As South Africa prepares to host the summit of the BRICS group of nations and others in the Global South, it is important to understand the significance of this event and the objectives that the participating countries hope to achieve.
With at least 40 heads of state and government in attendance, the summit aims to address the ongoing challenges faced by these countries while seeking to balance Western dominance of the world order. Here are the top essential things to know about the upcoming BRICS summit in South Africa:
1. BRICS Expansion
One of the key priorities for the BRICS (Brazil, Russia, India, China, and South Africa) group is expanding its membership beyond the current five nations. While this idea has been delayed in previous summits, there are now 23 other countries eager to join, including Indonesia, Saudi Arabia, and Egypt.
However, there have been some concerns about China’s rapid expansion and its potential influence over the group. Additionally, Brazil wants to ensure it maintains positive relations with the West. Despite these reservations, discussions are underway to establish admission rules and criteria.
2. BRICS Currency Integration
Another topic on the agenda is reducing the dominance of the US dollar in international payments. This issue has become more pertinent due to factors such as US interest-rate hikes and geopolitical events like Russia’s invasion of Ukraine that caused a surge in dollar value and commodity prices tied to it.
Several proposals will be considered to address this concern. These include boosting the use of national currencies within member states for trade purposes and establishing a common payment system among BRICS nations. While creating a common currency is seen as a long-term project, some BRICS members have already initiated bilateral trade agreements utilizing their respective currencies. For example, India has an agreement with Malaysia to enhance cross-border business using the rupee.
Earlier this year, Brazil and China reached an agreement to conduct trade using their respective local currencies. In a similar vein, India and Russia have expressed interest in exploring the possibility of linking payment settlements using their own currencies with South Africa. This move signifies a trend towards facilitating trade transactions using national currencies between these countries.
3. New Development Bank
According to data from the Higher School of Economics in Moscow, trade between BRICS members has seen a significant increase of 56%, totaling $422 billion over the past five years. With their combined nominal gross domestic product amounting to $25.9 trillion, this represents 25.7% of global output.
The New Development Bank, established as an alternative to the International Monetary Fund and World Bank in 2015, plays a crucial role in facilitating these transactions. As part of its plans for the future, it aims to have at least one third of its lending done in local currencies by 2026.
President Dilma Rousseff of the Shanghai-based lender will provide an update on diversifying funding sources at a gathering soon. However, it is worth noting that the NDB has faced challenges due to Western sanctions imposed on Russia after its invasion of Ukraine. Despite this setback, there is growing interest from countries in the Middle East and other parts of Asia to contribute capital to the NDB.
Excitingly, there are currently twelve countries considering full membership with the bank, highlighting its expanding global reach and influence.
The discussion will include Russia’s 18-month invasion of Ukraine, a topic that has remained prominent on the agenda for BRICS nations. Throughout the conflict, these nations have largely maintained a united front, with Brazil being the only member to support a United Nations resolution in February, which called for an end to the conflict and urged Russia to withdraw. On the other hand, China, India, and South Africa chose to abstain from voting.
Lula has expressed his desire for the bloc to contribute towards achieving peace. In fact, South Africa is taking charge of an African initiative that aims to bring an end to the ongoing combat.
5. Food security
The soaring prices of food are having a devastating impact on billions of the world’s most vulnerable individuals. The issue of food security will be a top priority, particularly in light of recent actions taken by India and Russia that have exacerbated the situation.
India, responsible for 40% of the global rice trade, has imposed export restrictions to safeguard its domestic market. Moreover, Russia has withdrawn from an agreement aimed at facilitating the secure transportation of Ukrainian grain exports – a rare instance of cooperation amidst ongoing conflict.
For Asians and Africans, rice is a crucial staple that contributes up to 60% of their total calorie intake. In an effort to address these challenges, India will be hosting an India Africa Forum, while South Africa and China plan to hold similar events focused on agriculture.
“I am optimistic that both gatherings will yield positive outcomes,” stated Sooklal. “I anticipate significant announcements being made regarding agricultural concerns.”
To gain a comprehensive understanding of the upcoming BRICS summit in South Africa, it is essential to know five key things about this significant event. With numerous heads of state and government set to attend, the summit aims to tackle pressing challenges faced by the participating countries and to promote a more balanced global order.
By familiarizing oneself with these crucial details, one can better appreciate the importance of the summit and the potential outcomes it holds. Stay informed and prepared by exploring our top things to know about the upcoming BRICS summit in South Africa.