Institution building, 'BRIC' by 'BRIC'

Editor's note: Warwick Powell is an adjunct professor at Queensland University of Technology and a senior fellow at Taihe Institute. The article reflects the author's opinions and not necessarily the views of CGTN.

The BRICS meeting in Kazan, Russia, is now behind us. Over 30 nations attended. A 134-clause Kazan Declaration was issued, outlining a comprehensive set of positions in relation to contemporary global challenges.

The Western mainstream media has largely struggled to settle on a position regarding BRICS. Initially, it tried to ignore the summit. It then sought to paint the event as a "Putin event," seeking to create the impression that it had little international weight. However, with over 30 nations in attendance, this line of reportage was hard to sustain. The last approach has been to continue to belittle BRICS itself and the outcomes of this summit.

On the contrary, however, the summit is evidence of the unyielding development of a multimodal world. There are at least four substantive dimensions worth noting.

Firstly, the BRICS 2024 meeting can be seen as a consolidation meeting, focused on laying the foundations for organizational sustainability as it deals with a growing membership, growing interest in membership and a growing presence on the global stage. To deal with these issues, BRICS 2024 delivered a broad array of institutions by way of bodies, sub-committees and formal mechanisms by which critical issues are to be addressed in the future. Interestingly, the distributed ethos of BRICS remains, as the group avoided creating anything resembling a permanent secretariat or administrative apparatus.

Secondly, the meeting affirmed a certain BRICS "feet on the ground" style, which is far less about grand gestures and media-friendly announcements, and more about the practical realities of driving global institutional reform. While BRICS did not reject or propose the need to "overthrow" prevailing international institutions, few who read the declaration would be in any doubt as to the fact that BRICS nations are dissatisfied with the prevailing institutional set-up and its discriminatory effects on developing economies. While the declaration never directly confronts the prevailing post-World War II institutions, and frequently speaks of creating institutions and mechanisms that will complement the existing world order, it is clear that BRICS is laying the groundwork for an alternative, should efforts to reform institutions like the World Bank and International Monetary Fund fail to materialize.

Thirdly, the meeting confirmed a determination to proceed with the development of new financial institutions to support the needs of members. These institutions focus on the mechanisms needed to enable the expansion of national currency-based cross-border payments for trade settlements. 

In the lead-up to BRICS, there was plenty of excitement about BRICS Pay and the "unit." Some parts of the independent media landscape promoted these as part of the new BRICS financial architecture. These claims are erroneous. These two projects have nothing to do with the BRICS nation states, their central banks or financial regulators, but are private projects. There is no new BRICS currency.

Fourthly, BRICS addressed the challenge of membership growth. Over 40 nations have in the past year reportedly expressed interest in joining BRICS. There is also a need to work through what new membership may look like and how it may affect questions of governance into the future. The outcome of the Kazan Summit was to issue invitations to 13 nations to become "partner states." These nations are: Türkiye, Indonesia, Algeria, Belarus, Cuba, Bolivia, Malaysia, Uzbekistan, Kazakhstan, Thailand, Vietnam, Nigeria and Uganda.

From the point of view of the Asia region, the invitation to four ASEAN nations to become partner states is significant. The four countries – Indonesia, Malaysia, Thailand and Vietnam – collectively have a population in excess of 500 million people. They also anchor one of the world's fastest-growing regions. Additionally, the overlapping membership between BRICS and ASEAN opens up opportunities for deepening economic collaborations that focus on driving security and prosperity as symbiotic objectives.

ASEAN is working on expanding seamless cross-border payment systems to enable the use of national currencies to settle intra-regional payments. These initiatives build on decades of work to strengthen regional financial institutions as a reaction to the Asian financial crisis of 1997, which exposed regional economies to dollar liquidity risks. With BRICS's own focus on national currency-based cross-border payment systems development, the opportunity is emerging to ensure interoperability between the ASEAN network and those that will be designed and developed for use within BRICS.

The expansion of the group not only consolidates a growing global heft in sheer population and GDP terms, it also creates greater intra-complementarities that will support a growing network of bilateral trading relations. A growing number of national "pairs" is underpinned by diverse economic bases, delivering trade-enabling complementarities. This real economy foundation is pivotal to supporting the resolution of liquidity issues, which the institutions associated with BRICS Clear will no doubt seek to address.

BRICS is here to stay. The institution building of the Kazan Summit lays the foundation for future sustainability. As the organization is based on a rotating chair or secretariat protocol, the institutions created can provide the operational continuity necessary to enable member states to contribute to and benefit from the development opportunities within the BRICS network.

While the BRICS Declaration did not explicitly state the need to replace the existing post-World War II institutions unless they could be reformed, it did make clear that, as far as the growing number of member states is concerned, there is both a need and a will to move forward with creating a "Plan B."