Russian Goals for BRICS: Then and Now

During the sixth BRICS summit last week in Fortaleza, Brazil, the five BRICS countries agreed, as expected, to form both a development bank (named the New Development Bank) and a Contingency Reserve Arrangement (CRA). The agreements aim to minimize the role of traditional Bretton Woods institutions in the BRICS countries, and to lessen BRICS dependence on the US dollar as the global reserve currency. They mark the first true concretization of the BRICS partnership. Until now, the countries have formed working groups, announced plans, and criticized the status quo, but they had not succeeded in mounting a clear challenge or response. Although the agreements are only the first step – the bank is not expected to be operational until 2016 – they mark a clear turning point in the development of the group.

 

For Russia, this small success could not come at a more needed time. In much of the Russian press, the BRICS summit was described in glowing terms, with headlines such as “BRICS: a step towards a bipolar world” and “BRICS breaks the chains of the dollar.” To be sure, writers from other BRICS countries have taken similar approaches – one Indian official wrote that the bank has broken “the monopoly status” of the Bretton Woods institutions. But while other BRICS may revel in the symbolism of their new institutions, it is Russia who faces potential isolation from the dominant international system, and for whom BRICS may turn out to be an international lifeline.

 

This was not what Russian leaders had in mind when they proposed the first meeting of the-then BRIC foreign ministers on the sidelines of the United Nations General Assembly in 2006. From the very beginning of the BRIC transformation from an investment strategy proposed by Goldman Sachs to a political association, Russian scholars and leaders have talked about the group as a way of widening Russia’s diplomatic ties; many even wrote of trying to use Russia’s unique position as a member of both the G8 and BRICS to act as a bridge between East and West, between the Global North and the Global South.

 

This is not to argue that the Russian goal with regards to BRICS was all Kumbaya and global community. Without question, there has always been an obvious element of balancing in Russia’s approach to the BRICS group, and to argue otherwise would be naive. But until the most recent deterioration in ties between Russia and the historical West, the group was seen as a complement to Russia’s ties with the United States and Europe. BRICS was written about as a bargaining chip that increased Russia’s leverage during negotiations with the West, and was part of wider Russian efforts to diversify its diplomatic ties. Indeed, the whole idea of “multivector diplomacy,” of which Evgenii Primakov was the progenitor and of which BRICS is a paradigmatic example, grew out of a sense that in the early 1990s, Russian diplomacy had been too focused towards the Euro-Atlantic countries, to the detriment of Russia’s own national interests. However, as Russian-Western relations continue their downwards spiral in the midst of the fallout from Malaysia airlines disaster in Ukraine and worsening US sanctions, it might be worth asking whether Russia’s “alternative vector” will become its only choice.

 

Ironically, last week marked not only the creation of a body specifically designed to challenge the Breton Woods institutions; it was also the seventieth anniversary of the Bretton Woods Conference itself. It was during that conference that the dollar formally took pride of place as the global reserve currency. Although the Soviet Union had representatives at the Breton Woods Conference, the real stars of the show were Harry Dexter White (United States) and John Maynard Keynes (Great Britain); the USSR never ratified the IMF charter, and its formal association with organization did not begin until the later 1980s when Gorbachev, desperate for cash to prop up the ailing Soviet economy, began to make inquiries about joining (the USSR collapsed before it became a member).  Seventy years later, Russia has played a leading role in an international conference designed to rewrite the rules of the international economy. It remains to be seen what role these new institutions will play, and whether they – and the bloc they represent – will help mitigate the political and economic pressures that Russia faces from the leaders of the old guard.