Key Takeaways:
– Jim O’Neill, former Goldman Sachs economist, dismisses the idea of BRICS surpassing the US economy.
– The alliance between the BRICS nations is more symbolic than substantial, O’Neill believes.
– The shaky relationship between China and India, key players in BRICS, poses an obstacle.
– The first formal meeting between President Xi and Prime Minister Modi in five years may signal thawing tensions.
– Putin aims to diversify away from the US dollar, citing it as a political weapon.
Analysis of the BRICS Alliance
The proposal of BRICS, an economic alliance featuring Brazil, Russia, India, China, and South Africa with additional member countries, overtaking the US economy is closer to fantasy than reality, suggests Jim O’Neill, former chief economist of Goldman Sachs. According to O’Neill, the credibility of BRICS as a formidable global entity is undermined by the unstable relationship between China and India, two of its major players.
Formed initially in 2009 following the global recession and its aftermath, BRICS has grown rapidly over the past two decades. The addition of South Africa in 2010 marked the group’s expansion which now encompasses Iran, Saudi Arabia, the United Arab Emirates, Ethiopia, and Egypt. Despite the growth in its numbers, O’Neill doubts the alliance’s effectiveness. He views the BRICS coalition as a symbolic annual assembly where emerging countries, especially the more vociferous ones like Russia and China, come together.
China-India Relations Hold the Key
Any bona fide significance for the BRICS group, O’Neill asserts, rests on the cooperation between China and India. These nations, constantly grappling with territorial disputes, have a significant bearing on the group’s potential success. He argues that the alliance can only prove valid if China and India can overcome their differences and work together effectively.
Hope for improvement in the strained relations between the two Asian economic giants emerged recently. China’s President Xi Jinping and India’s Prime Minister Narendra Modi have agreed to reconcile their long-standing border disputes. Their meeting is the first in five years and may spell the end of a four-year standoff along the contentious Himylayan border. Nonetheless, details on how the dispute will be resolved and the status of the large military presence there remain unclear.
The Vision of Russia
Russian President Vladimir Putin, however, remains bullish on the future of BRICS. He claims that over 30 countries are currently eager to join. Putin sees the BRICS agenda aimed at diversifying away from Western-led financial institutions, reducing reliance on the US dollar, and diminishing the influence of the SWIFT system. He expresses discontent with the use of the US dollar as a political weapon and hence seeks alternative financial solutions.
The Differing Perspectives
Contrasting with Putin’s optimism, Ulrich Schmid, Professor of Russian Studies at the University of St. Gallen in Switzerland, urges caution. He points out that the varying agendas among BRICS member states complicate progress. For instance, while Russia and Iran are keen to create alternative trade platforms to evade sanctions, Brazil and India emphasize a multilateral world order and aim to maintain good relations with Western nations, including the US.
While pundits debate the future possibility and impact of the BRICS alliance surpassing the US economy, its eventual outcome remains uncertain. What is clear, however, is that the dynamics between the key players, particularly China and India, will be critical in dictating the group’s trajectory. Developments in these relationships and directions forward should be watched with great interest.