Why India Should Bet On A BRICS Future (And Let G20 Pass On By)
With the G20 in New Delhi around the corner, India risks finding itself the wrong side of history, and end up as an observer and not one of the drivers of a "once in a lifetime" change.
NEW DELHI — India may believe it is in strategic competition with China over leadership of the Global South but the recent BRICS meet made it clear who is calling the shots. Watching from afar, the U.S.-led G7 nations could see that China was the key determinant of the summit’s accomplishments and that their own influence over the developing world had diminished substantially.
The biggest unsaid gain made by China was the deft shifting of its global geopolitical game – based on "common prosperity and cooperative security" — from east Asia to the 54-nation African continent. The attendance of some 35 African nations at the Johannesburg summit as South Africa’s invitees, followed by 50 African nations attending the third China-Africa Peace and Security forum in Beijing on Aug. 29 is testimony to the attraction President Xi Jinping’s "Global Development Initiative" (GDI) and "Global Security Initiative" (GSI) hold for the Global South.
The focus of the China-Africa Peace and Security forum was on peacekeeping (most of China’s 2,700+ peacekeepers are in Africa), counterterrorism, cyber security, humanitarian aid and military education.
Thus, in contrast to, say, the French forces fighting in the former colonies of Mali and Burkina Faso, the Chinese People’s Liberation Army (PLA) is providing training, self-defense weapons, and military education to accomplish security through development. With its focus on ‘cooperative security’, Beijing hopes to secure Chinese infrastructure, interests and citizens working there.
The BRICS advantage
The big headline from the summit was the arrival of BRICS Plus, with six new members from the Middle East, Africa and South America — Saudi Arabia, the UAE, Iran, Egypt, Ethiopia and Argentina — joining from Jan. 1, 2024. However, the bigger story is that despite political and ideological differences, many nations from the Global South are queuing up to join the organisation which is just 15 years old. They hope, and perhaps rightly so, that collective and interdependent prosperity will cap differences, such as the ones between Saudi Arabia and Iran or between Egypt and Ethiopia over Nile.
There are three reasons for BRICS’s growing appeal for.
First, nations of the Global South want prosperity by new economy, which is a mix of physical and digital economies by use of Artificial Intelligence and big data. Their assessment is that China, which is seen as the driver of BRICS, can give them this.
Second, the weaponization of the U.S. dollar against Russia has made many nations realize the need to boost trade in local currencies, especially through institutions like the New Development Bank (NDB), which is the BRICS bank.
Third, the selective approach of the U.S. and its allies towards war and occupation means global trust in the West’s so-called "rules-based order" has diminished.
China’s Africa strategy
While rich in minerals and commodities, the African nations are the poorest in the world. They were exploited by the industrialized western nations who exported their mineral wealth for a pittance in return. Instead of helping them with sustainable economic development through infrastructure and capacity building, the West, especially the U.S., exploited them economically. They also assumed the moral high ground, by lecturing them on democracy and human rights when expedient while ignoring similar violations elsewhere. The West also erred in treating the entire continent (with some exceptions) as a monolithic entity.
The U.S. could lose the fourth industrial revolution race to China
In its two-decade-long association with the African continent, China changed the way of doing business. It understood that each of the 54 African nations were unique and needed to be addressed individually. At present, 50 African nations have joined or have an understanding with China on the Belt and Road Initiative (BRI). Through the latter, roads, railways, bridges, hospitals, schools, and airports, etc., have been constructed in Africa, which has boosted trade, increased job creation, improved transportation, education and health among African countries. China is Africa’s top trading partner, with an annual $300 billion trade.
Working under the GDI, China built the New Industrial Revolution Innovation Centre in Xiamen to further cement the BRICS partnership with focus on African nations. In 2022, China hosted the forum on the development of industrial internet and digital manufacturing with big data for sustainable development, concluded the digital economy partnership framework, issued the initiative for cooperation of digitization and manufacturing, and agreed to establish a network of technology transfer centres and data centres to further South-South cooperation. The purpose of all this is to prepare African nations for the industrial internet and smart logistics as part of the fourth industrial revolution. Earlier, China attempted this piecemeal in ASEAN (starting Alibaba Cloud, Malaysia’s first global public cloud platform, and setting up its first data centre in Indonesia), but geopolitical divisions within the 10 members grouping did not produce optimal results.
