Latest news with #Brics+
Mint
a day ago
- Business
- Mint
Brics+ could get the globe to work out a better-balanced world order
Gift this article At first there were four. Then five. And now eleven. Egypt, UAE, Ethiopia, Iran, Saudi Arabia and Indonesia have joined Brazil, Russia, India, China and South Africa (collectively called Brics) in the newly expanded Brics+ group of nations. At first there were four. Then five. And now eleven. Egypt, UAE, Ethiopia, Iran, Saudi Arabia and Indonesia have joined Brazil, Russia, India, China and South Africa (collectively called Brics) in the newly expanded Brics+ group of nations. Brics+ is an eclectic grouping of countries. It owes its conception to a Wall Street report written a quarter of a century ago about the initial four 'Bric' countries and the promise of their economic prospects, mostly driven by demographics. What began as a clubbing meant for global investors to focus on has since evolved into a formal alternative platform for countries to counter Western dominance of multilateral institutions. This makes it an important forum for a post Pax-Americana world, if you will. Also Read: Brics isn't an anti-US forum, it's a voice of the Global South The group is as notable for its differences as for its common purpose. Its members make up 49% of the world's population and 41% of global output (in purchasing power parity terms). In many ways, Brics+ is at par with the G-7 in economic importance. A few members are outright adversaries of the West, such as China, Russia and Iran. Others like India, Brazil, Indonesia and the UAE are keen to retain their flexibility to swing both ways. Only India recognizes China as a competitor; all others have sought to befriend China through this group or keep their relations with it and the West on an even keel. Until the latest meeting in Brazil, Beijing was gradually exerting greater influence on the group. Its dominance was clear in the group's recent expansion. With Russia's support, China overwhelmed Indian and Brazilian hesitation, which resulted in the addition of six countries and 'non-voting partnerships' with 10 other nations. Even though Beijing's rhetoric is nuanced, its objective is clearly to push Brics towards a more stridently anti-Western stance. The goal of India (and Brazil) is to keep an alternate channel open, but not be seen as 'anti-West.' This jockeying for influence will continue within the group, with China assured an edge by its deep trade relationships with all other members. Also Read: Brics isn't out to build a wall but serve the Global South The Brics+ group of countries met in Rio de Janeiro at its 17th summit. All 11 members were represented at the meeting for the first time. However, the heads of state of Russia and China did not attend in person. Vladmir Putin, president of Russia, could only attend virtually because there is an outstanding warrant for his arrest for war crimes issued by the International Criminal Court. The absence of China's President Xi Jinping was a bit puzzling, since this was the first time he has not attended a Brics summit meeting and had played a very visible role in the earlier summits held in Russia's Kazan and South Africa's Johannesburg. Now consider the positions taken by Brics. Group communiques have consistently supported a two-state solution for the Palestine-Israel conflict and an expansion of permanent membership of the United Nations Security Council to include India and Brazil. In the financial realm, the group has emphasized the need to increase quotas of the International Monetary Fund and the shareholding of emerging and developing countries in the World Bank. US President Donald Trump leaned into the current situation by threatening a 10% additional tariff on Brics+ countries for their supposedly 'anti-American' approach. Of course, the situation might change, but Trump's words provided common cause to the 11 nations to strengthen their resolve. Trump seems to be playing a delicate game of trying to weaken the dollar so that America can export more, but doing so without losing the extraordinary privilege that issuing the world's top reserve currency bestows upon the US. Trump's choice of instrument to achieve such a balance is a policy of import tariffs, which is a blunt tool in this context and could create a lot of unintended collateral damage. Pessimists argue that Brics+ only represents a platform for 'transactional multilateralism." In the absence of shared values, a grouping of diverse countries such as this will dilute their individual stands on sensitive issues and reinforce only whatever can achieve a group-wide consensus. There is already some evidence of this in the group's careful wording on the Ukraine conflict, the non-reference to Pakistan on Pahalgam, a dilution of the two-state idea for Israel and Palestine in response to Iran's objection and a soft-pedalling on South Africa's permanent Security Council seat. Also Read: Brics for India: A trade springboard, not an anti-West wall Can Brics+ survive all the differences among member nations? Will it remain relevant in a world that has watched older post-World War II multilateral institutions turn dysfunctional? Paradoxically, the answer appears to be 'yes.' Even though member nations seem to have very different reasons for being part of this club, Brics+ still offers each country some value. For India, membership offers a way to align with other emerging economies, demonstrate leadership of the Global South, exert extra pressure on the UN for a permanent Security Council seat and retain strategic autonomy. For many developing nations, particularly in Africa and Asia, very few means exist to voice themselves on the global stage (other than trade groups). Imperfect as it is, Brics+ is one of the few forums based neither on a military alliance nor trade ties. Its primary purpose is rooted in geopolitics, with geo-economics playing a secondary role. That's why, Brics+ will keep playing a significant role—at least until the world figures out a new order. P.S. 'Nothing endures but change," said Greek Philosopher Heraclitus. The author is chairman, InKlude Labs. Read Narayan's Mint columns at Topics You May Be Interested In
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First Post
05-07-2025
- Business
- First Post
Trade, terror and the trust trap: Can India afford a reset with China?
