Information Bulletin of the BRICS Trade Union Forum
Issue 39.2021
2021.09.27 — 2021.10.03
International relations
Foreign policy in the context of BRICS
Age of Multilateralism: Why is BRICS Important despite Possible Weaknesses? A Perspective from Russia (Эпоха многосторонности: почему БРИКС важен, несмотря на возможные недостатки? Взгляд из России) / United Kingdom, September, 2021
Keywords: expert_opinion, political_issues
United Kingdom

This article discusses whether BRICS, a leading global governance mechanism, can revive multilateralism, international law and interstate cooperation while providing stability at the global, regional and bilateral level. BRICS has created opportunities for addressing three core themes: politics and security; economics and finance; and humanitarian cooperation. It has evolved into an entity of like-mined countries, which connects people through vertical and horizontal ties, delivers impactful projects and builds friendships. BRICS interconnectedness keeps the group intact from issues such as China-India border conflict that could potentially disrupt BRICS unity. Moreover, the group was not designed to serve as a mediating body and clearly avoids being drawn into internal BRICS conflicts. To reach its full potential, BRICS must continue to expand the scale of cooperation in mutually beneficial issue areas and serve as a platform for cooperative projects for its citizens.
Why BRICS Still Matters (Почему БРИКС по-прежнему имеет значение) / USA, September, 2021
Keywords: expert_opinion

The 13th BRICS Summit, featuring the five major emerging economies of Brazil, Russia, India, China, and South Africa, took place virtually earlier this month. It was chaired by Indian Prime Minister Narendra Modi, and the leaders of the other BRICS members—Chinese President Xi Jinping, Russian President Vladimir Putin, Brazilian President Jair Bolsonaro, and South African President Cyril Ramaphosa—all tuned in. Modi's speech was avidly covered by the Indian press, and the summit itself drew significant coverage by newspapers in India and China, the two most populous BRICS members.

This attention stood in contrast to U.S. media coverage, where there was noticeable silence. Past BRICS summits have invariably drawn at least a trickle of U.S. media coverage, albeit usually in the form of commentary on the irrelevance, dysfunction, or inevitable demise of BRICS as an institution.

But this dismissive view reflects a fundamental misunderstanding of how institutions like BRICS work in international relations and why they matter. Importantly, it misses the motivations of BRICS members, particularly China and India, who remain committed to the institution.

To understand this dynamic, it helps to first understand how the BRICS came into existence and why many in the West write it off.

In 2001, an analyst at Goldman Sachs coined the acronym "BRICs" to describe the emerging economies of Brazil, Russia, India, and China, grouping them as significant players in international politics. This grouping built on 1990s punditry that described Brazil, China, and India as rising powers with growing economic and, therefore, political clout. A later iteration of BRICS added South Africa.

From the outset, the premise that these countries should be grouped together because they were all emerging material powers was problematic. Although in 2001 both India and China were conceivably rising powers with large economies and increasing military spending, it is unclear whether that label applied to the other members, either then or now. Brazil remains a non-nuclear weapons state while Russia is arguably a declining power. South Africa continues to face myriad challenges, including dropping life expectancy in the years after it joined BRICS.

Further, after BRICS members embraced the term and began to formally meet, many observers argued that strained relations among BRICS members—particularly between China and India, which face a simmering border dispute—would hamper any hopes of smooth functioning. Moreover, BRICS members have no common ideology or cause to speak of.

Vast and growing disparities between the economies of the member states remain a common critique. Buffeted by the pandemic, none of the BRICS economies are predicted to expand except for China's. Looking only at these factors, it is no wonder analysts have been pessimistic about BRICS's future and efficacy.

Importantly, however, these analyses fail to take into account why global institutions like BRICS work and what makes them successful.

Such institutions work for three reasons. The first is institutions can act as forums for providing information to their members. Information-sharing builds trust among members and reduces uncertainty about their intentions.

Second, countries usually agree to only participate in institutions that mesh with their key interests. Significantly, this means because any given country will only join an institution that already aligns with its interests, it is naturally predisposed to comply and cooperate within that institution.