The promise of a fourth industrial revolution
Mobile broadband, underpinned by 5G wireless communications, is the enabling technology for the fourth industrial revolution which comprises the fusion of physical and digital economies. It essentially has four components for speedy, efficient, and cost effective trade and commerce: (1) use of industrial robots, AI, big data, and the internet of things for smart manufacturing; (2) smart logistics with fully automated ports where automated cranes move containers from automated warehouses to autonomous (driverless) trucks; (3) smart solar panels (solar parks being considered for funding by the NDB) to reduce cost of green energy for heating and cooling; and (4) the digital yuan. With smart logistics and smart trade backed by blockchain technology (distributed digital ledger), the digital yuan could emerge by the end of this decade as a leading unit of account in the Global South and perhaps even world trade.
To put this into perspective, China’s Huawei 5G roll out both for industrial (industrial internet) and private (mobile internet) use is far ahead of the U.S. and western nations. With the recent breakthrough in indigenous 7nm chip, scalable production will become possible for use in data centres which require large numbers of high-performance computing, storage and server chips. Moreover, China leads the world in use of industrial robots. And it was the first nation to introduce a Central Bank Digital Currency (CBDC).
Another area where China says it can help the Global South is in internet security. It is evident that the global internet —matrix of telecommunications, fibre optic cables, subsea cables, and satellite network — will get fragmented into perhaps a U.S.-led, China-led, and maybe a European Union-led internet. The reason for this is that each grouping will safeguard its data which runs through the internet from cyber and information operations. Data is the source of geopolitical power and competition; it is seen as central to economic and national security. Given this, China, ahead of the U.S., has rolled out comprehensive regulations on cyber security, data security, personal protection, and even generative AI. In short, there is a strong case to argue that the U.S. could lose the fourth industrial revolution race to China, and the Global South nations who are lining up to join BRICS are aware of this.
India's Prime Minister Narendra Modi speaking at a conference ahead of the G20 Summit in New Delhi
Leveraging China’s financial clout
To support the Global South’s new economy, the importance of the BRICS bank or NDB, which is in its eight-year of existence has grown substantially. This is a consequence of the Ukraine war which, to the US’ and western nations’ chagrin, has delivered unexpected results from sanctions on Russia. Today, Russia has emerged as one of the fastest growing economies of Europe (owing to energy sales to Asian nations), while Germany, which is the largest economy of Europe, is in recession. Moreover, non-western nations, which have not supported the U.S. view on the Ukraine war, have realised they need to find a way out of dollar dominance (and the U.S.’s arbitrary confiscation of their dollar reserves). One option is totrade in local currencies within the framework of BRICS, the Shanghai Cooperation Organisation (SCO), and the Eurasian Economic Union (EEU). For example, the NDB has already issued yuan-dominated bonds worth 8.5 billion ($1.2 billion) and hope to issue rupee and rand denominated bonds by end of 2023. NDB officials were recently in Delhi and Mumbai (for discussion on policy and regulations) to hasten the issuance of rupee bonds.
Two issues that require immediate attention are (a) the need to develop cyber secure and reliable industrial chains and strategy to link BRICS, SCO, and EEU nations, and (b) from India’s perspective, the time has come to decide which fragmented internet it chooses to be with. India has already rejected Huawei 5G on political grounds; no security issues were flagged by Indian cyber regulatory on technical examination. India’s 5G has 100% electronics (hardware) imported from different countries, which may not be acceptable in the BRICS industrial chains.
In terms of achievements, the NDB has cleared 98 green infrastructure projects worth USD 35 billion, of which 35% are in local currency, mostly yuan. Focussed on climate friendly projects, the NDB is considering big projects which help numerous nations. Thus, instead of individual solar projects, it is considering, say, a large solar park, perhaps in the Sahara Desert, which can benefit the entire African continent. And, importantly, the NDB works in close collaboration with the Asian Infrastructure and Investment Bank (AIIB), established in 2016 with headquarters in Beijing. According to former U.S. treasury secretary Larry Summers, the AIIB’s establishment “may be remembered as the moment the US lost its role as the underwriter of the global economic system”. The AIIB’s governing principle — that the largest contributor to the multilateral organisation gets the largest say in running it — would ensure that China, which has initially committed $50 billion of the total corpus of $100 billion, would rule the roost.
