The idea of the BRICS group ever challenging the US dollar is for the fairies as long as China and India remain so divided and refuse to cooperate on trade, the former Goldman Sachs economist who came up with the BRIC acronym told Reuters.
Russian President Vladimir Putin is using the summit of BRICS leaders to show that Western attempts to isolate Russia over the Ukraine war have failed and that Russia is building ties with the rising powers of Asia.
Then-Goldman Sachs chief economist Jim O’Neill introduced the term BRIC in 2001 in a research paper that underlined the massive growth potential of Brazil, Russia, India and China – and the need to reform global governance to include them.
“The idea that the BRICS can be some genuine global economic club, it’s obviously a bit out there with the fairies in the same way that the G7 can be, and it’s very disturbing that they see themselves as some kind of alternative global thing, because it’s obviously not feasible,” O’Neill told Reuters.
“It seems to me basically to be a symbolic annual gathering where important emerging countries, particularly noisy ones like Russia, but also China, can basically get together and highlight how good it is to be part of something that doesn’t involve the US and that global governance isn’t good enough.”
O’Neill, who admitted he would “have Mr BRICS stamped on my forehead forever”, said the BRICS as a group had achieved very little over the past 15 years.
He added that it was not possible to solve truly global issues without the United States and Europe – just as it was not possible for the West to solve truly global issues without China, India and, to a lesser extent, Russia and Brazil.
The BRICS group grew out of meetings between Russia, India and China which then began to meet more formally, eventually adding Brazil, then South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates. Saudi Arabia has yet to formally join.
The group now accounts for 45 per cent of the world’s population and 35 per cent of its economy, based on purchasing power parity, though China accounts for more than half of its economic might.
Putin opened the summit on Wednesday by saying that more than 30 states had expressed interest in joining the group but that it was important to strike a balance in any expansion.
Bringing in more members into BRICS would make achieving anything even harder, O’Neill said.
Dollar challenge?
Russia is seeking to convince BRICS countries to build an alternative platform for international payments that would be immune to Western sanctions.
O’Neill, 67, said people had been talking about alternatives to the dollar since he started out in finance but that none of the countries with the potential to challenge the dollar had done anything to seriously do so.
Any BRICS currency, he said, would be heavily dependent on China while Russia and Brazil would not be significant parts of it, he said.
“If they wanted to be really serious about economic matters, why don’t they genuinely pursue less tariff based trade between each other?” O’Neill said.
“I will take the BRICS group seriously when I see signs that the two countries that really matter – China and India – are actually really trying to agree on things, rather than effectively trying to confront each other all the time.”
India has tried to curb Chinese investments in the country since a decades old border dispute erupted into a clash between border guards in 2020. The two countries pledged to enhance cooperation on Wednesday in their first formal talks in five years.
Chinese President Xi Jinping told Putin the international situation was gripped by chaos but that Beijing’s strategic partnership with Moscow was a force for stability amid the most significant changes seen in a century.
O’Neill said the G20 had failed to become a sinew of truly global governance because the United States and China had both turned inwards since the middle of the last decade. BRICS, he said, lacked clear objectives and should take on major issues for humanity – such as finding vaccines or drugs against infectious diseases, or fighting climate change.
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