With the BRICS Fifth Summit drawing to a close, observers are already analyzing the summit’s impact on the future of these important nations. Here’s a recap of what has been going on in Durban, South Africa in a number of key areas.
This year’s summit was the first head-of-state summit to be held in South Africa. Fittingly, the theme of the conference was “BRICS and Africa-Partnership for integration and industrialization.” To that end, several African organizations as well as non-BRICS leaders like Egyptian President Mohamed Morsi participated in the summit alongside BRICS heads of state South African President Jacob Zuma, Brazilian President Dilma Rousseff, Russian President Vladimir Putin, Indian Prime Minister Manmohan Singh, and Chinese President Xi Jinping.
Africa presents both enormous opportunities and challenges for BRICS nations. On the one hand, BRICS members like China and India have been steadily deepening relations on the continent in order to tap into Africa's enormous natural resources as well as to open up markets for consumer goods. That latter goal is likely to prove particularly important as certain parts of Africa emerge as international success stories.
On the other hand, many parts of Africa are steadily deteriorating due to a breakdown of governance; indeed, immediately prior to the summit the Central African Republic's capital city of Bangui was overrun by militants forcing its president to flee the country and resulting in the deaths of some 13 South African peacekeeping troops. Meanwhile, Egyptian leader Morsi is presiding over an increasingly perilous situation at home as political disputes continue to hamper necessary economic reforms. Ominously, with an estimated three months to go before its foreign reserves run out, the global political risk consulting firm, Eurasia Group, said in a research note this week, “the chances of state collapse [in Egypt] will be better than even in the coming three months.”
As President Xi Jinping has learned in his travels this week, one challenge BRICS countries face in deepening their presence in Africa is the possibility of opening themselves up to charges of imperialism and neocolonialism. One way to hedge against this risk is by acting through multilateral institutions and initiatives. In this regard, it wasn’t surprising to see BRICS come together at the summit in creating a number of new institutions and initiatives.
BRICS-led development bank?
No such initiative was as important and anticipated as the creation of a BRICS development bank, and as well as the related reserve currency fund.
Unfortunately, earlier today BRICS leaders announced they had failed to reach an agreement on funding the development bank. Earlier South African Minister of Finance, Pravin Gordhan had said, “We have made very good progress” on working out the terms of the bank. With some areas of contention still needing to be worked out, BRICS will likely continue discussing how to bring this idea to fruition in the coming months.
BRICS was more successful in agreeing to pool some of their reserves together to create a currency stabilization fund to hedge against future volatility in international financial markets. Together, BRICS holds $4.4 trillion in foreign currency reserves and the new stabilization fund will initially consist of $100 billion, $41bn of which will come from China.
Independent of this, China and Brazil signed a $30bn currency swap agreement this week to insulate their own bilateral trade from international financial markets, providing enough capital for Sino-Brazilian trade to continue for eight months during a global financial crisis.
The potential biggest intra-BRICS challenge in implementing its vision for a more equitable international financial order—particularly as it relates to the foreign reserve fund— will be to ensure that China’s dominance in its liquid reserves holdings does not result in Beijing dominating the multilateral initiative.
Formation of BRICS business council:
On the eve of the summit, a business forum was launched featuring over 900 business professionals which resulted in the creation of a permanent business council. The business council consists of 5 members, each of which is a BRICS country representative. Yuri Ushakov, Russian presidential aide said, “Its main task will be [the] implementation of multilateral investment projects,” including the formation of the BRICS-led development bank.
Creation of BRICS think-tank:
South Africa’s Human Sciences Research Council (HSRC) was given the responsibility of nurturing and growing the South African BRICS Think Tank launched prior to the summit. The think tank is supposed to be a South African equivalent of BRICS think tanks already established in other member states. Its purpose is to “provide a forum for discussion among academics, policy makers and non-governmental organizations on the BRICS developmental strategy” that will allow member states to collaborate on policy research and analysis.
Clearly, the Fifth BRICS Summit has proven ambitious in its aims. Despite its critics, many diplomats are optimistic about the outcomes and long-term implications for these new projects. South Africa is in a unique position to advance fellow-African interests through the BRICS forum to assist in developing the continent, and has recognized its role as such.
If the summit’s projects are successful, they can add legitimacy and credibility to BRICS as an alternative institution to other more Western-dominated ones. As Memory Dube, Senior Researcher at the South African Institute for International Affairs, noted: "If [BRICS] can establish common norms then they will succeed in entrenching their position on the international arena.”
Whether they will succeed in this, as well as how exactly it will impact international relations, remains to be seen. It’s more certain, however, particularly after this summit, that it remains one of the most important trends to monitor in the coming years.
Elleka Watts is an editorial assistant for The Diplomat.