Summary of the BRICS Summit – 2014

By Samruddhi Khanna

Edited by Sanchita Malhotra, Associate Editor, The Indian Economist

BRICS is a contraction used for an association of five major economies of the world which are developing at a fast pace.  The nations, the initials of which make this acronym include – Brazil, Russia, India, China and South Africa.  The BRICS nations are termed as the emerging nations of the world and are distinguished by their developing or newly industrialized countries but are fast growing enough to have a significant effect on the global economy and affairs.

BRICS has been holding a number of meetings since its inception in 2008.  Each year a summit has been held and one of the member nations act as a host while the representatives of rest of the nations attend the summit and many other nations are invited too for their input.  These meetings are diplomatic in nature and are meant to strengthen the economies of nations by mutual understanding.  The 6^th BRICS summit was held just last week from 14^th to 16^th July 2014 and the host nation was Brazil.  The summit was held in the Brazilian city of Fortaleza and was incepted when Host President Dilma Rousseff invited the BRICS leaders to the 2014 FIFA World Cup Final.  Leaders of all other member nations came in for the summit – Vladimir Putin, the President of Russia; Narendra Modi, the Prime Minister of India; Xi Jinping, the President of China and Jacob Zuma, the President of South Africa; along with the leaders of many invited nations.

Over the years, the agendas discussed in these summits have broadened and now include discussion topics like terrorism, national security, national and global financial crisis, trade relations etc.  The main aspect of this year’s summit included the discussion regarding the BRICS Development Bank.  The BRICS Development Bank was due to be inaugurated and Shanghai was selected as its headquarters. On 15 July, the group signed a document to create the US$100 billion BRICS Development Bank and a reserve currency pool worth over another US$100 billion. Documents on cooperation between BRICS export credit agencies and an agreement of cooperation on innovation were also signed.

The BRICS nations represent almost 18% of the world economy.  It is imperative then that economic policies, relations etc. are always a major part of the summit.  Russian President Vladimir Putin said of the summit that it sought to decouple dependency on the U.S. dollar.  An active part by BRICS nations and other new economies of the world in the IMF and the World Bank’s decision-making system were amongst other things discussed.  There were also some comments made about the fact that how the international monetary system itself depends a lot on the US dollar and steps should be taken to change this.

The BRICS format now includes more than 20 equally important cooperation formats, including the BRICS Business Council, the BRICS Banking Forum, the BRICS Exchanges Alliance and others, embracing such areas as information security, healthcare, agriculture, science and technology, and others.  There were measures taken to improve the trade and financial ties between the nations.  Memorandum of Understanding on Cooperation among BRICS Export Credit and Guarantees Agencies, as well as the Cooperation Agreement on Innovation within the BRICS Interbank Cooperation Mechanism are the means that are said to be undertaken to achieve this feat.

As a part of this association, the member nations also sought to improve the relations amongst each other and to peacefully strengthen the ties.  There were talks to increase the intra-trade relations amongst the member nations and to mutually benefit from them.  Indian PM, Narendra Modi went as far as to declare Russia as India’s most loyal friend and talked about further strengthening the ties in every sector, be it defence, technology or trade and investment.

BRICS has received both – praise as well as criticism but all can see that as the time passes by, these nations only grow more strong.  The mood and the climate during this summit was very enthusiastic as it was started just days after the FIFA World Cup and like the much talked about game we can only hope that many goals were scored here as well.  Lastly, I would also like to inform about another important agenda that was talked about.  It is said that in the 6^th BRICS summit there were discussions about the possible admission of Argentina as the sixth member country.  Guess what will the acronym be then – BARICS?