The third reason is institutions can enhance the reputations of members by providing them with visibility and a structure through which they can carry out complex activities, such as consensus-building on agreements, fleshing out shared norms and ideas, mitigating conflicts, managing disagreements, and even providing technical assistance.

Some institutions are more successful than others. Particularly when information-sharing is consistent, when an institution can discern its members' key interests and align with them, and when it offers a functioning structure that is collectively enhanced by member participation, the institution functions well.

The Association of Southeast Asian Nations (ASEAN) is an excellent example of such an institution. ASEAN members identify shared challenges through a consensus-based consultative process. The institution aligns with many of its members' core interests by operating on a strict principle of nonintervention in the domestic affairs of its members.

And ASEAN's structure is set up through the ASEAN Charter, a document that outlines its legal and institutional framework and lays out the blueprint for three communities that focus on different facets of regional cooperation: the ASEAN Economic Community, the ASEAN Political-Security Community, and the ASEAN Socio-Cultural Community.

Consequently, by reducing uncertainty—allowing for the participation of and cooperation with even recalcitrant and hostile countries like Myanmar—and giving members a high-level forum, ASEAN has had notable successes, such as creating the ASEAN Free Trade Area and joining the Regional Comprehensive Economic Partnership.

BRICS is a much newer institution than ASEAN, but its trajectory thus far shows it should not be underestimated.

In the 2000s, when BRICS came together, its member countries were broadly excluded from global economic governance structures, particularly Western institutions. As the Economist once wrote regarding the International Monetary Fund (IMF), "it is absurd that Brazil, China and India have 20 percent less clout within the fund than the Netherlands, Belgium and Italy, although the emerging economies are four times the size of the European ones."

Thus, right from its first communiqué, BRICS made it clear that existing international structures were flawed, and it would offer its members a forum for cooperation, leadership, and information-sharing that had been denied to them.

Like ASEAN, BRICS nations have strict principles of sovereignty and noninterference, allowing for issues like territorial disputes and even regional sensitivities (such as India's relationship with Pakistan and China's incursions in the South China Sea) to be set aside.

Moreover, because some of its members, such as China and India, have acrimonious relationships with one another, BRICS offers a forum where focusing on immediate issues of mutual interest (like the economy) has grown to include noneconomic areas, such as national security.

Finally, BRICS offers a level of visibility into members' views by offering a structure to group them as a bloc—for instance, China's and India's historical and continued insistence on independence from the U.S.-led order meshes well with Russia's anti-U.S. stance.

Consequently, BRICS continues to remain both functional and tangibly beneficial to its member states. Each country's top leader attends the summit every year, and before G-20 summits and IMF and World Bank meetings, BRICS members have held preparatory meetings to discuss their positions. During the 2008 financial crisis, such preparatory meetings helped BRICS make unified recommendations for governance reform that were subsequently adopted by the IMF and in the G-20.

BRICS also began to discuss transnational security issues, such as drug trafficking; in 2016, for example, prior to the BRICS summit, the heads of the member countries' anti-narcotics agencies met to discuss and adopt best practices and form an anti-drug working group. This year, that group added the misuse of the dark web and other technologies as top concerns in drug smuggling. On key security threats, including terrorism, BRICS have kept communication channels open, with BRICS national security advisors having met on a regular basis since 2009.

Despite gloomy predictions, BRICS made good on its 2012 promise at the Delhi summit to create new financial institutions, establishing the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) in 2014. The NDB is the first bank founded by developing countries. Although recent, it has been able to establish partnerships with other development banks, such as the Asian Infrastructure Investment Bank and the World Bank, and is attempting to innovate by marketing itself as more attractive to developing countries than Western banks.

For example, the NDB offers policies like lending in local currency, which protects the borrowing country from the stronger U.S. dollar, and allows borrowing countries to set the standards for environmental and social compliance rather than having such standards imposed on them. The CRA, with capital of more than $100 billion, is meant to help members withstand any short-term balance-of-payment pressures.

