BRICS Plus in the Capitalist World-System

When the annual BRICS Plus summit was held in Kazan, Russia last October, host Vladimir Putin was clearly in a good mood. Indeed, in terms of foreign policy, the Russian president had done quite well for himself: 40 nations were represented, more than half of them by heads of government or of state; UN General Secretary António Guterres also attended.

It was only the previous year that the intergovernmental organization known by the acronym BRICS, consisting of Brazil, Russia, India, China, and South Africa, had expanded. Since then, Iran, Egypt, Ethiopia and the United Arab Emirates (UAE) have become part of the extended BRICS Plus; meanwhile however, Argentina and Saudi Arabia declined an invitation to join. Indonesia joined at the beginning of the year.

Unlike the summit in South Africa in late 2023, in Kazan there were no announcements of new members. In the meantime, over 30 other nations have allegedly announced their interest in joining, but Russia in particular is currently putting the brakes on further attempts to expand. Russia’s foreign minister Sergei Lavrov emphasized the importance of a “shared political orientation” as the basis of securing more influence relative to the West.

But other members are also critical of the idea of adding many new members. For South Africa and India, for example, expansion could mean a loss of relative significance within the alliance. Nonetheless, 13 applicants received official partner status: Algeria, Belarus, Bolivia, Indonesia, Kazakhstan, Cuba, Malaysia, Nigeria, Thailand, Turkey, Uganda, Uzbekistan, and Vietnam.

Russia and China in particular want to position the alliance as a counterweight to the West and as the central platform of the Global South.

In particular, Turkey’s interest in joining garnered a lot of attention. President Recep Tayyip Erdoğan has long criticized Western dominance in global politics, but Turkey is also a NATO member and remains, at least officially, a candidate for EU membership.

The main attraction of BRICS Plus for Turkey — and for many other countries — is the opening up of new markets. The strong Indian and Chinese economies create an especially powerful force of attraction. In this sense, the alliance concentrates on cooperation in terms of economic and development policy; security policy, by contrast, is bracketed out. For most BRICS Plus countries, this approach also entails cooperation with the west. Russia and Iran, by contrast, both of which are sanctioned by the West and the UN, want the organization to take an anti-Western course. This disagreement is also reflected in the conflicts over institutions such as the New Development Bank (BRICS Bank).

The End of US Hegemony?

For some time, the focus has been on the architecture of international financial institutions. The demand for a multi-polar — and from the perspective of the Global South, more just — global order entails a critique first and foremost of the Bretton Woods institutions of the World Bank and the International Monetary Fund (IMF), but also of rating agencies, the SWIFT system, and the dominance of the US dollar in the system of global trade.

It is in this context that the development of the BRICS Bank and the Contingent Reserve Arrangements — a liquidity mechanism for members who run into difficulties with payments — must be understood. While countries like India and South Africa emphasize that these structures do not represent an alternative to the Western-dominated financial institutions but merely complement them, Russia and Iran are interested in developing an alternative financial system. Thus, it should come as no surprise that in the past, Lavrov insisted on the BRICS Bank having a political mandate. This was dismissed, however, by Anil Kishora, one of the bank’s vice presidents, as merely the Russian government’s opinion. Russian representatives may also be incensed that the BRICS Bank ceased all activities in the country in 2022, in order to avoid falling under the sanctions imposed against Russia itself.

The BRICS Bank, founded in 2014 and headquartered in Shanghai, has already opened up for other member countries: Bangladesh and the UAE joined in 2021, Egypt followed two years later. With a capital stock of 100 billion US dollars, the BRICS Bank is smaller than the World Bank, which has a capital stock of 268 billion dollars, but it has successfully established itself as a significant development bank. To date it has supported over 90 projects to a sum of over 30 billion dollars. In contrast to the World Bank, where members’ voting rights are proportional to the share of capital invested, the BRICS Bank operates on the principle of “one member, one vote”, and there is no veto right.

Yet the bank has also faced criticism. Political sociologist Patrick Bond from the University of Johannesburg analysed the projects funded by the BRICS Bank and decried the fact that a significant fraction of the loans were siphoned off into corrupt structures. He also criticized the fact that a neoliberal export orientation takes precedence, and that population groups affected by a given project are not included in planning processes. Moreover, a significant number of the projects in the bank’s portfolio are extractivist or involve nuclear energy.

