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The watershed 15th Brics Summit in Johannesburg had, to its credit, several runs on the scoreboard by the time it concluded last week.
While the outcomes were inevitably a complex amalgam of politics, economics and business, the overall Brics profile and agenda have been taken to the next level.
Brics wants to enlarge its sphere of influence in the global economy. Hence, apart from the addition of six new members — Argentina, Iran, Saudi Arabia, Egypt, Ethiopia and the UAE — the summit’s broad aspirational goals and decisions are signalling a potential new era for Brics in the years ahead.
On the Brics expansion there remains much uncertainty as to the criteria used to select the additional members.
The economic rationale for the choices is not immediately apparent. It seems the Brics consensus on the “six pack” of new members was inevitably the result of heavy political horse-trading during the summit proceedings, which is liable to stoke political controversy.
In any event, such an enlarged Brics group of eleven members is indeed likely to be a very different collaborative “mix” from the present Brics five constituents, and with its decisions being determined by consensus.
Behind the headlines, though, serious technical work now needs to start to bring about the economic diversification and recalibration envisaged by the Brics Summit declaration.
The rhetoric must now be matched with reality. The pace of progress may well be determined on an incremental basis in various technical forums, which are “below the radar” but are essential for narrowing the gap between symbolism and substance.
Achieving this balance between legitimacy and effectiveness remains a big challenge for any global formation today.
Leaving geopolitical considerations aside, the Brics Summit can be regarded as a valuable enabler and facilitator of new trade and investment opportunities generally, both for existing Brics members and the newcomers when they come on board at the beginning of 2024.
Importantly, the first day of the summit was allocated entirely to the business sector, and the “network effects” and positive spillovers should not be underestimated — particularly as they enabled various business networks to explore areas of common economic interest and/or immediate transactional value.
Also, on the helpful side, the prospect of lending more in local currency may have more to do with good liability management than with “de-dollarisation”.
And to the extent that the latest Brics developments are intended to promote genuine multilateralism in the world economy, they should be seen in a positive light. But if a better balance in the global economy is to be achieved, the focus should be on trade creation, not trade diversion.
“Win-win” outcomes must form part of the multilateralism narrative, although the jury remains out for now on “where the chips may fall” and what these outcomes should look like. — Moneyweb.
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