Editorials

BRICS and anti-Western frustrations

Chinese President Xi Jinping (4-R) and Russian President Vladimir Putin (3-R) attend a working breakfast meeting during the 11th BRICS leaders summit at the Itamaraty Palace in Brasilia, Brazil, 14 November 2019.
© EPA-EFE/ALEXEI DRUZHININ / KREMLIN /SPUTNIK / POOL   |   Chinese President Xi Jinping (4-R) and Russian President Vladimir Putin (3-R) attend a working breakfast meeting during the 11th BRICS leaders summit at the Itamaraty Palace in Brasilia, Brazil, 14 November 2019.

Holzstock Festival

There are state actors who seem to share their discomfort with the current international order, founded by the "West" after World War II. Some of them are frustrated by the fact that they are somehow left out of projects with a global impact, such as large logistics corridors, energy and trade transfers (as it is the case with Iran and Turkey). Others are affected by Western sanctions precisely because of their military and/or commercial aggression. China, seconded by Russia and Iran, lead the chorus of frustrations in this explicitly anti-Western camp.

Most of those who are flirting with alternative projects to the "international order of the West" are not necessarily against it, however. They simply prefer to diversify their trade and political connections regionally and globally, without excluding any opportunity.

All three types of actors indicated above can be found in BRICS – an organization named after the first 5 members, Brazil, Russia, India, China and South Africa, which was later joined by Egypt, Ethiopia, Iran, the United Arab Emirates and Saudi Arabia. Another 15 countries have received the invitation to join the organization.

The BRICS project seems to be in full swing now. Membership is growing and there is talk of a common currency and market. In the fall, Russia, which is holding the BRICS presidency this year, is to host the biggest summit of the organization so far. However, the chances of major developments seem to be minimal; in fact, in the near future, there are hardly any prospects for BRICS to become a viable alternative to the Western economic system, whose "flagship" is the G7.

BRICS - a project stuck in development hell, with China at the helm

BRICS is one of those forums where alternatives to the US dollar and the rules imposed by the World Bank, the International Monetary Fund and organizations connected to those rules under the umbrella of the UN are proposed. It is actually a type of discourse that serves China's aggressive global economic expansion agenda. It also obviously serves Russia, which has sabotaged its relations with major Western economies through an aggressive policy manifested in the invasion of Ukraine, but also through its constant efforts to undermine Western democracies.

On paper, BRICS+ looks like a thriving  organization. It accounts for approximately 45% of the world's population and over 35% of the Gross World Product (GWP). For comparison, the G7 group represents about 10% of the world's population and 37% of the GWP. Some of the BRICS+ countries are large exporters or importers of fossil fuels (oil, coal and gas) while countries such as China, the UAE and Saudi Arabia are large creditors and the manufacturing output is at a high level for almost all members. The intra-BRICS flow of goods and capital is therefore significant, with global reach. But a closer analysis reveals major issues, which will prevent the development of the organization at a level even close to, for example, the European Union (EU), the most advanced form of regional organization and the most important common market in the world. I will list some of those issues here.

First, it is hard to imagine harmonious cooperation within BRICS+ between old rivals. Historical disputes, such as those in the Iran-Saudi Arabia-UAE triangle, with Gaza or Yemen's Houthi rebels as hot topics even these days, do not give hope that cooperation will prevail. It is actually more likely that those actors will use the BRICS as an arena for their transactional disputes. Historical rivalries also mark other sets of bilateral relations within the organization, such as those between China and Russia or between Egypt and Ethiopia.

A second serious issue is the attitude towards the West in general. Argentina withdrew from the process of joining the organization precisely because its president understood that a fragile economy, such as Argentina's, couldn’t afford to play ideologically on world markets against Western actors such as the US or the EU. Moreover, the most vulnerable economies rely precisely on compliance with the rules imposed by the Bretton Woods institutions after 1944 (IMF, WB). Such rules and the accompanying financial aid have helped the world's economies overcome major difficulties since the Asian crisis of the late 1990s or the global crisis of 2008. Other BRICS member states, such as India, Brazil, South Africa, Saudi Arabia and The UAE, but especially states with weakened economies (Egypt or Ethiopia), cannot afford to disconnect from the West either. It is thus hard to believe that they will follow the radical group, explicitly anti-Western and especially anti-American, led by China, Russia and Iran.

