Eurasia Press & News
BRICS is an intergovernmental organization established in 2006 comprising Brazil, Russia, India, China and South Africa, originally slated to foster deeper economic ties and political dialogue among the member countries. It was set up primarily as an alternative bloc as a rival to the Western led order of the then Group of 8 (G8) and the established Western led institutions of IMF and the World Bank, in providing a new movement led by Russia and China.
Today, it found greater leverage and relevance with the new shift in geopolitical order where anti-West momentum and the growing Global South capacity and importance have made BRICS ever more pertinent in expanding its reach and sphere of power expansion and objective. The bloc expanded in January this year to include Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates.
Cost Benefit Analysis of BRICS for Malaysia
A detailed, long term, truthful and realistic cost benefit analysis must be properly carried out, in projecting and anticipating potential changes of the future in economic and geopolitical spheres which will change the dynamics and indicators of current advantages or risks of platforms like BRICS for the country and the region.
Current or near future terms of economic and other power indicators are not necessarily in line with analytical projections or anticipations. Near predominant agreement by most analysts on the future of the economic order has been that China will replace the US as the world’s largest economy by the end of the 2010s and that the West has lost its unipolarity since the onset of the Covid era. Both outcomes are still up for debate and no clear indications can be decisively agreed upon that the advent of multipolarity in economic or military power is upon us.
Malaysia has been doubling down on its stance of non-partisanship and neutrality, with autonomy and independence in directing its foreign policymaking. It has also been consistent in its non-alignment mantra, and has been vocal and persistent in denouncing the hypocrisy and double standard of the Western led global economic and political order.
The growing movement and influence of the Global South,in providing the new synergy, relevance and importance of the developing world and the non-Western powers, have also compelled other countries including Malaysia to seek a consolidated pooling of resources to rival the Western led systems.
Other moves including the de-dollarisation drive and the array of economic and defence friendshoring efforts in forming new partnerships with new emerging economies and powers, especially in giving new light and relevance to small and middle powers, have also contributed to the new so-called drive of multipolarity, with the argument that the US-led unipolarity of global dominance has effectively ended with the need to give new credence and relevance to the rights and voices of other powers.
With the shifting geopolitical realities and changes in the Middle East and West Asia and in the Indo Pacific, the focus has shifted on empowering the non-Western bloc and in ensuring the rights and relevance of the middle powers and the developing powers.
Malaysia’s reasons for joining the BRICS are understandable, in expanding economic friendshoring and in pooling greater market and trade access and joint capacity of forming a credible platform of trade, currency, supply chain, market and technological capacity among the emerging new non-Western powers, and in strengthening the voice and weight in the domain of the Global South and in sending a strong message to the Western led system.
As the dollar has affected the ringgit and in turn created ripple effects in its economic transition, the participation in BRICS is intended to strengthen fallback options and as a new arena for Malaysia to strengthen its middle powership, away from the dictate, influence and system of the West.
However, a more comprehensive and realistic projection of the future power parity must also not be overlooked in the quest to join any bandwagon.
Some possible readjustment in policy responses by others as a response to joining the bloc or future impact should also be studied. Some include the possible reorientation of policies with greater scrutiny and wariness by the West in Malaysia’s future long term policy alignment and leaning. Current issues in West Asia and the Middle East have also exacerbated the level of policy wariness and trap, and potential retaliatory adjustments in economic and segments’ policy responses might also be in the offer, either in further increasing the impact of the West’s economic and defence friendshoring and overtures in a carrot approach to further court Malaysia and preventing its pivot or other potential scaling back of supportive policies.
The bloc’s internal differences and divide and the still long journey in effectively rivalling the dollar led trade and financial system also provide hindrances and long term structural and systemic barriers and challenges.
By joining the bloc, it will also make it quite clear that Malaysia intends to cement the ties with the Global South to strengthen the alternative and rivalling bloc, in pooling and extending greater partnerships and strengthening its voice with the developing world in a soft pivot to the opposite bloc.
Current or future Western overtures including IPEF and other future defence friendshoring arenas, which emphasise on long term values-based model and approach of support and development might not appeal that much to the current urgent needs and demands of the country and other non Western powers.
