Daily Times

With Pakistan stuck in a quagmire of deepening political and economic crises and, as some recent reports suggest, unable to discharge its responsibilities towards CPEC, two important events took place recently; giving an impetus to the process of change at global and regional levels. As part of the process, the major world economies under BRICS, generally perceived as a countervail to G-7, and a growing challenge to the economic hegemony of the Western world, held their 15th Summit in Johannesburg from 22 to 24 August 2023.

The group represents 40 per cent of the world population and 32.1 per cent of the global GDP of $ 105 trillion surpassing the combined share of G-7 countries at the global level, estimated at 27 per cent in 2022. The Summit was hosted by South Africa focusing on “BRICs and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development and Inclusive Multilateralism.”

The expansion of BRICs indicates the disillusionment of the emerging economies with the G-7 states underscoring the need for a more representative order. This grouping gives a new perspective to the international cooperation for peace and security and equitable economic development free from hegemony, sanctions and protectionism. There are reports that over 40 countries from the Global South are desirous of joining the grouping. Decisions for expansion are taken by consensus.

The expansion of BRICs indicates the disillusionment of the emerging economies with the G-7 states.

In the Johannesburg Summit, six countries – Bangladesh, Iran, Saudi Arabia, United Arab Emirates, Egypt and Ethiopia – were invited to join the BRICs. However, Bangladesh was placed on the list of prospective members. The expansion would increase weight of the grouping in international affairs. With this addition, the block now accounts for a GDP of $31trillion and, most significantly, controls 90% of the oil exports.

The Summit highlighted a number of proposals that could reshape the future of international trade and economic cooperation. The De-dollarization was the most significant subject. Russia is a strong proponent of this proposal. China and Saudi Arabia are already looking into options for their oil trade in Yuan. The creation of a common currency like EU also came under discussion. This proposal may not materialize in the near future as currently 88% of the global trade is carried out in dollars. India would be willing to play the villain’s role at the behest of the USA to sabotage any shift of trade in Yuan.

The other significant takeaway was the strengthening of the New Development Bank (NDB) and BRICKs Bank for enhancement of integrated trade and economic development, mobilization of resources for infrastructural and sustainable economic development projects not only within BRICS only but also for other Emerging Markets and Developing Countries (EMDCs) with President Xi Jinping establishing a fund of $10 billion by the Chinese financial institutions for the purpose. The BRICs bank’s financial interventions don’t carry any conditionality as contrasted to IMF loans. The NDB would continue to finance projects in local currency to protect borrowers from fluctuations.

The G-20 Summit held in New Delhi recently is hailed by Indian leaders as a landmark success. The Summit, notwithstanding Indian bravado, would be remembered for the watered down consensus statement on the Ukraine War; the disillusionment of the Ukrainian leadership; the half cooked proposal for the India-Middle East-Europe Economic Corridor (IMEEC); the China’s deliberate snub to India by staying out; the shift in Indian policy from Non-aligned to Multi-alignment and the inclusion of the 55-nation African Union as member.

The G-20 had a significant role to play in building back a better world. Together, the group accounts for 86% of global GDP, 73% of international trade, and two thirds of the world’s population. However, the group has not been able to assume that leading role and seems to be overshadowed by the BRICs. Some experts on global trade have even discarded it as an effective force to align its members’ trade and industrial policies.

The Joint Statement of the Group’s Bali Summit last year, had adopted a robust statement on the Ukraine imbroglio with all members condemning the war. In the Delhi Declaration ‘all references to Russia, Russian aggression and calls for Russia’s complete and unconditional withdrawal that featured in last year’s joint statement were removed. Instead, the declaration called on all states to refrain from the threat or use of force to seek territorial acquisition, and that “the use or threat of use of nuclear weapons is inadmissible.” This prompted Kyiv’s Foreign Minister Oleg Nikolenko to say G-20 had “nothing to be proud of.”

President Joe Biden proposed multi-national rail, shipping, and trade and investment and economic connectivity project linking India with Middle East, and Europe. The proposal is seen as an ambitious plan to counter China’s Belt and Road Initiative (BRI). The India-Middle East-Europe Economic Corridor includes India, Saudi Arabia, United Arab Emirates, Jordan, Israel and EU. Iran, the most significant country of the region, has been excluded from the project at the behest of the USA. While it remains to be seen how this project pans out, the China’s BRI has already connected with 150 countries.

The Summit made a small gain in addressing the disaster of climate change. It backed limiting global warming to 1.5 Celsius. This will require reducing greenhouse gases by 43% by 2030 from 2019 levels, with developing countries needing $5.9trillion in funding to achieve their climate targets. The Summit failed to agree on a phase-out of fossil fuels, with its member states being home to 93% of the world’s operating coal power plants and around 80% of global emissions.

China is the dominant partner in the BRICs and could help Pakistan become member. The new member countries, more or less, have the same size of economy and economic potential as Pakistan. However, we need to put our house in order first achieving political and economic stability, rule of law and credible judicial intervention. With all this ongoing political engineering aimed at making and unmaking political parties, the hope for achieving this lofty objective remains a remote possibility for time being. China is reportedly very unhappy over this continued unstable situation and progress of CPEC.

The author was a member of the Foreign Service of Pakistan and he has authored two books