the side line of the 10th BRICS Summit. (DIRCO, South Africa)

The Lede: On Thursday, the BRICS bloc of developing economies concluded its 2023 annual summit in Johannesburg with major developments in the group including invitations of membership to six additional countries, discussions of a common currency, and an agreement between India and China to de-escalate border tensions.

What We Know:

South African President Cyril Ramaphosa, whose country hosted the summit and is the current BRICS chair, announced Thursday that six countries are invited to join the group in 2024. Calls for the bloc’s expansion were led by Chinese President Xi Jinping. The invited countries include Iran, Saudi Arabia, the United Arab Emirates—three of the world’s biggest oil producers—Argentina, Egypt, and Ethiopia. The additions would more than double the size of BRICS.
On Wednesday, Brazilian President Luiz Inacio Lula da Silva proposed a common currency among the BRICS nations for trade and investment between bloc members as a hedge against vulnerability in dollar exchange rate volatility. Leaders of the other member countries did not immediately share Brazil’s explicit enthusiasm for a BRICS currency, although Russian President Vladamir Putin made comments about the use of the national currencies of member countries and Xi spoke about promoting the reform of the international financial and monetary system.
Indian Prime Minister Narendra Modi held a meeting with Xi in regard to unresolved border issues. They agreed on Thursday to ramp up efforts to reduce tensions by pulling troops back in an effort to improve relations between Beijing and New Delhi to focus on common interests.
Ramaphosa also hosted Xi in Pretoria on Tuesday for an official state visit on the side of the BRICS summit. The two leaders discussed future cooperation on energy cooperation, direct investment, the digital economy, tourism, education, and the development of industrial parks and special economic zones.

The Background: This is the 15th annual BRICS summit among the principal member countries Brazil, Russia, India, China, and South Africa. The bloc was established in 2009 and currently represents about 40% of the world’s population as well as a quarter of the world’s GPP. Russian President Vladamir Putin did not attend in person due to the international warrant for his arrest from the International Criminal Court in which South Africa is a participant and joined via video conference instead. In the Ladakh area between China and India, there has been a standoff between tens of thousands of soldiers on either side with small clashes occurring from time to time. The two countries fought a war in 1962, after which the two countries lay overlapping claims on territory including Arunachal Pradesh and the Aksai Chin Plateau.

Likely Outcomes:

Although there was much talk leading up to the BRICS summit about the possibility of the bloc establishing a common currency, the topic did not play a large role in the gathering’s agenda. The bloc is likely not in agreement on the implementation of such a currency, though they share a common interest in influencing change in the global monetary system. In the near term, the idea is still in a nascent stage and requires much more development and consideration before it begins to emerge as a reality.
The addition of the six new countries will be a significant boost to the already sizeable bloc. It will not only elevate the bloc’s political influence in global affairs, but it will also expand the economic significance of BRICS with the inclusion of the Gulf region’s biggest oil producers.
The de-escalation of tensions between China and India represents the first step in solving one of the biggest stumbling blocks to bilateral realtions. It may lead to more cooperation between the two countries in the future, but India will likely continue to walk its neutral path as the U.S. has also been courting its favor, especially in military and security matters.
On the surface, the Biden administration downplayed the challenge of BRICS to the U.S.-led world order. National Security Advisor Jake Sullivan explained that the foreign policy approach would be to manage the individual bilateral relations with each of the member countries without lending much credence to the bloc.

Quotables:

"We should let more countries join the BRICS family to pool wisdom and efforts to make global governance more just and equitable." – Xi Jinping, President of China

"If you want [a BRICS currency], you'll have to get a banking union, you'll have to get a fiscal union, you've got to get macroeconomic convergence. Importantly, you need a disciplining mechanism for the countries that fall out of line with it... Plus they will need a common central bank... where does it get located?" – Lesetja Kganyago, South African central bank governor

“We are not looking at the BRICS as evolving into some kind of geopolitical rival to the United States or anyone else. So, from our perspective, you know, we will continue to work on the strong positive relationships we have with Brazil, India, and South Africa; we will continue to manage our relationship with China; and we will continue to push back on Russia’s aggression. But, from our perspective, [we] do not look at this group through geopolitical terms.” – Jake Sullivan, U.S. national security advisor

"What the Chinese are offering is an alternative world order for which autocrats can feel safe and secure in their own countries. They can find an alternative direction of development without having to accept the conditionalities imposed by the democratic Americans and European powers." – Steve Tsang, director of the Soas China Institute

"I think the message is that this is a diverse set of countries, none of them are close US allies, formal allies, two or three of them will be US opponents. But more broadly, this is not a group of anti-American states. No longer is it a world where the US can set all the norms, or drive all the institutions. There's no question about that. But a replacement? No, I would say much more of a complementarity than a replacement that is on the horizon.” - Sarang Shidore, director of the Global South program at the Quincy Institute

Good Reads:

Brics summit: Is a new bloc emerging to rival US leadership? (BBC)

The 4 biggest moments from this week's BRICS summit — and why they matter (CBS News)

BRICS welcomes new members in push to reshuffle world order (Reuters)

What is a BRICS currency and is the U.S. dollar in trouble? (Reuters)

China’s Xi Receives Warm Welcome on South Africa State Visit (VOA)