Limited BRICS expansion suits India’s interests, for now

While India wants a multi-polar world, China might prefer a large anti-West forum.

| Updated: 29 August, 2023 12:23 pm IST

China wanted a dramatic expansion of BRICS at its 15th summit last week, but the limited expansion (six new members) presents a change that is relatively in line with India’s interests. For, India wants a multi-polar world, while China might prefer a large anti-West forum.

While Iran is at least as strongly opposed to the US as Russia now is, other inductees (Argentina, the UAE, Egypt, Saudi Arabia and Ethiopia) are likely to back away from appearing belligerent against the US — which would continue to be India’s line.

The US will continue to woo Saudi Arabia and India, and the Saudis are unlikely to become a Chinese satellite. In any case, India should be able to work closely with Egypt (which was once a co-leader of the Non-Aligned Movement) and the UAE — possibly Brazil, Argentina, Ethiopia, and South Africa too — during future deliberations.

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India has good relations with all the entrants. None of them is India’s competitor, New Delhi has a lot of trade and expatriate income from Saudi Arabia, the UAE, and Iran.

Russia too may continue to broker a middle path for BRICS between the positions preferred by China and India. Russia needs China today more than ever, but is keenly aware of the long-term prospect of China trying to take over eastern Siberia.

According to some reports, Russian foreign minister Sergei Lavrov negotiated the compromise through which six were admitted, after China had pushed for ten new members and India reportedly wanted only three.

India has strategic ties with France, which might be quietly pleased that Algeria has not been included. However, this is only the first phase of expansion. Algeria, Indonesia, Bangladesh, Kazakhstan, Cuba, Venezuela, and several other countries might be included in subsequent rounds.

Undoing the petrodollar

If this BRICS summit was ‘historic,’ as Chinese President Xi Jinping observed, it was for the undoing of the so-called ‘petrodollar.’ It has been almost exactly 50 years since the pact through which Saudi Arabia and the rest of OPEC agreed to denominate oil prices only in US dollars, thus stacking the global financial deck with US dollars.

As long as most of the traded oil was priced in dollars, countries around the world were forced to keep stocks of dollar reserves to purchase petroleum. In exchange, the US guaranteed the security of Saudi Arabia, the leader of the OPEC grouping.

The summit did not announce a gold-backed settlement mechanism, as some had expected, but the inclusion of three of the world’s major oil producers marked a substantial shift.

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Many Western observers viewed the inclusion of Saudi Arabia in BRICS as marking the end of the petrodollar. However, the arrangement of the `70s had already been fraying for a while, and Saudi Arabia has already been selling petroleum in currencies other than dollars — in dirhams to India, for instance.

Not just that, it has become the world’s biggest importer of arms in recent years. That would indicate that the Saudis do not want to be a protectorate, either of the US or of China, but would like to protect itself in future. That is in line with India’s long standing preference for self-reliance.

BRICS will control more than 40 per cent of the world’s petroleum products. In case countries like Nigeria and Venezuela were to be included, the group would account for closer to 70 per cent of oil production. This would not only undermine the US’s longstanding effort to control the oil trade, but also the primacy of the US dollar.

Multi-polarity or Chinese domination?

Several Western observers and well-wishers of Russia and China interpret the expansion of BRICS as not only a blow to Western hegemony but also as a marker of China’s rise.

The catch-word among BRICS backers is global ‘multi-polarity,’ but China may take the view that, in the long term, this will not only be a global grouping of countries pushing back against Western financial domination, but one led by China.

NATO’s backing of Ukraine has already pushed Russia into China’s embrace, both geopolitically and economically. Plus, it has brought Iran into a tighter embrace with both. In fact, Iranian drones have been crucial to keep Russia’s war effort going in Ukraine over the past year. (That military aid is huge, considering that only four countries have openly sent arms to Russia, even though more than a hundred countries have reservations about Western stands on that war.)

Surprise inclusions

India and Brazil had reservations about the expansion but, faced with huge pressures, decided to opt for a slow and steady approach.

Iran’s inclusion was the most likely, for Tehran has a strategic or near-strategic relationship with the three bigger BRICS players: Russia, China, and India. Plus, Russia and China have recently brought former arch-enemies Iran and Saudi Arabia together.

Among the rest, there were some surprises. Algeria was among the most eager to join, and many observers saw the country as a shoo-in. As it turned out, the north African Arab country that was the actual shoo-in was Egypt. It was one of three Arab entrants, but had worked hard diplomatically to persuade members.

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Argentina had been expected to join, and Brazil’s President Luiz Inácio Lula da Silva went out of his way to ensure that it was included. But whether it will be among the six when they actually join on January 1 next year will depend on how Argentina’s October elections turn out. Both the main presidential challengers have vowed to oppose anything to do with China; both want to keep Argentina in the US orbit.

The way the actual expansion takes place will be managed by Russia, which takes over the presidency of BRICS on the same day as they join. That is expected to give President Putin much heft as he stares down the West over the Ukraine war and the sanctions imposed on Russia — and him personally.

(David Devadas is a seasoned journalist with a deep understanding of the Kashmir issue. He is the author of The Story of Kashmir and The Generation of Rage in Kashmir (OUP, 2018). He also analyses politics, geopolitics and security matters.)

Disclaimer: Views expressed above are the author’s own.

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