As the Brics+ summit approaches, India's fragile reset with China faces fresh strain amid Chinese support for Pakistan and financial flows that could shape regional stability read more The timing of the Pahalgam attack—during an India-China rapprochement—reignited India's security calculus and raised doubts over whether such diplomatic efforts could be meaningfully sustained. Image: Reuters File On 6–7 July 2025, the expanded Brics+ leaders will convene in Rio de Janeiro; however, the summit's choreography has already been disrupted. Beijing has confirmed that Premier Li Qiang—not President Xi Jinping—will lead the Chinese delegation, while Indian Prime Minister Narendra Modi will attend in person. Xi's absence throws a spotlight on the still-delicate reset that New Delhi and Beijing began in late 2024. Whether the Rio summit can consolidate that tentative détente—or expose its limits—will shape both the tone of the meeting and the broader credibility of Brics as a platform for emerging-power coordination. STORY CONTINUES BELOW THIS AD Between late 2024, India and China began cautiously resetting their strained relationship, marked by a partial border agreement and a renewed focus on diplomatic and economic engagement. It aimed to de-escalate military tensions stemming from the deadly 2020 Galwan Valley clash, with both sides agreeing to reduce troop presence at select friction points. This was followed by foreign minister-level talks, working-level dialogues, and backchannel efforts to revive economic ties, under pressure from regional actors to avoid further escalation. Trade and investment re-emerged as key areas of re-engagement, highlighting deep but asymmetric interdependence. Bilateral trade remained high, with Indian imports of Chinese intermediate goods dominating the market, while India's trade deficit with China widened significantly. India's vulnerability to supply chain dependencies has become increasingly evident, particularly in sectors such as electronics, pharmaceuticals, and solar equipment. India also voiced its long-standing concerns over limited market access in China. It responded by selectively reopening its economy to targeted Chinese investments, especially in the electronics and infrastructure sectors. However, strategic mistrust persisted. On April 22, 2025, India was struck by a major terrorist attack in Kashmir's Pahalgam, killing 26 civilians. India accused Pakistan-based militants of responsibility and, within two weeks, launched 'Operation Sindoor' on May 7, 2025 – strikes on nine terrorist camps across the Line of Control in Pakistan and Pakistan-occupied Kashmir. The ceasefire on May 10 ended the immediate violence, but tensions have remained high since then. The timing of the attack—during an India-China rapprochement—reignited India's security calculus and raised doubts over whether such diplomatic efforts could be meaningfully sustained. Blood and Bailouts: Chinese Dollars, Deadly Dividends? Amid the India-Pakistan flare-up, Beijing has been overt in its backing of Islamabad. In a high-profile visit to Beijing in May 2025, Pakistani Foreign Minister Ishaq Dar met with Chinese Foreign Minister Wang Yi, who publicly reaffirmed China's 'ironclad' support for Pakistan's security. China simultaneously urged both sides to dialogue, but its message was clear: Pakistan is a close ally. For New Delhi, this duality—preaching restraint while funding and shielding Pakistan—undermines China's credibility as a stabilising actor. This diplomatic posture reinforces China's 'all-weather' friendship, even as India views Pakistan as a security threat. STORY CONTINUES BELOW THIS AD At the United Nations and other forums, China has also shielded Pakistan. For example, a March 2025 report noted that Beijing blocked India's UNSC proposal to sanction five Pakistan-based terrorists, including a key Lashkar-e-Taiba figure, and similarly blocked India's call to designate the Lashkar-e-Taiba (LeT)'s proxy 'The Resistance Front' (behind the Pahalgam attack) as global terrorists. The consistent veto of counter-terror measures at multilateral platforms adds another layer to India's frustration with the international rules-based order. China's economic investment in Pakistan underscores its strategic bond. Beijing is now Pakistan's largest bilateral creditor, with roughly US$29 billion in loans (~22 per cent of Pakistan's external debt). The flagship China–Pakistan Economic Corridor (CPEC), a Belt and Road Initiative (BRI) project, channels tens of billions more into Pakistani infrastructure; the latest figures top $60 billion in investment commitments. Chinese spending on power plants, railways, and the Gwadar port has become a mainstay of Pakistan's fragile economy. STORY CONTINUES BELOW THIS AD In key sectors such as energy, logistics, and telecom, Chinese capital has translated into strategic leverage, blurring the lines between commercial partnership and geopolitical patronage. In fact, in February 2025, Pakistani President Asif Ali Zardari's visit to China culminated in new agreements to expand trade and investment, accelerate China-Pakistan Economic Corridor (CPEC) projects, and deepen security cooperation, including in the areas of technology and education. These developments further anchor the China–Pakistan alliance at a time of rising India–Pakistan tensions. Subsidising Instability: IMF, Investments, and Islamabad's Asymmetry Pakistan's stability now depends heavily on Chinese financing and the International Monetary Fund (IMF) bailouts