India should carefully pursue its BRICS strategy

It’s been 15 years since BRICS (Brazil, Russia, India, China and South Africa) came into being, and it has now turned into an outfit that quite openly promotes China’s strategic and economic interests. This is affirmed by the agenda of BRICS, spelt out in its joint statement released in Johannesburg last week, and even more so by the choice of the new members — Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE. This raises serious questions about how this forum furthers India’s interests, if at all.

The joint statement rightly suggests that BRICS should evolve along with G-20 as a forum to articulate the position of emerging economies with respect to trade barriers, climate negotiations, food security and post-Covid debt. The reference to the use of human rights to score trade and strategic points would have drawn Saudi Arabia and Iran. While the former’s leanings towards China are clear, Iran is emerging as China’s big investment partner. Most of the members, particularly the new ones, are food and energy exporters, while China and India are big commodity importers. An embattled China, dealing with a serious slowdown and structural economic imbalances, perhaps feels the need to leverage BRICS by expanding it. It would like to secure key supplies, as a response to the US’ shift to a ‘China plus one strategy’ to remove critical supplies out of China’s influence. China would like to guard against being choked in the event of a conflict. Meanwhile, commodity exporters may want a back-up against shocks and sanctions of the sort induced by the Ukraine war.

The question is whether India, Brazil and Argentina can go along with Para 45 of the statement, which along with Para 70, essentially sums up what today’s 11 member BRICS is all about — securing energy and food (for China) in currencies other than the dollar, in other words, yuan. The first says: “We task our Finance Ministers…to consider the issue of local currencies, payment instruments and platforms and report back to us by the next Summit.” Para 70 highlights the need for enhanced cooperation as major producers and consumers of energy. India should be wary of the financial aspirations of BRICS. The BRICS’ New Development Bank is positioned as an alternative to the Bretton Woods twins, again a China agenda. Russia will go along, not least because it finds itself in a corner. NDB’s usefulness to India is an open question. It could work for African countries scouting for multilateral funds.

Meanwhile, India has moved closer to the US, as the latter views it as a counterweight to China and a player in the China plus one strategy. As a result, US companies are eyeing India with renewed interest. Even as India deals with the US on its own terms, it can hardly afford to dabble actively in moves that seek to replace the dollar with the yuan. As BRICS emerges as a China shop, India should keep a sharp eye out for its strategic interests.