India Should Quit the BRICS

Following the BRICS’ recent announcement that it will add Saudi Arabia, Iran, Ethiopia, Egypt, Argentina, and the United Arab Emirates, India faces a big strategic choice. Why should it belong to a China-centric club that will no longer share or serve its own interests, writes Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics and Josh Felman Principal of JH Consulting.

The world’s most powerful leaders met in New Delhi, heralding the culmination of India’s G20 presidency. While the G20 has delivered very little since its early successes following the 2008 global financial crisis, there are two reasons why the group still matters for India.

First, Prime Minister Narendra Modi has turned the G20 presidency into a significant domestic issue by involving all India in the preparations. G20 posters featuring Modi are plastered nationwide, signalling his intention to present India as a key player on the global stage. The more that Indians are persuaded their country is a vishwaguru (teacher to the world), the greater the ruling party’s chances in upcoming state elections and next year’s national elections.

Second, India now faces a significant strategic choice, following the BRICS’ (Brazil, Russia, India, China, and South Africa) decision to add Saudi Arabia, Iran, Ethiopia, Egypt, Argentina, and the United Arab Emirates. Until recently, the BRICS was anomalous in design and ineffective (and thus harmless) in operation.

But BRICS+ is more politically focused, more China-centric in leadership, and more anti-West in motivation. Its composition is shaping its character. The question for India is whether it still makes sense to belong to such a grouping.

That answer is “probably not” for three reasons. First, consider the economics. The attraction of the original BRICS (South Africa joined in 2010) lay in its members’ economic dynamism. In 2004, Brazil, Russia, India, and China were booming. But today, the BRICS risks becoming a collective of fading stars. To be sure, many of the BRICS still have high levels of wealth. In particular, China, Russia, Saudi Arabia, and the UAE still have the resources to partner with and donate to poorer countries. But wealth alone is no guarantee of global economic influence. Just look at Japan. Developing and emerging economies aren’t particularly interested in a potential partner’s glorious past; they want to align with countries that are on the rise.

Undoubtedly, the BRICS of 2023 is much less dynamic than it was two decades ago. Gone are the days when China could effortlessly achieve 10Pct annual growth. The economic model that produced those spectacular results has broken down such that most analysts now expect secular growth of three per cent or less. Meanwhile, Russia has been in terminal decline for years – and now its war of aggression will enfeeble it further. Though Brazil is enjoying a boom on the back of higher commodity prices, it remains to be seen if its fortunes can be sustained.

As for the others, Argentina is yet again teetering on the edge of financial collapse, and South Africa remains saddled with astronomically high unemployment and profound governance and fiscal challenges. Egypt needs support from the International Monetary Fund to ensure any semblance of macroeconomic stability, and even Saudi Arabia and the UAE are living on borrowed time: a concerted global push on climate change will leave them stranded with devalued hydrocarbon assets.

In short, BRICS+ comprises a bunch of economic has-beens. The big exception is India, which is still proliferating, with long-term prospects that have improved markedly in recent years. Since it no longer has much in common with the other BRICS members, it should consider leaving for symbolic and practical reasons.

That brings us to the second big issue: politics. The new BRICS+ shows every sign of becoming more political, and in ways that pose serious problems for India. Its increasingly China-centric, anti-Western orientation runs counter to India’s longstanding principle of non-alignment. Maintaining equidistance from rival power blocs has always been a central tenet of Indian foreign policy, which it has upheld even in Russia’s war on Ukraine.

To Modi’s enormous credit, India has managed to move closer to the United States and Japan while maintaining its relations with Russia; it has also deepened its ties with Israel and forged better relations with Egypt, Saudi Arabia, and especially the UAE. Is India prepared to jeopardize this success to remain a member in good standing within the enlarged BRICS+?

Moreover, apart from Argentina and Ethiopia, the new members are all autocracies, which matters now that the group is becoming more political. Does India want to belong to an authoritarian club? Notwithstanding its political backsliding under Modi, it still counts democracy as its international calling card.

The third reason to quit the BRICS is global governance. There is no longer any doubt that the US- and G7-led international order is unfit for purpose. After all, multilateral financial institutions do not give nearly enough voice to rising powers; multilateral trade institutions have been undermined through unilateral protectionist measures; and interdependence itself has been weaponized in the name of US national security.

But even if India would prefer a new world order, its vision would not coincide with that of China, Russia, or Saudi Arabia. The other BRICS members aspire to dethrone the US dollar as the world’s dominant currency and provide alternative development resources and emergency funding to poorer countries. But these objectives imply that a better world would be based on renminbi dominance, Belt and Road Initiative-type lending, and a greater reluctance among official creditors to write off debts when poorer countries face crises.

These solutions are not better than the status quo; from India’s perspective, they are almost certainly worse. How would India benefit from replacing US dominance with Chinese dominance? By lending its weight to BRICS+, it would become complicit in supporting China’s geopolitical aspirations.

Since India already eschewed membership in the China-centered Regional Comprehensive Economic Partnership, aligning with China in a quasi-political grouping would be odd. The feeling is mutual: Chinese President Xi Jinping and Russian President Vladimir Putin have skipped the G20 summit.

That should make India’s choice more accessible. The G7 is outdated, and BRICS+ is no alternative. Tedious and performative though it has become, the multilateralism of the G20 remains a sliver of hope in navigating a new world of fragmented disorder.

As an assertion of its emerging strength, India should leave the BRICS. And, as a signal of its commitment to constructive alternatives, it should strive to make the G20 a success.

11th Year • September 2023 • No. 121 EBR

Arvind Subramanian

is a senior fellow at the Peterson Institute for In- ternational Economics

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