more than ever. This pattern of external financing is not limited to China. Just a day before the Pahalgam ceasefire, the IMF approved a $2.4 billion bailout for Pakistan—$1 billion under the Extended Fund Facility and $1.4 billion via its climate-focused Resilience and Sustainability Trust. While framed as support for macroeconomic stability and climate resilience, the timing raised serious questions in India. It reinforced a perception that Pakistan, despite its sponsorship of terrorism, continues to receive lifelines from global institutions without accountability or behavioural change. STORY CONTINUES BELOW THIS AD The sequence—from terror attack to retaliatory strikes and then IMF disbursement—seemed to reward belligerence rather than deter it. Critics argue that even if the IMF or Chinese funds are not directly used for military purposes, they ease budgetary pressure and free up resources that could be redirected toward defence and potentially militant infrastructure - in 2025, Pakistan's defence budget was set to rise by 18 per cent, even as it secured international financial support ostensibly for economic recovery. The IMF's long-standing technical neutrality in its engagements with Pakistan has become increasingly controversial. Despite 24 bailouts since 1958, meaningful reform remains elusive, mainly due to entrenched elite resistance, military dominance, and weak civilian oversight. Repeated IMF programmes have focused on macroeconomic stabilisation, while structural dysfunction has been left unaddressed. For India, the implications are grave: international financial institutions may be inadvertently subsidising a security threat. Pakistan's chronic crisis-response cycle—backed by both Chinese investment and Western liquidity—has not reduced its reliance on strategic proxies, but instead, risks sustaining them under the guise of economic stabilisation. STORY CONTINUES BELOW THIS AD Finally, Brics+ risks mirroring South Asia's own 'weaponised-bailout' paradox, where development rhetoric co-exists with permissive financing that enables destabilising proxies. The convergence of capital, conflict, and geopolitics in South Asia presents a dangerous paradox. As Pakistan leverages its strategic location to court both Chinese money and Western aid, India faces an increasingly asymmetric security landscape—one where conventional deterrence is undermined by financial impunity. The author is a research fellow at Observer Research Foundation. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost's views.
Business Times
12-05-2025
- Business
- Business Times
Investment implications of the rise of Brics+
INVESTING over the past three decades has relied on assumptions about three key dynamics that have underpinned the global order in the post-Cold War era: unfettered free trade, globalisation, and world peace being assured under the Western-led international system. These dynamics have been synonymous with the free movement of goods, capital, people and information, and the absence of systemic conflict between rival powers. Now, however, all three premises can no longer be taken for granted and are in fact being challenged at a time of profound change in the global geopolitical and economic order. US President Donald Trump's sweeping tariffs and China's stinging retaliatory measures are symptomatic of a new contest for global leadership that is reshuffling the geopolitical and economic world order. This tectonic transition is upending all these three dynamics, and a major rethink of the way we approach investing is due. Rise of Brics+ and tectonic transition in the geopolitical and economic order Originally a loose alliance of Brazil, Russia, India, China, and then South Africa, Brics+ now extends to an array of partner countries representing almost half the world's population. In an increasingly polarised world, Brics+ is developing as a counterweight to the G7 by giving agency and influence to countries in the Global South that are dissatisfied with the existing international system. Moreover, the coalition is gaining momentum as an entity by organising its collective resources and markets to challenge and disrupt the Western-led international system. This maturing alliance serves as a mechanism for China to reach important markets that are not politically aligned with the US and its coalition. Beijing's relationships help it secure access to crucial resources and to extend its influence – all while hedging against restrictions on access to US and European markets, or potential future sanctions. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Brics+ presents a formidable challenge to the West in many crucial areas: technology, energy resources, a broad range of critically important commodities, control of major maritime and trade chokepoints, expanded military capabilities, and favourable demographics. These compelling assets explain, in part, the Trump administration's focus on changing the established practices of the global economy. Under Trump, the US is seeking to slow the ascent of Brics+ and China before they become the dominant alliance in a new geopolitical era. The unipolar, post-Cold War period – centred on the US has ended. What comes next isn't certain, but for now it resembles at least a bipolar competition between the US and China, each with its respective coalitions. Investment opportunities The rise of the Brics+ is grounds to pause and reflect on the asset management practice, particularly as our analysis suggests this