Then there is the huge "Chinese issue". The Communist regime in Beijing uses its financial capital and economic power to control investments under the Belt and Road Initiative (BRI) and those made through the BRICS. Moreover, it imposes economic, commercial and even political conditions that, sooner or later, prove too difficult or inconvenient for the partners. In Europe, the cases of Poland and Montenegro illustrate this situation. Many states already understand, in the logic already exposed by Argentina's gesture, that alignment with the BRICS and the anti-Western ideology imposed by China-Russia-Iran is not at all productive.

The major Gulf players are flirting with BRICS, but their most important relationship is with the United States

As a state with major interests and influence in the Middle East and globally, Saudi Arabia is going through an important economic diversification program, as are the UAE, Qatar and others in the region, which are now major oil exporters. All require advanced green technologies in multiple areas, and in the specific case of Saudi Arabia, national security also requires major investment. The crisis in Yemen has shown that the kingdom is not prepared to respond to threats such as Iran's via the Houthi rebels, which endanger its security as well as the global trade through the Gulf of Aden, the Red Sea and the Suez Canal. And the Saudi leaders, led by Crown Prince Mohammed bin Salman (MBS), are fully aware that Iran will continue to be a powerful destabilizing factor in the region. And although it recently became a BRICS member, the Saudi kingdom's oldest and most solid alliance, on which its prosperity and security have been built since the 1930s, is with the US.

Despite the problems created by the Israeli military intervention in Gaza, the Biden administration continues to work hard on the process of normalizing relations between the US, Israel and Saudi Arabia, started with the Abraham Accords (2020) and revived in 2023, but interrupted by the Gaza crisis. Not only does Riyadh remain the largest buyer of US arms, but it is also a player directly interested in countering Iran, as are Israel, the US and the EU.  The US’s diplomatic efforts have intensified in recent months , and it would not be a surprise if a tripartite Washington-Riyadh-Jerusalem agreement were to be reached at some point. Everything now seems to depend on the support of the US Congress, but also on the Benjamin Netanyahu factor. But the course of great diplomacy is rarely derailed by the problems of a single politician, especially when they begin to lose support domestically.

Saudi Arabia instead insists on American security guarantees. Such extremely rare guarantees would place the country on the same level of relations with Washington as Japan, South Korea, and Israel. The deal would attract significant investment to the region and, who knows, perhaps provide a basis for a broader regional alliance. But one of the American demands is that Saudi Arabia  strategically distance itself from China, which means giving up investments in that country and not accepting Chinese investments at home, especially those that involve partnerships in the fields of technology and defense. Certainly, Washington will also insist that Saudi Arabia increase oil production in the long term, an essential aspect for reducing the price in the fight with Putin's Russia, but also for controlling inflation in the US. And the Saudis also demand that the Biden administration make Israel create the conditions for the building of an independent Palestinian state. All these details also depend on the chances of the tripartite agreement passing the US Congress, which must approve any international treaty undertaken by the federal government. Saudi Arabia is the kind of complex and influential actor that will never treat an organization like BRICS as the singular solution to its problems, especially when it has the US on its side.

The UAE behaves in a similar way. It became a BRICS+ member but is an active part, along with Saudi Arabia, in the most ambitious east-west logistics corridor project, IMEC, which will connect India to Europe by sea and land (via Saudi Arabia-Jordan-Israel).  IMEC has the support of the US and the EU, being a strategic project for the many actors involved, including India, China's most important economic rival in Asia. At the same time, the UAE is financing alongside Qatar  the New Development Road from the Persian Gulf to Europe via Iraq-Turkey, perceived by China as an uncomfortable competitor for its own BRI project. And Qatar, perhaps the most important state of the 15 invited to join BRICS, but without having taken this step so far, continues to honor its strategic commitments to the US. Although it provides support to Hamas and has a history of supporting the Muslim Brotherhood as well, the small but wealthy state of Qatar signed a memorandum with the US in January 2024  on expanding the presence and activity of the US air force  in the Persian Gulf and the Middle East from the Al Udeid Air Base. And this is now the most important US military base in the entire region.

As can be seen quite clearly from such examples, important players involved in BRICS do not treat this organization exclusively and, even if they have abrasive speeches at times, they do not align themselves through concrete measures to the anti-Western ideology that Russia and Iran are mainly trying to imprint. This ideological charge is never desirable in international relations, as the relative isolation of Turkey and Iran indicates. And Beijing's politics also seem to be understood, more and more clearly, as one of the problems preventing BRICS from becoming a truly viable solution for the participating states.

China, the real problem of BRICS?