This is not to say BRICS is infallible—particularly given border tension escalations between China and India and those two countries' disagreements on the Belt and Road Initiative in South Asia.

Despite this, BRICS is likely to continue and flourish precisely because of broader geopolitical dynamics. The United States' strategy with respect to containing China has focused on security, whether through the Quadrilateral Security Dialogue, NATO, or the now so-called AUKUS deal. But China is focused on a long-term economics game through infrastructure, investment, and building close networks with political elites in many developing countries (by providing, for example, professional training in different vocations as well as scholarships to students).

The BRICS agenda lines up with this strategy, and its members are unlikely to push back. As of this year, China has overtaken the United States as India's number one trading partner. Although India does not want a China-dominated order, it also does not want to openly ally with the United States against China. Russia has an excellent relationship with India and has grown closer to China. Brazil and South Africa have little to gain economically or politically by turning away from BRICS.

Nor is BRICS doomed by a mere dint to China's status as the dominant country any more than NATO is by the United States as the dominant country. For BRICS to lose significance, the United States would have to offer those members most suspicious of China—India and Brazil—attractive multilateral arrangements that would give them weight and due importance in global governance. Outside of this, there is little motivation for BRICS members to downgrade their commitments.

If U.S. President Joe Biden wants the United States to lead the liberal international order again and stymie China's rise, he would do well to remember that international order is not a monolithic entity but comprises different groupings of power that jockey for influence.

BRICS is one such grouping whose individual members carry far more significant weight in international politics than, say, many who have joined China's Belt and Road Initiative. And it offers members who are wary of a rising China the ability to keep an alternative path for cooperation with Beijing open. As such, the United States would be wise to pay closer attention to BRICS's trajectory.

BRICS amidst India-China Rivalry / Raj Verma and Mihaela Papa (БРИКС среди индийско-китайского соперничества / Радж Верма и Михаэла Папа) / United Kingdom, October, 2021
Keywords: expert_opinion, cooperation, political_issues
United Kingdom

Authors: Raj Verma and Mihaela Papa

In only a decade, the BRICS group has achieved policy coordination among five very disparate countries and has started presenting a serious challenge to the status quo in global governance. It is now collaborating on many policy issues and delegating authority to a range of BRICS organizations. Since the inception of BRICS, the protracted India–China rivalry has cast a dark shadow over the group. In the aftermath of the India–China standoff in Ladakh, especially the Galwan Valley clash evoking memories of more serious clashes such as those at Nathu La in 1967 and even the 1962 border war, a crucial axis of BRICS cooperation – the India–China relationship – has deteriorated. This Special Section examines whether the India–China rivalry will render BRICS dysfunctional. Will the BRICS group be broken? The contributors will analyse whether BRICS can be a pacifying force and outline the prospects for the development of BRICS in light of the India–China crisis.

Dialogue with China is Russia's foreign policy priority — upper house speaker (Диалог с Китаем - приоритет внешней политики России - спикер верхней палаты) / Russia, October, 2021
Keywords: quotation, cooperation

Valentina Matviyenko pointed out that the Russian-Chinese relations of comprehensive partnership and strategic cooperation are based on long-standing traditions of friendship and trust

MOSCOW, October 1. /TASS/. Strengthening the dialogue with China meets the objectives of ensuring the national security and sustainable socio-economic development of Russia, Federation Council (the upper house of parliament) Chairperson Valentina Matviyenko said in a message to Chairman of the Standing Committee of the National People's Congress of China Li Zhanshu on the occasion of the National Day of the People's Republic of China.

"Strengthening the dialogue with friendly Beijing is an unconditional foreign policy priority of Moscow, a long-term course that meets the objectives of ensuring national security and sustainable socio-economic development," Matviyenko wrote.

She pointed out that the Russian-Chinese relations of comprehensive partnership and strategic cooperation are based on long-standing traditions of friendship and trust. "The successful cooperation of our states on current issues of global and regional agendas, including within the framework of the UN, BRICS, SCO and other international associations, serves as an important factor in maintaining international stability and security, strengthening international law and order," the Federation Council Chairperson said.