evolving coalition of nations and the increasingly fractured world order will have profound effects on the way we approach investing, and the way we categorise asset classes. We are accustomed to dividing assets into those from developed and emerging markets. Developed markets are widely seen as enjoying high liquidity, low political risk, high GDP per capita, advanced technologies and exports from a variety of sectors. Emerging markets are usually seen as offering high potential growth but lower liquidity and a narrower scope of investment opportunities, while carrying greater political risk and potential volatility. However, today's increasingly fractured world is marked by growing barriers to trade, the increased segmentation of markets, and an evolving set of growth drivers. This calls for a reframing of the way investment opportunities are considered to take a more thematic approach. Investment themes could now be present or absent in markets that were previously thought of as developed or emerging. In particular, investment opportunities are likely to revolve around the key determinants of future growth: technology, energy supply, commodities/resources and productivity advantages. While these drivers have always been important, their nature is changing. Growth in technology is increasingly chip- and AI-related; energy concerns not only fossil fuels but also green and nuclear energy; and commodities/resources include rare earths and minerals that are becoming highly sought after. Productivity advantages now come from AI and robotics. This means the mix of the growth drivers, and the intensity of their use, is changing. There is a lot more need now for energy, for example, due to new technologies that are energy intensive. The changing profile of growth drivers implies a corresponding reshuffling of the economic pecking order of countries and their industries. This requires that we think thematically about countries' exposure to the drivers of future growth. Some G7 and Brics+ members have compelling advantages in these areas, including natural resource endowments that distinguish them from other countries. China, with its strong grip on the production of the critical minerals and rare earths needed for the green transition, possesses many advantages. Brics+ levers of potential global influence also extend to maritime trade routes, energy resources and military capabilities. Trump's renewed interest in acquiring Greenland and keen interest in the Panama Canal can be understood in this context. At the same time, not all developed markets will be able to hold on to the sources of growth that got them where they are today. The rich natural resource endowment of Brics+ positions the alliance well to harness these future sources of growth, which will be highly prized in a fragmented world marked by divided economic clusters. If the coalition manages to effectively leverage the full array of tools and influence at its disposal, the gains in growth that the alliance has already helped some of its members achieve could spill over to a wider group of developing nations, accentuating the associated pivot away from Western-centric trade patterns. Thematic investing and private markets Economic resilience will be a national priority for many countries. They will be prompted to diversify and focus on their industrial strategies – as evidenced by Trump's promise to 'supercharge our domestic industrial base'. Efforts to bring production home are potentially inflationary in the short to medium term. Policy uncertainty and political risk are rising. Investors will need to think thematically about countries' exposure to the drivers of future growth: technology, energy supply, commodities/resources and productivity advantages. Relationships within and between coalitions are bound to change and evolve. Less globalisation and more restricted capital flows imply lower liquidity in the markets. The effect may be further intensified by the bigger role that private markets will continue to play. This new world will also have less risk sharing and a lower capacity to absorb supply chain shocks, or other disruptions. With higher volatility, the risk exposure of portfolios may need to be reduced going forward, thereby reducing the overall leverage that needs to be employed. The upshot of these shifting economic dynamics is a need to fundamentally rethink how we approach investing and how we define and categorise assets in asset classes. The increasing fragmentation of the world economic order and its polarisation may imply higher volatility, lower liquidity and potentially higher inflation as the competing poles try to build capabilities independently of each other. With fragmentation, the cost of capital could become more localised in each bloc, raising its cost. As the drivers of growth become increasingly thematic and divisions between the poles grow, the need for companies to go public may decrease as they seek to protect their intellectual property. With public and private companies each offering access to different segments of the market, this suggests a multi-asset approach to investing – using both private and public market securities – may be more conducive to capturing growth in the evolving economic and market conditions. All these developments suggest that to effectively access investment opportunities, one has to be more active and thematic as opposed to passive, changing the investing playbook of recent decades. The writer is head of Pictet Research Institute
