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Putin’s war turns an economic conference into an alliance against the West

Russian President Vladimir Putin, left, speaks to South African President, Cyril Ramaphosa during a Russia-Africa summit - Sergei Chirikov/Pool EPA
Russian President Vladimir Putin, left, speaks to South African President, Cyril Ramaphosa during a Russia-Africa summit - Sergei Chirikov/Pool EPA

South African president Cyril Ramaphosa faces an uncomfortable diplomatic conundrum.

Two months after he invited Vladimir Putin to a summit in Johannesburg this August, the International Criminal Court issued an arrest warrant for the Russian president for war crimes in Ukraine. Today, if Putin arrives on South African soil, Ramaphosa will be required to lock up his guest.

South Africa has since announced that dignitaries attending the BRICS meeting will be granted diplomatic immunity, which may provide a legal escape from the arrest warrant.

Ramaphosa’s attempt at judicial gymnastics shows how the BRICS bloc – Brazil, Russia, India, China and South Africa – is becoming an increasingly significant alliance against the West in the wake of Putin’s war.

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The alliance is set to become much more of a geopolitical heavyweight.

Foreign ministers from the five nations met in Cape Town this week ahead of the August summit. They were joined by their counterparts from several other countries, including Saudi Arabia, which has applied to join the bloc.

A further 18 nations have expressed interest in joining.

In addition to expanding its membership, the alliance is also discussing plans to introduce a cross-border currency for BRICS countries.

BRICS Foreign Ministers Meeting at a summit meeting - RODGER BOSCH/AFP
BRICS Foreign Ministers Meeting at a summit meeting - RODGER BOSCH/AFP

Over the past year, the bloc has shown a renewed enthusiasm in policy making, says Cobus van Staden, a senior foreign policy researcher at the South African Institute of International Affairs.

“It’s been driven by Russia and China and specifically by the need to try and find these alternative spaces for commerce that are outside of Western norms and particularly Western sanctions,” he says.

“The Ukraine conflict dragged the BRICS into sharpened conflict with the West. It has dragged BRICS members who may not have wanted to pick that fight into some kind of positioning with Russia,” van Staden adds.

Members of the bloc have not necessarily endorsed the war, but are becoming increasingly aligned with Moscow.

India and China are buying Russian oil, for example. Celso Amorim, an advisor on international affairs to the Brazilian president, told the Financial Times this week that Russia’s concerns on Ukraine need to be “taken into account”.

The real value of the BRICS to its members is the statement they are making to the West, says O’Neill. “[They’re saying] ‘we are the big guys in this thing, whereas in all of the other global institutions, you basically treat us as your puppets,’”.

The bloc started life as “BRIC”, an acronym first coined by O’Neill in a 2001 paper for Goldman Sachs when he identified four rapidly emerging markets – Brazil, Russia, India and China – that would become defining players on the world economic stage.

Crucially, O’Neill called for greater representation of those nations on the world stage to reflect their rising economic importance.

He argued that the EU should have one combined seat at the G7 table, rather than individual representation for Germany, France and Italy, instead incorporating China, Brazil and Russia - and possibly India - to extend the group to eight or nine.

This did not happen. Instead, the BRIC nations formed their own formal alliance in 2006, adding South Africa in 2010.

G7 leaders attend a meeting at G7 leaders' summit in Hiroshima, Japan - MINISTRY OF FOREIGN AFFAIRS OF JAPAN
G7 leaders attend a meeting at G7 leaders' summit in Hiroshima, Japan - MINISTRY OF FOREIGN AFFAIRS OF JAPAN

“We have the G7 and then the BRICS is a sort of G7 for the emerging world, and as time is passing there is some kind of standoff, which is not really helpful for solving any really truly global challenges,” says O’Neill.

“What is certainly the case is each of those members is seeing its own self-interest in being diplomatically solid on not publicly supporting the West.”

BRICS is a bloc with an “excessive focus on symbolism”, O’Neill adds. But symbolism and identity politics are a defining factor in world politics.

If the BRIC nations had been absorbed into the G7 20 years ago, it is feasible that there would be no war in Ukraine today, he suggests.

These nations were aligned because they were ignored by the Western system. Now, the bloc is casting itself as an alternative geopolitical force as tensions with Western powers escalate.

“A lot of this manoeuvring is to do with Russia and China. China is worried about sanctions generally,” says van Staden. It needs alternative trading partners who will not impose requirements for universal values, he adds.

The war has also galvanised long-simmering resentment against Western power structures.

“I don’t think that some of the other BRICS members were burning to pick this fight with the West right now, but that kind of conflict does reflect wider discomfort with this old chafing they have with aspects of Western power in the global system,” says van Staden.

Whether or not its membership expands, the BRICS nations are becoming increasingly powerful players on the world stage.

At the turn of the century, China’s economy measured in US dollars was equivalent to just 12pc of US GDP, says Kevin Daly, managing director and senior economist at Goldman Sachs. Now, it is worth close to 80pc.

In 2000, China was the world’s sixth largest economy in US dollar terms, according to Goldman Sachs analysis, ranking below the US, Japan, Germany, the UK and France. In 2022, China was the second largest economy, while India was fifth.

China will be the world’s largest economy by 2050, the analysis shows. By 2075, the US will be the only Western power left in the top five, sandwiched in third place between China and India in first and second place, and Indonesia and Nigeria in fourth and fifth place. The UK will rank 10th.

“There has already been a shift in economic gravity, away from the West and towards southeast Asia in particular. That is where you have a much larger share of the global population and economic development,” says Daly.

South Africa has aligned itself with BRICS rather than the West because it knows there is a ceiling on how much it can do with the latter, says van Staden.

“There is a feeling that there is an inherent limit to what these countries can expect from Western institutions,” he says.

Although Europe is an important trading partner for South Africa, there is little capacity for expansion.

“There is a perception in Africa that there is not going to be some kind of new macro trade regime that could radically reshape the amount of stuff that they can export,” van Staden adds.

“The EU has very powerful agricultural lobbies, it is already structurally limited. That is not true for China.”

Though BRICS is fraught with its own power struggles, says O’Neill, the bloc’s potential is huge.

“China and India can virtually never agree on anything. If they could, then we would be looking at probably much more significant changes in the world system as we know it,” he adds.

If China invited India to help design part of its Belt and Road strategy, for example, there would be a sea change in global power dynamics, says O’Neill.

“The transformation for global, certainly for Asian, trade would be just truly monumental,” he says.

If Saudi Arabia, the world’s largest oil producing nation, joined the bloc, there could also be major implications for the dominance of the dollar in global trade.

“That could change the dominance of dollar denominated oil transactions quite rapidly,” says van Staden. But BRICS does not yet have the infrastructure in place to challenge the dollar, he adds.

For all the geopolitical shocks that Putin has triggered, he is likely to be absent from August’s summit: the Russian president will be too scared to make the trip, says Anders Åslund, chairman of the advisory council at the Center for Economic and Social Research, who has been advisor to previous presidents of Russia, Ukraine and Kyrgyzstan.

“I’m convinced that Putin will never again travel abroad because he’s not prepared to take such a risk,” says Åslund.

“He travels in an armoured train between his three main residences and in order to speak to him even now you have to be in quarantine for one week because of his paranoia about Covid.”