Matviyenko also stressed that the mutual desire of the people of Russia and China to maintain and develop friendly relations based on the principles of good neighborliness and mutually enriching cooperation remain unchanged, as well as the desire of Russian senators to deepen an open and constructive dialogue with Chinese colleagues.

"The inter-parliamentary commission on cooperation between the Russian Federal Assembly and the National People's Congress of China ensures the interaction of legislators, including on interregional issues, promotes the implementation of bilateral intergovernmental agreements. I am sure that the seventh meeting of the inter-parliamentary commission, which we will soon hold, like all previous meetings, will be successful and productive for both sides. We hope that close and productive joint work on the issues included in the agenda will open up additional opportunities for inter-parliamentary cooperation," Matviyenko concluded.

Investment and Finance
Investment and finance in BRICS
Emirates News Agency – Brazil-UAE bilateral trade defies pandemic, with 33% rise in first 8 months of 2021: Brazilian VP (Агентство Emirates News Agency - Двусторонняя торговля Бразилии и ОАЭ преодолевает пандемию: за первые 8 месяцев 2021 года рост составит 33%: вице-президент Бразилии) / UAE, October, 2021
Keywords: economic_challenges, expert_opinion

DUBAI, 3rd October, 2021 (WAM) -- The economic relations between Brazil and the United Arab Emirates have successfully overcome the negative impacts of the global pandemic, with bilateral trade witnessing a 33 percent increase in the first eight months of 2021, compared to the same period last year, according to a top Brazilian official.

In an exclusive interview with Emirates News Agency (WAM), Brazilian Vice President Hamilton Mourão added that the bilateral investments also had an upswing, with UAE's investments in Brazil exceeding US$10 billion.

"We have very solid economic relations which can be seen in the growing flows of trade and investments. I see it as extremely positive. The UAE is Brazil's third-largest economic partner in the Middle East in 2020, with bilateral trade reaching US$2.8 billion," revealed the Vice President who is on a four-day working visit to the UAE.

"This year we can see a strong increase in bilateral trade that reached US$1.8 billion in the first eight months [until August], it is plus 33 percent compared to the same period last year. So we are progressing [despite the global pandemic]".

As WAM reported earlier the Brazil-UAE bilateral trade in 2018 stood at US$2.6 billion, which went up to US$2.81 billion in 2019. The US$ 2.8 billion trade in 2020 shows that there was only a negligible decrease compared to 2019, although the global pandemic heavily affected the global trade last year.

The Vice President explained that Brazil this year exported to the UAE, mainly poultry and meat, which constituted 38 percent of total exports, gold (17 percent), and beef (12 percent). In turn, Brazil imported mainly platforms and vessels (62 percent), petroleum (22 percent) from the UAE.

The UAE's estimated $10 billion investments in Brazil is a good development, Mourão noted. About Brazilian investors in the UAE, he said more than 30 Brazilian companies have operations here. "The number can go up and have to go up," he said, however, figures related to Brazilian investments in the UAE were not readily available with him.

The Vice President inaugurated the Brazilian Pavilion in the Expo 2020 Dubai on Friday evening.

UAE's entry to BRICS bank a milestone

Talking about the relevance of the New Development Bank (NDB) set up by the BRICS group of nations admitting the United Arab Emirates in September, Mourão said, "Other countries are looking with envy at the UAE. They want to join the NDB, too. The UAE's membership is a milestone in the bank's expansion plans to be the premier development institution for emerging economies."

BRICS is an informal association of five major emerging economies: Brazil, Russia, India, China and South Africa.

"The UAE is an expansive financial centre and one of the world's most dynamic economies, and now it has joined the NDB in the first membership expansion of the bank," the Vice President pointed out.

The NBD, since established in Brazil in 2014, aims to mobilise resources for infrastructure and sustainable development projects in developing and emerging countries, he explained.

The bank has approved about 80 projects in its member countries, which is about a US$30 billion portfolio covering areas such as transportation, sanitation, clean energy and urban development, Mourão noted.