U.S. strategy in Pacific and Indian Ocean
All this is happening against the backdrop of the decline of American power. The reality check on this is provided by the schizophrenic foreign policy of the Biden administration. It wants its annual $700 billion trade with China to continue, but it is not willing to lift technology sanctions on China — on the pretext of safeguarding its security — which would help it leapfrog into the fourth industrial revolution. Since the third industrial revolution, based on communications and computation was driven by the U.S., Washington cannot reconcile to the idea of China leading the next revolution based on AI and big data, which, though entirely different, builds on the third revolution.
Backed by its security establishment (including its massive defense industrial complex), the U.S., unable to compete with China’s BRI, GDI and GSI, has decided to play to its strength: military power (deterrence). The U.S.’s proxy war against Russia, fought at the expense of Ukrainian lives, cannot succeed since Russia is not any another nation. Russia remains a global major power (like the U.S. and China) with landmass across eleven time zones, thousands of nuclear weapons, huge energy reserves, a vibrant defense industrial complex, and with determination (as seen in the 1942 battle of Stalingrad which changed the course of World War II) to defend its sovereignty.
BRICS is dynamic and evolving, whereas the G20 is loosing its sheen.
Moreover, the U.S. which has assessed China to be its primary pacing threat, is doing its best to provoke China into war under the guise of strengthening its deterrence against it in the west Pacific and Indian Ocean Region. The Biden administration has created and strengthened numerous military blocs like the Quadrilateral Security Dialogue (QUAD), AUKUS (Australia, United Kingdom, U.S.), JAPHUS (Japan, Philippines, U.S.), the trilateral military bloc of U.S., Japan, South Korea and so on. As part of its pivot to Asia, which continues from the Obama administration, the U.S. military has increased its strength in Japan, South Korea, Guam, and Philippines in both newly acquired bases and by rationalising existing ones. At present, of its 760 military bases across the globe with 2,50,000 troops, 313 bases surround China.
Unable to snap the strategic partnership between China and Russia, the U.S. has globalized NATO. The latter has forged military ties with Australia, Japan, New Zealand, and South Korea for interoperability between them. Worse, the Biden administration is equivocal on its stated "one China policy." According to the chairman of the U.S. joint chiefs of staff, Gen. Mark Milley, China is developing capabilities to unify Taiwan with China by 2027. This is a speculative statement. What if 2027 is the timeline that the U.S. is considering for starting a war with China?
BRICS backstory is not Goldman Sachs acronym
Coming back to BRICS, it is important to know its history, which is not what is popularly believed. According to the popular narrative, the acronym BRIC (Brazil, Russia, India, China) was first suggested by Goldman Sachs economist Jim O’Neil in 2001. Inspired by this, the foreign ministers of the four nations met on the sidelines of the UN General Assembly (UNGA) in 2006.
Digging deep, it would be fair to say that BRICS’s roots go back to the Russia-India-China strategic triangle first suggested by Russian Prime Minister Yevgeny Primakov in 2001. Primakov, a long-term foreign minister, was of the view that this strategic triangle would best serve Russia’s east vector interests. His suggestion was rejected by both India and China at the time as they assessed it as an anti-west tool to counter-balance the U.S. Russia once again presented the RIC format not as a strategic triangle, but as a trilateral dialogue mechanism on the sidelines of the UNGA in 2003, when it found favour with both India and China. Thus, it will be fair to say that the RIC trilateral dialogue mechanism helped the creation of BRICS.
What this means is that India’s peace and prosperity is linked to Asia, where BRICS as the progeny of the RIC, should not be abandoned in favour of G20. BRICS is dynamic and evolving, whereas the G20, which grew out of the G7, will lose its sheen without the participation of China and Russia. If India chooses to be on the wrong side of history, it will end up as an observer and not as one of the drivers of "once in a lifetime" change.
Pravin Sawhney is the author of "The Last War: How AI Will Shape India’s Final Showdown With China."
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