Context: The current crisis in Ukraine
- The current crisis in Ukraine will consolidate BRICS as the group will make further efforts to become a real alternative to the West to create a real multipolar world.
An overview of BRICS
- BRICS is the acronym coined to associate five major emerging economies: Brazil, Russia, India, China, and South Africa.
- The group was brought together by geopolitical rather than economic considerations and this can be seen in the strategic interests shared by Russia and China.
- It took them two decades to draw closer. Later, India joined Russia and China, thus changing RC into RIC, the entry of Brazil changed RIC into BRIC, and with South Africa as its member, the group became BRICS.
Relevance of BRICS in the present world order
Efforts to change the world economic system:
- BRICS is actively involved in the efforts to change the world economic system by increasing the number of non-Western states in international financial institutes despite frantic opposition by the traditional distributors of world money.
BRICS Development Bank and Reserve Currency Pool:
- The BRICS countries decided to create the $100 billion BRICS Development Bank and a reserve currency pool worth over another $100 billion to offer an alternative to countries in the non-Western world when it comes to choosing the sources of funding for development or coping with serious economic crises.
A real alternative to the West:
- The Ukraine crisis demonstrates that the West has not abandoned the idea of a unipolar world and will continue building it up by drawing into its foreign policy orbit issues.
- Many non-Western states look at this as a new wave of colonialism, which has abandoned the old slogans (“superior culture”) for new ones (“democracy”), uses the old methods and pursues the same aims.
- This will increase the desire of non-Western countries to enhance their coordination and perhaps the current conflict is already showing signs in this respect.
- Given this context, the current crisis in Ukraine will consolidate BRICS as the group will make further efforts to become a real alternative to the West to create a real multipolar world.
Rise of the RIC within the BRICS
- If one disaggregates BRICS into its geopolitical components within northern Eurasia, there are some interesting dynamics in play, revolving around the foreign ministerial triangular Russia-India-China (RIC) relationship.
- Dialectically, the fallout from Russia’s alienation from the G-8 group of nations (reduced to G-7), raises the prospect that — tactically at least — Russia, India, and China might be playing their own triangular integrationist card within BRICS at Moscow’s initiative.
- Neither India nor China may be on board with isolating Moscow.
- Russia’s invasion of Ukraine appears to have unwittingly put India at the sweet centre of a diplomatic triangle in the Indo-Pacific.
- As the war progresses, New Delhi has been receiving a stream of high-profile visitors from around the world.
- This has included delegations from the US, Australia and Japan, India’s partners in the Quad.
- Even traditional rival China is making overtures to India at this time, with Foreign Minister’s visit.
Implications of the Ukraine crisis for India
- Both the Asian giants — India and China — may stand to reap the “best of both worlds” as the Ukraine imbroglio plays out.
- This could mean greater industrial and energy cross investments between Russia and India as well as between Russia and China.
Cross currency pairing:
- Additionally, the proposed arrangement for rupee-ruble cross currency pairing could result in the settlement of payments in non-dollar currencies with more countries looking at India’s Sovereign Financial Messaging Systems (SFMS), while also remaining connected with a central system like SWIFT.
Dedicated payment mechanism:
- This should also anchor India’s quest to build a dedicated payment mechanism for energy-related payments and settlements as a long-haul measure.
- This could change the contours of the global payments landscape and benefit the rupee immensely.
- The Ukraine crisis could catapult India to the centre of a diplomatic and economic triangle, with Russia and China, in Indo-Pacific.
Practice Question for Mains
- With the rise of RIC, BRICS is developing in a direction that was never envisaged. (250 Words, 15 Marks)