As a geriatric news junkie, I watch a lot of news and commentary on the international channels, specifically Al Jazeera, BBC and CNN. Recently they were full of reports on the BRICS conference in South Africa. Surprisingly, it was largely ignored by the NZ media.
For the uninitiated, BRICS stands for Brazil, Russia, India, China and South Africa. It was a fairly loose group but is gaining in strength and membership. We need to be aware of it.
During the recent election campaign we heard a lot about a free trade agreement (FTA) with India. Successive governments have ignored India, much to my surprise, but it is currently in the headlights.
The election promise of pursuing a FTA with India, with the suggestion it could happen sooner rather than later, is pure rubbish. Yes, Australia has an agreement but it courted India for years if not decades. It has established universities there and Australia’s Indian immigration settings are far more liberal than ours.
India is an integral part of BRICS. The organisation has considerable size and clout. The current members have 27% of the world’s land surface, 42% of the world’s population and 33% of global GDP. Trade among BRICS nations is worth over $US200 billion ($341bn).
As well as the five current members, there are six new countries about to join. They are Argentina, Egypt, Iran, Ethiopia, Saudi Arabia and the United Arab Emirates. Morocco, with Africa’s largest port, has also shown interest in joining, as has Indonesia. Of the new entrants, Saudi Arabia, the UAE and Iran are all major oil producers.
Another 34 countries have shown interest in being part of the organisation.
It is a young organisation, having been formed in 2001.
India’s Prime Minister Narendra Modi attended the recent 15th annual conference in Johannesburg, as did the Brazilian and South African presidents and a representative from the Central Committee of the Chinese Communist Party. Russia’s President Vladimir Putin attended virtually, given the arrest warrant out for him for alleged war crimes in the Ukraine.
So far the BRICS gathering has been largely informal. There hasn’t been a secretariat, but that appears about to change.
There is a BRICS-backed New Development Bank that has provided loans of more than $50bn thus far. There has been a push by Brazil to have a common BRICS currency. Russia wants to reduce the influence of the United States dollar, and a common BRICS currency will achieve that. The BRICS bank issues loans in local currencies, which circumvents the US dollar. There is also a strong push for a more formal BRICS structure, all of which makes the group important internationally and for New Zealand.
Interestingly, although some of the world’s greatest polluters are part of BRICS, the recent South African conference supported a “partnership for sustainable development”. The conference “recognised the urgency of decarbonisation and a just energy transition”.
India is predicted to become the major player within BRICS, which will create issues for both the US and Australia.
BRICS has also been compared with Asia-Pacific Economic Cooperation (APEC) in that it is a collection of large and small economies all co-operating.
Further, it is seen as a strong counter to US influence in the region, certainly the G7.
That is going to create problems for NZ.
We’ve supported the US push to assist Ukraine in its war with Russia.
Much of the Middle East is either joining or keen to join BRICS. That will no doubt be helped by the Americans’ passionate and slavish support of all things Israel.
The Australian position is also interesting, as with the Australian, United Kingdom, US agreement (AUKUS) they are firmly in the US camp. If anything, Australia seems to be getting a lot closer to the US than previously.
Our outgoing Trade Minister, Nanaia Mahuta, has firmly rejected being any part of AUKUS, which I support. So NZ will have to face some tricky decisions.
For a start, it would be impractical for us to join the BRICS grouping, certainly at this point – but we do need continued dialogue with it. Second, China is our biggest trading partner, with India being the country with the greatest potential. The Arab countries joining BRICS also has massive potential for us.
NZ is already a signatory to the Chinese Belt and Road initiative, so being part of BRICS or an associate of it isn’t a big step.
Of most interest, however, is that Goldman Sachs believes the original BRICS will be dominating the global economy by 2050. Logic would suggest with the new and potential members, that could happen a lot sooner.
That provides some interesting options for the next NZ minister of foreign affairs.
Do we stick with our traditional allies, specifically the US, which certainly isn’t committed to free trade, or do we have a positive dialogue with India and the BRICS countries?
My definite preference would be for the latter.