BRICS, the acronym for a group formed by the counties of Brazil, Russia, India, China, and South Africa, has been touted as an anti-Western alliance with the power to usher in new world order. Sergei Guriev argues it is nothing of the sort.
He has had one of those lives fit for a Russian novel. Sergei Guriev served as a professor and the Rector of the most elite Russian university, the New Economic School in Moscow, advised the Russian President Dmitry Medvedev, sat on numerous Russian government advisory boards, only to find himself being the subject of a “frightening and humiliating interrogation” by government officials in 2013. He fled the country soon after.
Guriev witnesed up close Russia’s shift over the last decade from a Western-friendly regime with democratic aspirations, to an aggressive anti-Western spin-dictatorship – a term he coined to describe the new wave of authoritarian regimes who rule by spin and democratic pretence, rather than explicitly by fear. Though today Guriev believes Russia is rapidly moving back towards the “rule by fear” model. He has gone on to hold numerous prestigious positions, including his current leadership role at Science Po in Paris, one of France’s elite schools of government known for educating future politicians, diplomats and presidents. France's current president, Emanuel Macron is a graduate. So was his predecessor, Francois Hollande.
As the chief economist at the European Bank for Reconstruction and Development from 2016 to 2019, Guriev has a deep understanding of development banks, and capable of assessing perhaps the only concrete institution that has been born of the BRICS group so far: the New Development Bank. This bank has been set up as an alternative to what are seen as Western development organisations, such as the IMF and the World Bank, driven primarily by a Chinese agenda to undermine the dominance of the dollar as the world’s main currency, but also with the hope to exercise some softer power and widen the group's geopolitical influence, gaining the allegiance of nations who might struggle to get development loans otherwise.
I asked Guriev how he saw the claims about the potential economic power of the BRICS group, especially after the recent announcement of the addition of several new countries to their ranks, including Saudi Arabia, the United Arab Emirates, Iran, Ethiopia, Argentina, and Egypt, and whether the geopolitical influence of the group will help Russia in its war against Ukraine.
The Economic Power of BRICS
Under its new iteration, the BRICS+ group makes up approximately 32% of global GDP, compared with the G7 which makes up 30% of global GDP. How meaningful are these comparisons, and do these metrics translate into economic power – the ability to influence the direction of the global economy?
These comparisons are based on purchasing power parity (PPP) rather than GDP in market prices. E.g., in market prices G7 accounts for 45% of world GDP rather than 30% (based on PPP) – thus way ahead of the share of BRICS with or without new members. Total GDP in PPP represents how much the national income can buy domestically; it may provide some indication in case, for example, of defense spending. But it is meaningless for understanding the weight or a country or a country block in the global economy.
How significant is the power of the New Development Bank as a counterpoint to the World Bank and the IMF?
In 2021, the New Development Bank (NDB) approved 10 projects with the total amount of 5 billion dollars (the 2022 report is not published yet). The World Bank Group 2022 volume of commitments was 104 billion dollars, including 33 billion dollars by the International Bank for Reconstruction and Development (IBRD) and 22 billion by the International Finance Corporation (IFC). In addition to the World Bank Group that operates globally, the Western universe of multilateral development institutions includes regional development banks such as African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development (EBRD) and the Intra-American Development Bank. Each is an important player in its region, e.g., EBRD has invested 13 billion dollars in 2022. The numbers speak for themselves: The New Development Bank – at least for now – is not an important development bank.
De-dollarisation - moving away from the dollar as the global currency - is not universally popular among the new BRICS members, as some of their currencies have a dollar peg.
The World Bank and the IMF have been criticised for the very strict conditions they attach to loans, sometimes going beyond purely economic indicators and veering into politics, whereas the New Development Bank promises economic help without any strings attached. Is it good news for the Global South that might have otherwise found it difficult to access funds from those more Western institutions?
The conditionalities of Western development institutions are usually related to sound economic policies, rule of law and good governance. The Chinese development institutions (with the possible exception of the Asian Infrastructure Investment Bank) have been criticized for not complying with the Environmental Social, and Governance standards upheld by the global development community. On the other hand, right after Russia’s full-scale invasion in Ukraine in February 2022 several BRICS development institutions (including AIIB and NDB) announced that they stop financing projects in Russia.
There are many and significant disagreements between China and other members (especially India) as these countries are geopolitical and economic competitors.
There seems to be an explicit agenda on the side of some of the members, especially China and Russia to undermine the dollar as the global currency, for example by making the loans of the New Development Bank in denominations other than the dollar.