The Expansion of NDB Membership: First Wave of BRICS+ (Расширение членства в НБР: первая волна БРИКС +) / Russia, September, 2021
Keywords: ndb, expert_opinion, brics+
Author: Yaroslav Lissovolik

The near term priorities for the expanded NDB will need to focus on countering the pandemic crisis. This in turn raises the importance of sectors such as healthcare, digital economy development and other projects that are related to the development of human capital. There will also be more scope to deliver a strong contribution to the evolving "green/ESG transformation agenda", writes Valdai Club Programme Director Yaroslav Lissovolik.

Perhaps the most important developments associated with joint actions of the BRICS economies to counter the crisis of the Covid pandemic have been associated with the operations of the BRICS New Development Bank (NDB). In particular, the Bank has extended anti-crisis loans to counter the pandemic to its members and forged ahead with issuance of financial instruments in BRICS national currencies. But perhaps the most significant stride undertaken by the BRICS in the past several years was the expansion in NDB's membership this year, which effectively sets off the institutionalization of closer ties between the five BRICS economies and their partners from the developing world.

The first non-BRICS members to be admitted to NDB were Bangladesh, Uruguay and the United Arab Emirates. Earlier discussions about the admission of new members largely centred on the expediency of inviting those economies that are regional partners of BRICS. This was to provide sufficient scope for the implementation of connectivity infrastructure projects between BRICS core members and their regional neighbours. Closer regional alignment also potentially strengthens positive spillover and synergy effects across countries in undertaking "integration projects".

The other approach advocated a more diverse strategy targeting primarily those economies with high reserves and a strong credit rating. The latter would then redound to the overall rating of the NDB bank and provide scope for contributions to NDB's capital.

In the end, the approach undertaken by NDB was a hybrid strategy of sorts which combined the regionalist approach with the strategy of bringing in countries with high reserves and credit rating. Uruguay and Bangladesh are the regional partners of Brazil and India respectively. They are part of the regional integration arrangements in which Brazil and India are members – MERCOSUR and BIMSTEC (Bay of Bengal Initiative for multi-sectoral technical and economic cooperation). These are also the economies that have common regional development institutions with BRICS economies – SDF in the case of Bangladesh and FOCEM in the case of Uruguay.

As for the United Arab Emirates, this economy has a sovereign credit rating of AA- from Fitch (outlook stable) and enjoys substantial reserves that are managed by some of the largest sovereign wealth funds such as the Abu Dhabi Investment Authority (ADIA). This provides scope for closer cooperation between the sovereign wealth funds of BRICS economies with those of UAE and more broadly between the BRICS countries and the Gulf region (Gulf Cooperation Council (GCC) economies).

Given the importance of the regional element in the expansion of NDB's membership there is likely to be an important role played by the respective regional offices of NDB. There may also be a need to explore the possibility of closer cooperation with all three new entrants via some of the other BRICS cooperation mechanisms, such as the BRICS Contingent Reserve Arrangement (CRA). This in turn could be based on greater cooperation/coordination between the BRICS CRA and the respective regional financing arrangements where NDB countries are members – in the case of UAE it is the Arab Monetary Fund, while in the case of Uruguay it is FLAR (Fondo Latinoamericano de Reservas).

The near term priorities for the expanded NDB will need to focus on countering the pandemic crisis. This in turn raises the importance of sectors such as healthcare, digital economy development and other projects that are related to the development of human capital. There will also be more scope to deliver a strong contribution to the evolving "green/ESG transformation agenda", particularly with such important actors in the oil sector as UAE.

The future trajectories of NDB's membership expansion are likely to follow the same hybrid strategy as in the first wave of admission. It could well be possible that in the coming waves of Russia's regional allies from the Eurasian Economic Union (such as Kazakhstan) could become new members of NDB. This in turn could reinforce the potential for NDB's cooperation with Eurasia's regional institutions such as the Eurasian Development Bank (EDB) and the Eurasian Fund for Stability and Development (EFSD). This in turn will lead the BRICS towards further stages of the implementation of a BRICS+ framework, whereby NDB cooperates with the regional development institutions (regional banks and regional financing organizations) in which BRICS economies are members.
NDB Board of Directors held its 32nd meeting (Совет директоров НБР провел 32-е заседание) / China, September, 2021
Keywords: ndb, top_level_meeting

On September 23, 2021, the Board of Directors (Board) of the New Development Bank (NDB) held its 32nd Meeting in a virtual format.

