In a summit meeting of governmental leaders, the BRICS states (Brazil, Russia, India, China, South Africa) met in Johannesburg, South Africa, in August. These large and powerful nations took steps toward an alternative approach to international trade and investment. They did so outside of Western Europe and North America, yet within the existing framework of the United Nations, World Bank, and International Monetary Fund (IMF).
The BRICS nations had met quietly for 15 years, since the 2008 financial crisis that reaffirmed the need for tighter regulation and greater equity in global finance. By 2015, BRICS formally created the New Development Bank (NDB), designed as a parallel to other international development banks.
At this year’s meeting, the BRICS group made two big decisions. First, the NDB announced loans of up to $10 billion for specific development projects. Second, it admitted six more members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE).
Global Order in Change, Old and New
The BRICS initiative is a recent and significant shift of the global order. Looking back more than 75 years, we can trace several other major changes preceding BRICS. The United Nations (UN) was formed in 1945. It brought stability to the global system by allowing the replacement of empires with nations and welcoming all independent nations as members. Today, the Security Council, General Assembly, Secretariat, and UN agencies are still functioning.
As soon as the UN was established, the Cold War opposed the U.S. and Soviet Union in a half-century of struggles between capitalist and socialist economies. The U.S. invested in the Marshall Plan, yielding the European Economic Community (EEC) and its OECD think tank. At much the same time, decolonization brought national independence to 80 former colonies and millions of people by 1970 (though without a Marshall Plan for their recovery). In 1964, the Group of 77—ex-colonies with many votes in the UN—proposed a New International Economic Order (NIEO), with more equitable rules.
Wealthy countries declined to support the NIEO. Instead, in 1976, France and West Germany led in forming the G7—an organization separate from the UN—to better represent the interest of wealthy nations. When the Soviet Union fell in 1991 in a wave of democratization movements, the world leadership of the G7 group seemed to be reinforced: in 1995 the G7 powers formed the World Trade Organization (WTO) to negotiate trade relations outside the context of the UN.
But when financial crises threatened (1995–1998 in Asia and Americas), the G7 powers reached out to form a more inclusive group. The G20 was established in 1999, including 13 members of the WTO that were not members of Euro-American-based OECD. After another financial crisis (2008 in the U.S.), five of those non-G7 members of G20 formed the BRICS organization.
Global Economy, Trade, and Investment
BRICS—in alignment with the G20 yet in tension with the G7—has focused explicitly on global trade and investment. Its main initiative, the New Development Bank (NDB), was proposed by India in 2012 and approved in 2015; its headquarters were set up in Shanghai. Memos of agreement were gradually signed to ensure NDB cooperation with the IMF, World Bank Group, Asian Development Bank, and several other groups.
The new president of NDB is Dilma Rousseff, a widely known economist and political figure who served as president of Brazil (2011–16). She presented a report on NDB goals at the 2023 BRICS summit. It confirmed that each BRICS member holds $20 billion in capital and that NDB will make loans in Chinese yuan, plus Brazilian, South African, and Indian currency (loaning $8–10 billion during 2023), but also in dollars.
This approach aims to avoid risks posed by the dollar-based exchange rate and fluctuations in U.S. interest rates. The medium-term goal of the NDB is to have 30 percent of all loans within BRICS be in national currencies and, importantly, without any political preconditions. BRICS favors more resources for IMF, with quotas for all and upward adjustments in quota shares for the poorest economies.
Social Movements and Corporate Hierarchy
Two more factors provoke changes in the global order. First, social movements arise periodically: peoples of the world demand democratization (1989–1992), or, more recently, indigenous rights, environmental reform, and gender equality. Second, an expanding corporate hierarchy (e.g., banks, mining, manufacture, commerce) impresses its policies on G7 leaders and lobbies at meetings of the Davos Global Economic Forum in Switzerland. The bottom-up influence of social movements, while strengthened by the internet and social media, is counteracted by the top-down influence of corporations.
What terms shall we use to describe this complex network of world affairs? The G7 speaks of “Western leadership,” with the U.S. government and military as central in global affairs. In China, the term “multicentric” is often used, suggesting that two or more nations will provide alternative poles of leadership. The G20 statements choose “multilateral” to emphasize the many sides in global discussions. One more term, “multicultural,” has arisen from social movements. This term highlights distinct yet overlapping cultures, prefers local initiative to top-down leadership, and expresses concern with problems at both national and global levels.
Big-Power Politics: Combat or Conciliation?
Meanwhile, the global drama of big powers continues. There is fear of conflict between the U.S. and China, as there is already conflict in Ukraine. Yet as I will show, despite these tensions, the G7, BRICS, and G20 have made commitments to cooperation in economic and even political affairs.
Here is the composition of each of the overlapping groups within G20:
- Those that were initially members of the G7: Canada, France, Germany, Italy, Japan, United Kingdom, United States, and European Union
- Those that joined G20 in 1999 and formed BRICS in 2009–2010: Brazil, China, India, Russia, South Africa
- Members of G20 since 1999: Argentina*, Australia, Indonesia, Mexico, Saudi Arabia*, South Korea, Turkey. (*Argentina and Saudi Arabia will become members of BRICS in 2024; the African Union was admitted to G20 in 2023.)
The rotating presidencies of G20 mean that all three of these groups will have influence. Indonesia was host to G20 in 2022; India hosted the 2023 meeting; Brazil will host in 2024; and South Africa will host in 2025. (Notably, the latter three are BRICS members.) The U.S. is scheduled to host the G20 in 2026, but China has challenged this plan.
Looking at the 2023 statements from each of these groups, here’s how their priorities compare: (Reading these statements can also reveal subtle differences on numerous issues.)
- G7: The top priority is military support for Ukraine against Russia. This report lists many other political and economic goals but without much detail.
- BRICS: The main emphasis is inclusive multilateralism. As the BRICS statement says, “We support a robust Global Financial Safety Net with a quota-based and adequately resourced International Monetary Fund (IMF) at its centre. … Any adjustment in quota shares should result in increases in the quota shares of emerging markets and developing economies (EMDCs), while protecting the voice and representation of the poorest members.” For Ukraine, BRICS prefers negotiation via the UN Charter for resolution.
- G20: The G20 supports balanced growth, the UN 2030 Agenda for Sustainable Development, and global environmental programs, yet is short on specifics.
The stakes of such collaboration and conciliation are high. While each nation has its own priorities, there is pressure from all sides to make concessions, especially as the overlaps among groups tend to limit the hostilities of competing national aims.
Here are several examples of this give-and-take.
- BRICS members may act independently in G20 meetings, but they agree to act in consensus within BRICS.
- The G20, seeking to be inclusive, suddenly added the African Union as a member.
- India’s government seeks a Hindu-only nation yet has just allied with Islamic nations in BRICS.
- Russia and China may have to limit their claims for new territory in order to gain the benefits of an expanding BRICS and its policies.
- The U.S. has just agreed with Iran on prisoner exchange and release of funds.
- The G7 powers seek to reduce UN influence yet the U.S., long outside UN’s UNESCO, recognized that regulations for artificial intelligence will be set there, and rejoined.
Beyond the governments and leaders directly involved in these international meetings, outside players have a role, too. Corporations exert influence by pressing for lower taxes and weaker governments, while social movements affect outcomes by demanding conflict resolution and action on environmental and economic reforms.
It will be fascinating to observe the shifting balance in relations and policies of G7, BRICS, and G20 in the immediate future.