For countries with a regional or global scope, such as Saudi Arabia but also the other BRICS members or candidates, especially India or Russia, the real problem is represented by China's weight within the organization.  There is no free trade treaty that would even create the conditions for BRICS to become a common market in the future. Despite the aversion of some of its members to the dominance of the US dollar in world trade (over 90%, much of it through US and EU banks), the conditions do not exist for the adoption of a common BRICS currency in the absence of a common market and a central bank of the organization. The use of member states' currencies in transactions is not always attractive either, depending on the products and markets on which they are traded. There are also big inequalities between the main creditors (China, UAE, Saudi Arabia) and the big debtors within BRICS, which have fragile economies (especially Ethiopia, but also Iran or Brazil) or deeply affected by international sanctions (Iran and Russia). Although India and Brazil are major economic players (India's economy is growing faster  now than China's), China remains a colossus that sort of makes the rules within BRICS.

Producing, in 2022,  more than 70%  of the total Gross Domestic Products of the BRICS members,  China is also the main importer of oil and gas, the main exporter of manufactured goods, as well as a huge market that all companies want to penetrate, especially those with global ambitions . Within the framework of BRICS, China created together with its partners the New Development Bank (NDB) which  it controls  and which started with a capital of 100 billion US dollars, from which it grants loans. The NBD is actually linked to China's Belt and Road Initiative (BRI), which still has about $900 billion allocated, lending to projects in more than 150 countries. China also shepherds the second BRICS financial institution, the Asia Infrastructure & Investment Bank (AIIB). Together, the NDB and AIIB have granted more than $70 billion worth of loans in 2023 for several economic sectors. However, the investment model followed for years by China, including through the BRI, began to inspire distrust, especially after the failures in Poland and Montenegro, but also in Africa (Angola, Djibouti, Kenya and the BRICS member Ethiopia). Chinese investment always means promoting Chinese interests, including the use of labor brought from China. Investments coordinated and controlled by Beijing are thus, in fact, financially, socially and politically more expensive than traditional crediting sources, from the already existing system and subject to the rules that China and some BRICS partners always condemn.

"The world" is not just the West, but neither is it just China

Projects of new global logistics corridors such as IMEC and New Development Road, or those dedicated to the transition to green energy, also put great pressure on producers and fossil resource consuming industries, including the huge coal, gas and oil consuming industry of China. India is in a similar situation, but is seeking solutions through cooperation with Western and regional partners (e.g. IMEC). The US is proposing security solutions and finally seems to have begun to understand the immense strategic value, globally, of cooperation with the EU. And the Union is not sitting by idly either. In December 2021, it announced the launch of the Global Gateway EU  program, which comes with global investments of 300 billion euros by 2027, from public and private funds.

The European Commission, the administrator of any such European program, also wants to attract large private investors to use the Portal as a vehicle for global expansion. European banking institutions are involved (European Investment Bank, European Bank for Reconstruction and Development), but also national development institutions. Coordination is provided by the European External Action Service (EEAS), through EU diplomatic representations in member and partner countries.

The current phase of the Global Portal program focuses on development in almost 60 countries around the world in areas such as digitization, environment, public health, transport, energy, education and research. For example, in October 2023, the European Commission announced the allocation of 12 million euros as a grant for a project through the European Investment Bank to rehabilitate two important sections of the north-south railway connection in the Republic of Moldova. Another 42 million euros will follow for the rest of the sections of the respective railway corridor, which is of particular strategic importance, connecting Ukraine with the Prut and Danube ports and thus ensuring access to international waters.

Another example is a vital Africa-wide project initiated in 2022 on vaccine production in Ghana, Rwanda, Senegal and South Africa. In total, in 2023, around 90 projects were initiated globally through the EU Portal. All of this comes at no financial cost (non-refundable grants) or in the form of low-cost loans and, very importantly for partners, with technical assistance provided by the European Commission. It can also provide budgetary guarantees, essential for the private sector as they significantly reduce investment risks and costs. There are thus big differences between the EU Global Gateway and Beijing's policy through the BRI and BRICS, which involves higher interest rates for loans, as well as the participation of Chinese firms and labor in most projects. Over time, perhaps in just a few years, more and more states will develop analytical capabilities able to reveal  the best solutions for policymakers. It is important, on a global scale, that the options exist and that it is possible to diversify the ways of relating and development. From this perspective, Western or non-Western offers are not competing but complementary. Ideologizing them, for or against the West, helps no one in the long run.

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