Systemic Deficiencies and Limits of BRICS
Political differences and conflicting interests laid bare the internal divisions and frictions in BRICS, further fuelling doubt on its overall resilience and efficacy on the ground. Brazil, Russia and South Africa are commodity exporters, while India and China are importers.
The common goal among most of the members is to ward off the Western narrative and dictate of the economic and geopolitical order and to present a credible new stance and capacity to reduce the West’s grip.
The internal fault lines also deepen along the political frameworks. Brazil, India and South Africa are democracies while Russia and China only pretend to be. India and China have their own geopolitical differences and rivalries, with clashes on the border and systemic power rivalry over decades.
The bold move to include additional members this year with the likes of Saudi Arabia, UAE, Egypt, Iran and Ethiopia has also failed to present a credible force in challenging the dollar led international trade and financial system.
Argentina’s new president refrained from joining, arguing that he had no intention of “allying with communists” and BRICS will thus not get a second Latin American member.
BRICS tried to make up for that by admitting the four new members from the Middle East and West Asia, and Ethiopia that’s just recovering in a year out of a devastating civil war.
Internal cracks are also fuelled by the Iran-Saudi discord in struggling for influence in the region, where Tehran backs the Houthi rebels in Yemen where Riyadh has been fighting a long war.
It remains to be seen how a group that has always struggled to get a lot of impact and work done will be able to create anything substantive if they don’t even manage to see eye to eye.
New Development Bank (NDB) and Financial Insecurity
One of the limited successes that has borne fruit is the Shanghai-based New Development Bank (NDB) or otherwise known as the “BRICS bank” which is tasked to lend capital to finance infrastructure projects. One of the limited things that existing BRICS members agree on is that more needs to be done on project finance, in wanting cash to be injected according to locally designed norms.
In comparison, the Asian Infrastructure Investment Bank (AIIB) is better capitalised with a more effective track record than the NDB, as the former chose Western partners with higher levels of capital and deeper pockets than BRICS peers, and has also partnered with Western led multilateral development banks.
The NDB, meanwhile, has not always managed to offer competitive rates, and has been struggling to comply with the various financial sanctions imposed after the Ukraine invasion.
Fitch downgraded it from AA+ to AA. Its role is largely confined to fuelling the common dislike of the US dollar, lacking the real financial and realistic might as a viable financial provider that can sustain BRICS’ relevance. Inclusion of Riyadh and Tehran into the fray might increase hope of capitalising on both powers’ petro capital to salvage the NDB, but it remains a distant dream.
The NDB has had some considerable localised successes in long term loan denomination in localised currencies, but this remains a far-fetched goal of rivalling or replacing the dollar in the long run.
A great deal of hype has been cast on the “de-dollarisation” talk, but in reality, we are still very distant from a world in which all trading powers and nations are able to ditch or avoid dealing in US dollars.
BRICS fared worse in the geopolitical domain, where regional based inter-governmental institutions often fare better in the range of influence, alongside existing economic and merit based groupings especially the G20 and G7. It remains largely a loose economic and financial soft pact that strives on the common need to avoid the risks and future fallout of the dollar trap and the long held Western dominated economic order.
While the ripple impact of a stronger dollar and the sanctions imposed predominantly by Western powers led by the US have affected the interests of the non Western powers, to mould BRICS as one that is mainly an anti-Western pact risks backfiring in getting the needed two-way interdependence and synergy of vital cooperation and development in critical areas that will need the expertise, resources, capital and capacity of both the West and the Global South.
It will further complicate efforts to jointly address common pressing challenges that affect the entire global order, namely both traditional threats with rising tensions and power trap and non-traditional threats dominated by climate change and related structural negative fallout that will mainly affect the developing and least developed countries.
Creating or consolidating new alliances, pacts or defence and economic friendshoring arenas along geopolitical, ideological or economic faultlines bring little to no credible long term return to maintaining the peace, stability and the sanctity of the common need for a rules based order that govern and maintain universal peace, stability and prosperity.
It remains to be seen how the current BRICS president, Russia, tries to dictate and mould the near term strength and reach of the grouping.
Sheer additional rise in membership over the course of the future without consistent addressing of internal barriers will not make it a more persistent or credible threat to the current order of a Western dominated system, but it might affect to a certain extent, the reach and leverage of the West over certain powers, falling short of the full reform of the conventional system that one might hope for.