The People’s Forum on BRICS, based in India, has criticized how the business practices of the BRICS Bank are ultimately no different from those of other multilateral development banks such as the World Bank or the Asian Development Bank, and that like them, it concentrates on the funding of businesses and the privatization of public goods. Urgent issues affecting the majority of people living in BRICS Plus member countries (such as the provision of adequate housing) are not the focus of the bank. But this is precisely where a new approach to financing is needed, one that goes beyond the usual form of public funding. South African political science professor Vishwas Satgar therefore concludes that BRICS “has rhetorically asserted an ‘alternative’ strategy to key features of Western imperialism, while in reality fitting tightly within it”.

From a progressive perspective, the phenomenon of Global South nations striving for independence from Western-dominated institutions that do not work to their advantage is fundamentally to be welcomed.

Yet it is noteworthy that in future, the BRICS Bank plans to provide loans in its member countries’ local currencies rather than in US dollars. This underlines the core concern of BRICS Plus, that of breaking with the hegemony of the Western-dominated financial and accounting instruments generally, and of US dollars in particular.

The sanctions against Russia and its exclusion from the SWIFT system have made dramatically clear how vulnerable some countries are in light of US hegemony. As a result, at the 2022 virtual BRICS summit, members discussed an alternative to the SWIFT system for financial transactions, while at the 2023 summit in Johannesburg the introduction of a BRICS currency was on the agenda. Such a currency — which would not replace national currencies but only be used for international trade — has been discussed since 2009, but when or whether it will actually end up being introduced is anyone’s guess.

Yet that does not by any means spell the end of efforts to de-dollarize economic relations. Back at the 2023 summit, the BRICS Plus countries agreed to a more comprehensive usage of local currencies for bilateral trade, and for the introduction of BRICS Bank loans. Brazil increasingly accepts the Chinese yuan as a payment method in trade and investment. For now, we are still far from the end of the hegemony of the US dollar: at the end of 2022, the yuan’s share of global currency reserves was only 2.7 percent, while that of the US dollar was 59 percent. Yet a gradual decline of the dominance of the US dollar is taking place — in 1999, its share was 71 percent.

US president-elect Donald Trump’s recent threats to slap BRICS Plus countries with punitive tariffs of 100 percent should they introduce a BRICS currency as an alternative to the US dollar can also be understood in light of this trend. But that is just grist to the mill of countries that view their dependence on the US dollar and Western-dominated financial institutions as a danger. Protection from negative impacts is thus increasingly sought in the BRICS Plus alliance. Russia and China in particular want to position the alliance as a counterweight to the West and as the central platform of the Global South. Meanwhile Brazil, India, and South Africa consider the alliance primarily as a platform to secure their own national interests.

No Alternative to Neoliberalism

The course taken by BRICS Plus is not set in stone. Whether the alliance develops into something more than a platform for declarations depends on whether disagreements can be overcome and a shared agenda found. When freshly elected president Javier Milei turned down the offer of membership for Argentina, it also made clear the extent to which the alliance depends upon domestic political conditions.

There is unity regarding the principle of non-intervention and striving for more influence in a multi-polar world. Yet what that would concretely look like is subject to internal disagreements. That also entails the issue of what role Western nations might play within the organization.

From a progressive perspective, the phenomenon of Global South nations striving for independence from Western-dominated institutions that do not work to their advantage is fundamentally to be welcomed. Yet so far there has also been a notable absence of transformative political approaches — approaches serving to benefit not only elites, but the majority of the population of member countries.

In short: BRICS Plus does not represent an anti-capitalist alternative. It is much more a matter of seeking to secure more influence within the capitalist world-system: “neoliberalism with a Southern Face”, as it were. Progressive forces ought instead to concentrate on identifying — and also making use of — strategic spaces for alternative political approaches.

This article first appeared in nd.Aktuell in collaboration with the Rosa Luxemburg Foundation. Translated by Marty Hiatt and Samuel Langer for Gegensatz Translation Collective.