BRICS countries try to reconstitute

On Friday June 24, China hosted a hasty one-day virtual summit of the Brazil-Russia-India-China-South Africa. The date is important because on Monday June 26, two of the three intrinsically pro-Western leaders from the bloc – Narendra Modi from New Delhi and Cyril Ramaphosa from Pretoria – travelled in person to Germany, to the G7 summit by Olaf Scholz.

Xi announced the meeting at the end of May, just after German Chancellor Olaf Scholz visited Pretoria. The earlier ambition was to have a post-Covid in-person BRICS summit, which logically would have been in September. That was the case in 2017, in Xiamen, the last time the BRICS met in China.

But in recent weeks, a sense of panic must have arisen in Beijing – and perhaps Moscow – as the realization dawned that two BRICS could well be wheeled and dealed by the G7. The two could thus continue “spalling”; the construction-industry terminology refers to a process (spalling) in which – mainly due to the freezing-thawing cycle – a wall’s masonry and bricks crack, crumble, flake, and even pop out of the wall.

After all, a sleazy deal with the West was struck in Geneva on June 17, when imperialist powers at the World Trade Organization wrecked a vision expressed rhetorically by both Modi and Ramaphosa that waivers would be allowed on Intellectual Property for Covid-19 medicines. But the unity of imperialist states whose leaders have been captured by Big Pharma – openly led by the British, Germans, Swiss and Norwegian and behind the scenes supported by the U.S., French, Canadians and Japanese – mean the subimperial Indians and South Africans could be brought back within the fold.

So on June 24, the BRICS’ line was established, after a period of drift, division and decay within the group. The third western-wayward BRICS capital is Brasilia, thanks to Brazil’s highly unreliable, Trumpian president Jair Bolsonaro, though he should be replaced by former president Lula da Silva (2003-10) if current polls hold firm until the October 2 election.

Today, the BRICS represents a club for discussing common problems, with the G7 probably being its closest equivalent. However, what makes BRICS different from other clubs is its potential: Brazil, Russia, India, China, and South Africa account for around 20 per cent of global GDP, they are home to 40 per cent of the planet’s population, and their aggregate share of global trade totals 17 per cent. In other words, the BRICS countries are collectively the largest market in the world, and their cumulative GDP has more than tripled in the last 10 years.

The stakes are highest for Putin, who on June 22 complained to the (virtual) BRICS Business Forum, “Businessmen of our countries are forced to develop their business under difficult conditions where Western partners neglect the basic principles of market economy, free trade, as well as the inviolability of private property.”

Note his complaint that imperialism has gone rogue, which is also reflected in the way more than $300 billion of Russian state assets kept in Western banks were frozen. (If Russia is doing weekly physical damage of $4.5 billion to Ukraine, those frozen funds would obviously be useful for reparations – but then Putin will have yet more weaponry to accuse the West of hypocrisy when applying sanctions, and after all, with soaring energy prices his oil and gas export revenues are at record highs.)

As a result, said Putin, Russia is “actively redirecting its trade flows and external economic contacts towards reliable international partners, above all the BRICS countries.” And beyond trade, there are monetary opportunities to de-dollarize: “Together with BRICS partners, we are developing reliable alternative mechanisms for international settlements. We are exploring the possibility of creating an international reserve currency based on the basket of BRICS currencies.”

Cynics would quickly point out that over the past eight years, two other international financial initiatives – the never-used “Contingent Reserve Arrangement” supposedly providing $100 billion in the five countries’ hard currency stocks as an alternative lender to the IMF, and a BRICS credit ratings agency – were merely hot air.

The “talk left, walk right” of BRICS’ role in global finance is seen not only in its vigorous financial support for the International Monetary Fund during the 2010s, but more recently in the decision by the BRICS New Development Bank – supposedly an alternative to the World Bank – to declare a freeze on its Russian portfolio in early March, since otherwise it would not have retained its Western credit rating of AA+.

Within that status, however, Fitch soon downgraded the bank’s prospects, reporting, “The Negative Outlook on NDB’s rating is primarily driven by the risk that in the context of the Russia-Ukraine war, the presence and role of Russia as a large shareholder in NDB (19% of capital as of end-2021) leads to a downward revision… [and] in addition, NDB’s country exposure to Russia (13% of loans as of end-2021, 70% of which is to the sovereign) poses downside risks to the bank’s credit risk profile and solvency.

Ironically, Putin succeeded in abiding by international financial rules, aside from shifting contract terms for payment of Russian exports of oil and gas (which he insisted be made in roubles, to raise the Russian currency’s value). That aside, while acting as a rogue subimperialist when it came to the savage invasion of (West-leaning) Ukraine, Putin (unlike his predecessor Boris Yeltsin) has always been a loyal subimperialist when respecting Russia’s foreign debt repayment obligations.

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