The term "BRIC" was first coined in 2001 by then-chairman of Goldman Sachs Asset Management, Jim O'Neill, in his publication Building Better Global Economic BRICs. The Foreign Ministers of the initial four BRIC states (Brazil, Russia, India, and China) met in New York City in September 2006 at the margins of the General Debate of the UN General Assembly, beginning a series of high-level meeting.
In 2007 it was established as a pressure group against wealthy Western economies. (before South Africa joined the group in 2011). Thereafter BRIC was turned into BRICS.( The last word “S” means South Africa.) . A full-scale diplomatic meeting was held in Yekaterinburg, Russia, on 16 June 2009.
The BRICS represent 41.6% of the world population, 23% of the world’s GDP (about $ 40.6 trillion), 18% of the global trade and 25% of the world’s territory.
While the BRICS group involves countries with varying levels of economic growth, vastly different political systems and an array of simmering issues among them, analysts caution that its potential clout should not be taken lightly.
BRICS nations have criticised the World Bank and the International Monetary Fund for not giving developing nations enough voting rights. One of the goals for the bank - whose creation has been discussed for some time - would be to increase the amount of money loaned to developing countries to help with infrastructure projects.
BRICS nations - which once saw each other more as rivals than friends - agreed a deal establishing a New Development Bank. Despite their political and economic differences, they agreed upon in one issue that the US and European countries have too much power in institutions like the World Bank and the IMF and they controlled the economies of developing countries.
At a meeting in the north-eastern city of Fortaleza in Brazil on 15th July, 2011, the leaders of Brazil, Russia, India, China and South Africa (BRICS) who have gathered announced they agreed to establish a development bank with a $US100 billion fund of currency reserves for members to use during balance of payments crises.
First BRICs summit:
The then-4 country grouping's first formal summit, also held in Yekaterinburg, commenced on 16 June 2009, with Luiz Inácio Lula da Silva, Dmitry Medvedev, Manmohan Singh, and Hu Jintao, the respective leaders of Brazil, Russia, India and China, all attending. The summit's focus was on means of improving the global economic situation and reforming financial institutions, and discussed how the four countries could better cooperate in the future. There was further discussion of ways that developing countries, such as 3/4 of the BRIC members, could become more involved in global affairs
In 2010, South Africa began efforts to join the BRIC grouping, and the process for its formal admission began in August of that year. South Africa officially became a member nation on 24 December 2010, after being formally invited by the BRIC countries to join the group. The group was renamed BRICS – with the "S" standing for South Africa – to reflect the group's expanded membership.
In April 2011, the President of South Africa, Jacob Zuma, attended the 2011 BRICS summit in Sanya, China, as a full member. The Bank would challenge the influence of the World Bank and the International Monetary Fund among developing countries. BRICS nations decided to put the capital of $100 billion of the New Bank while the subscribed capital in the World Bank and Asian Development Bank was $223 billion and $162 billion respectively. (Incidentally, Bangladesh’s GDP is $249 billion in 2017, according to IMF).
The new organisation would be based in Shanghai, and would open with an initial capitalisation of $50 billion. India would name the first president, according to a statement from the leaders.
The five countries will have equal number of shares in the bank so that China and Russia would not influence the new bank. The Indian media reportedly has given credit to the Indian Prime Minister Narendra Modi for such idea of equality among members and also the appointment of an Indian to be the first President of the bank. A Treaty was signed in July 2014 and was effective from July 2015. As a result, the Bank’s HQ is located in Shanghai (China) and the President of the Bank is an Indian, K.V. Kamnath.
The emergency reserve fund - which was announced as a "Contingency Reserve Arrangement" - will also have $100bn, and would help developing nations avoid "short-term liquidity pressures, would promote further BRICS cooperation, strengthening the global financial safety net and complementing existing international arrangements.
Why the Bank?
Two questions arise. First, as there's no shortage of multilateral finance institutions, why create another one? And second, given the characteristics of this new bank, and the world it's been born into, would it be able to fulfill its parents' ambitions?
The first question has at least four answers: (a) geopolitical shifts, (b) unchanged voting rights of rich countries at the World Bank and IMF, (c) shortfalls in financing for infrastructure, and (d) the national priorities of the BRICS countries.
For geopolitics, a historic shift from old to the rising powers is under way. Economically, this can be seen most clearly through long-term growth prospects. Politically, the locus of decision-making is moving from the G-7 to the G-20. The fact that Belgium has more IMF votes than Brazil appears to bring back old days of colonial past. Financially, the 2008 economic crisis has changed the scenario of government of rich countries.
Answer to the second question remains uncertain. Although there is a real need for finance, particularly in the background of the need of infrastructures in developing countries, no one can tell whether the annual infrastructure spending gap in developing countries which exceeds $1 trillion and this rises by 15% when climate change adaptation and mitigation costs are factored in. Clearly, a big question mark remains whether the aforesaid expenditures would be available.
The 10th Summit:
The speeches of the leaders at the 10th BRICS summit on July 25-27 (2018) demonstrated that the protection of goods under the Trump administration is on the rise even as against its allies, such as Canada and Germany. The ongoing trade wars between US and China has adversely affected the economies of BRICS nations.
Furthermore, the 102-paragraph statement after the summit has shown the anxieties and worries of the BRICS nations. China is worried about how its economy would be as a result of the trade war. There are some obvious negatives among BRICS nations. Russia is not fully integrated fully with the global economy. Brazil has not yet recovered from its economic depression it suffered in 2015 and 2016. South Africa with a much smaller economy (GDP-US$280 billion in 2017) does not carry influence and wants investments from China. India and China remain political rivals in Asia and fail to monitor and coordinate their policies together towards global economy.
The BRICS nations are going through strains and stresses and face challenges, some are known and some are unknown. The BRICS nations remind us of the importance of addressing the challenges in unity.. It follows the old adage” United we stand, Divided we fall.” The maxim inspires us to become united and collaborative.
"They (BRICS) still have just shy of half the world's population," said Kevin P. Gallagher, a professor of international relations at Boston University, emphasising the influence the countries already have within organisations such as IMF and the World Trade Organisation. "They are a force regardless of their growth rate, which will remain faster when averaged than the West's for years to come."
Barrister Harun ur Rashid, Former Bangladesh Ambassador to the UN, Geneva