This is certainly the goal of BRICS members – especially of China. The only feasible alternative to Western currencies is Chinese yuan. Other currencies are either not convertible or do not service a sufficiently large and deep financial market. This is an example where BRICS serves China’s geopolitical and geo-economic agenda.
Interestingly, de-dollarisation - moving away from the dollar as the global currency - is not universally popular among the new BRICS members, as some of their currencies have a dollar peg.
To what extent do you think there’s an unease between countries like China and India when it comes to economic competition between them, but also in terms of how deep they would like their economic ties to be with the West?
There are many and significant disagreements between China and other members (especially India) as these countries are geopolitical and economic competitors. It is also true that these countries (especially China) cannot afford to break their ties with West. Even Russia is constantly complaining about Western sanctions thus showing its interest in restoring ties with the Western economies. Furthermore, Russia uses third countries (including members of BRICS) to circumvent Western sanctions and to import Western goods.
First and foremost, BRICS is not an alliance – or at least not an alliance in the sense of the word that we use when we describe a military alliance like NATO or political alliance such as G7.
The Geopolitics of BRICS and Russia's war
Should we understand the geopolitical vision behind the BRICS alliance as anti-Western or simply as a non-Western alliance?
First and foremost, BRICS is not an alliance – or at least not an alliance in the sense of the word that we use when we describe a military alliance like NATO or political alliance such as G7. For example, none of the old or the new BRICS members has recognized the annexation of Crimea by Russia. These countries have very different political and economic priorities. BRICS is just an annual non-Western conference. The only tangible BRICS project is the New Development Bank which – as I mentioned above – is not an important global player.
This is certainly not an authoritarian club; it is just a non-Western club. Furthermore, the democratic members of BRICS are not and will not become “anti-Western”.
There is a temptation to see BRICS as an authoritarian club, as opposed to the G7’s democracies, given the prominent role of China and Russia within the group. But there are also many democracies within BRICS: Brazil, India, South Africa, now Argentina. How do you see the democratic or authoritarian credentials of the group’s constituent countries informing its overall political identity?
This is certainly not an authoritarian club; it is just a non-Western club. Furthermore, the democratic members of BRICS are not and will not become “anti-Western”. For example, India will remain the member of the Quad (Quadrilateral Security Dialogue) consisting of Australia, India, Japan and the US. The Quad is essentially an anti-China security initiative. Argentina and Brazil will continue to cooperate actively with the Intra-American Development Bank.
You speak in your book Spin dictators about how even authoritarian regimes like to present themselves as having a democratic veneer, both for business reasons but also for diplomatic reasons. Do you see BRICS as having a self-image issue, given the inflated role of China and Russia, but also India, who some analysts don’t classify as a democracy?
For spin dictators it is indeed important to project an image of geopolitical competence – convincing their own citizens that they are not pariahs, and they are members of important international clubs. This is certainly more important for Russia rather than China who is already playing a key role in many international organizations. On the other hand, given China’s weight within BRICS, Chinese leadership can correctly tell its citizens that this is China-led non-Western club (similarly to the case of Shanghai Cooperation Organisation, a China-led security club).
BRICS will not bring any tangible benefits to Russia.
How do you see BRICS influencing geopolitics in the near future? Will Russia and Putin be able to avoid any real consequences of its invasion of Ukraine if its BRICS allies stick by it and help it economically and politically?
BRICS will not bring any tangible benefits to Russia. Putin needs to circumvent Western sanctions and he is doing this through members and non-members of BRICS (such as Turkey, Kazakhstan, and Emirates and Iran even before they joined BRICS). Russia will expand its imports of Chinese goods irrespective of BRICS. None of BRICS countries (except Iran which is already heavily sanctioned) will risk being sanctioned itself. But BRICS may continue issuing vague statements on geopolitics that Putin will be able to use for his domestic audience.
Is BRICS contributing to a new multipolar world, or merely a new bipolar world with the US and China respectively as the heads of the two major alliances?
The world is going to be multi-polar with two global powers - the West (US and its allies) and China and many smaller regional powers. It is important that China does not have allies – and BRICS is certainly not an alliance that can help China compare itself to the Western alliance. In terms of GDP in purchasing power parity, China has already overtaken the US; in the coming years, it may also overtake the US in terms of GDP in market prices. However, even in this case, China’s GDP will be well below the total GDP of the US and its allies. At the same time, it makes no sense to consider the BRICS as an alliance given that it is a club and no matter how many annual BRICS conferences are held, its members will remain geopolitical competitors rather than allies.