The Delhi Declaration by leaders at the summit of Brazil, Russia, India, China and South Africa — a five-nation grouping known by the acronym BRICS — marks a decisive vote away from starry-eyed notions of political ideology reminiscent of the Non-Aligned Movement, to forging bonds based on mutual economic benefit. It reinforces the principle that crystallising a common stand purely on geo-political considerations lacks the sheen that only greater economic integration can bring about. In the circumstances, the emphatic message from the BRICS trade ministers that they were not bound by any US sanctions on Iran, and any decision to stop oil purchases from the latter can only be taken by the United Nations Security Council, assumes significance. The logic offered here was purely economic: Since Iran supplied up to a fifth of the oil requirements of the two countries, it was not in their interest to allow the current situation there to “escalate into conflict”. Hence, the need to settle the issues around Iran's nuclear programme “through diplomatic means and dialogue”. The same pragmatic considerations weighing against any “unilateral steps” by western powers in other parts of West Asia were highlighted in the declaration emerging from the two-day summit.
The other major initiative taken at the summit involved signing agreements promoting use of local currencies for extending credit and carrying out trade with one another. These are intended to “reduce the demand for fully-convertible currencies (read dollar and euro) for transactions among BRICS nations”. Again, this is not really an outlandish idea. China has made no secret of its desire to promote the use of its currency internationally to compete with the US dollar. It has started looking at extending trade loans in renminbi, which comes even as Reliance Communications recently secured loans from a host of Chinese banks to refinance about $1.2 billion worth of foreign currency bonds otherwise due for redemption. The inability to make payments for Iranian oil on account of US and European Union sanctions is also driving India to explore alternative settlement mechanisms, including barter and paying in rupees.
The coming together of China and India in a grouping such as BRICS may not signal any shift in their more vexed political equations. But the two, between them, account for over 14 per cent of the world's GDP and 36.5 per cent of its population. Throw in Brazil, Russia and South Africa as well, and the ratios for the combined BRICS economies climb to 22 per cent and 43 per cent, respectively. There is legitimacy, therefore, to any partnership between them that attempts to broaden mutual economic engagement and also redraw power equations in institutions of global governance, currently heavily tilted in favour of developed Western nations. Moreover, the fact of their being drawn from Asia, Africa, Europe and Latin America lends a transcontinental character to BRICS that makes it a more representative platform compared to rich-country blocs like the G-7 or Organisation for Economic Cooperation and Development. All this could just be the start.