BRICS Grouping

Recently, U.S. President Donald Trump threatened to impose 10% tariffs on members of the BRICS grouping, including Brazil, Russia, India, China, and South Africa..

Implications of U.S. Tariff Threats:

• Economic Impact: A 10% tariff could have serious economic implications, especially for countries like China and India, which are significant trading partners with the United States. It may increase the cost of imports, leading to higher prices for consumers and potentially slowing economic growth in the targeted nations.

• Geopolitical Ramifications: The tariff threats underscore the trade tensions between the U.S. and major global players, especially with countries like China and Russia, which have increasingly sought to challenge the U.S.-led global order.

• BRICS Unity: Although BRICS countries share common interests in strengthening their economic clout, these tariffs could create rifts within the group, particularly between nations with more global trade ties to the U.S. (such as India and Brazil) and those with more contentious relationships (like China and Russia).

BRICS, an acronym for Brazil, Russia, India, China, and South Africa, is a significant political and economic alliance formed to promote cooperation among the world's major emerging economies. Originally coined as BRIC by Goldman Sachs economist Jim O’Neill in 2001, the group later expanded in 2010 to include South Africa, thus becoming BRICS.

Key Objectives of BRICS:

• Economic, Political, and Social Cooperation: The primary aim of BRICS is to strengthen cooperation in these areas among its member countries. This cooperation serves as a platform for enhancing the influence of the Global South in global affairs.

• Reform Global Institutions: The group seeks to improve the legitimacy, equity, and efficiency of international institutions like the UN, IMF, World Bank, and WTO. BRICS advocates for reforms in these bodies to better reflect the realities of global governance, where emerging economies play a crucial role.

• Sustainable Development: BRICS aims to foster social and economic development that is inclusive and sustainable, addressing issues like poverty, inequality, and environmental degradation.

• Social Inclusion: The group promotes social inclusion and aims to create a more balanced global economic system that works for the benefit of all, especially emerging economies.

Membership Expansion:

• Initially comprising Brazil, Russia, India, and China, South Africa joined in 2010, giving rise to BRICS.

• The group expanded again to include Egypt, Ethiopia, Iran, United Arab Emirates (UAE), and Indonesia, significantly increasing its geopolitical and economic influence. This expanded group now represents 45% of the global population and about 28% of the global economy.

Global Influence:

• The combined population of BRICS and its new members is approximately 3.5 billion people, nearly half of the world’s population.

• The collective GDP of BRICS and the new members is valued at more than $28.5 trillion, contributing significantly to the global economy.

New Development Bank (NDB)

The New Development Bank (NDB) is a key institution established by BRICS to address the infrastructure and development needs of emerging markets and developing countries (EMDCs).

Key Facts about NDB:

• Established: The NDB was created following the BRICS Summit in Fortaleza (2014), with the bank starting operations in 2015.

• Purpose: Its main goal is to mobilize resources for infrastructure and sustainable development projects across emerging markets and developing economies. The focus is on financing projects that contribute to social and economic development, especially in areas such as clean energy, transport, water supply, and education.

• Headquarters: Shanghai, China.

• Regional Offices: The bank also has regional offices in South Africa and Brazil.

• Membership and Voting Power: While the NDB is open to all members of the United Nations, the voting power of each member is proportional to the shares they subscribe to. However, a key feature of the NDB is that the BRICS nations together hold at least 55% of the voting power, ensuring their influence remains dominant. No single country within BRICS has veto power, emphasizing the collaborative nature of the institution.

Conclusion

BRICS, now a key player in global politics and economics, continues to pursue its goals of fostering development, equity, and reforms in international governance. The New Development Bank (NDB) is central to these efforts, offering an alternative to traditional Western-dominated financial systems. However, challenges like U.S. tariffs and global trade tensions could test the resilience of this bloc, particularly as it expands to include new members.