The Board welcomed the deposit of the Instrument of Accession by Bangladesh, which has become the first non-founding member of the NDB.

The Board of Directors approved a total lending envelope of USD 15.0 billion for 2021 and 2022, as informed by NDB's updated Financial Model.

NDB's LIBOR Transition Strategy was also adopted, and the Board noted the progress made in the preparation of the next General Strategy of the Bank.

The Management presented an update on the Bank's strategically diversified project pipeline in its member countries, as well as on project implementation and disbursement.

The Board also approved a loan of USD 300 million to JSC "Russia Housing and Urban Development Corporation" (DOM.RF) for the financing of affordable housing across Russia.

DOM.RF Affordable Housing Program

NDB's loan will address the quality affordable housing shortage in Russia by co-financing 1.5 million square meters of housing construction equivalent to about 35,000 apartments until 2023. This will support the efforts of the Russian Government's national project on "Housing and Urban Environment" aimed at expanding homeownership opportunities with NDB's loan improving living conditions for around 91,000 people.

Overall, the loan is expected to contribute to SDG 11 (Make cities and human settlements inclusive, safe, resilient and sustainable), specifically target 11.1 (Ensure access for all to adequate, safe and affordable housing and basic services).

The Program will be implemented by DOM.RF's fully-owned subsidiary, JSC "Bank DOM.RF", which would provide financing to developers for housing construction.

Background Information

NDB was established with the purpose of mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development.

According to the NDB's General Strategy, sustainable infrastructure development is at the core of the Bank's operational strategy for 2017-2021. The NDB received AA+ long-term issuer credit ratings from S&P and Fitch and AAA foreign currency long-term issuer rating from Japan Credit Rating Agency (JCR) and Analytical Credit Rating Agency (ACRA).

NDB headquarters building hand-over and move-in ceremony held In Shanghai (В Шанхае состоялась церемония открытия здания штаб-квартиры НБР) / China, September, 2021
Keywords: ndb, top_level_meeting

On September 28, 2021, the New Development Bank (NDB) and Shanghai Municipal Government celebrated a milestone in the establishment of the Bank's permanent headquarters, with the NDB Headquarters Building Hand-over and Move-in Ceremony. The ceremony was held in the NDB's new Headquarters Building at 1600 Guozhan Rd., Pudong New District, in Shanghai Expo Park.

The Ceremony was attended by Mr. Gong Zheng, Mayor of the Shanghai Municipal Government; Mr. Chen Yin, Executive Vice Mayor; Mr. Cheng Zhijun, NDB Director; as well as senior officials, Ambassadors, Consul Generals and diplomats from Brazil, Russia, India, China, South Africa, Bangladesh, United Arab Emirates and Uruguay.

The Permanent Headquarters of the New Development Bank has become an iconic building in the skyline of Shanghai. Innovation, efficiency and sustainability were amongst the priorities for the NDB HQ Building project. "This new NDB headquarters is much more than an office building. It is a powerful symbol of what emerging economies can achieve when they work together," said Mr. Marcos Troyjo, NDB President.

At the Ceremony, Mr. Liu Kun, Minister of Finance of China addressed the participants in a recorded video speech.

During the Ceremony, NDB and Shanghai Municipal Government signed the Use and Occupancy Agreement for the NDB HQ Building. The Agreement was signed by Mr. Zhou Qiangwu, NDB Vice President and Chief Administrative Officer, and Mr. Chen Yin, Executive Vice Mayor of Shanghai Municipal Government.

Background Information

NDB was established by Brazil, Russia, India, China and South Africa to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development. In 2021, NDB initiated membership expansion and admitted the United Arab Emirates, Uruguay and Bangladesh as its first new member countries.

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