ISSN 2330-717X

BRICS In Russian Foreign Policy – Analysis

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By Nivedita Kapoor

Since the 2014 breakdown of relations with the West, Russia has re-oriented its focus towards non-western institutions, further cementing its move away from post- ‘Cold War’, western-dominated order. This move has also been prompted by economic compulsions and a need to fulfil its own ‘national development goals.’

This has resulted in Russia initiating the Eastern Economic Forum (2015), expanding trade agreements of Eurasian Economic Union (EAEU) and introducing the ‘Greater Eurasia’ project (2016). The expansion of SCO, annual BRICS meetings, informal BRICS leaders’ summit, and revival of RIC leaders’ meeting on the sidelines of G20 (2018) – all are indicative of Russia’s continued involvement in policies designed to position itself as an important power in the creation of a multipolar world order.

Thus, despite no major announcement coming out of 2019 BRICS summit, the grouping remains of continued relevance to Russia. Even though Russia’s desire to focus more on political issues within BRICS has not materialized with economic issues dominating the discussions, the importance to the former superpower of belonging to a club of ‘influential,’ ‘non-western powers’ cannot be understated. In this context, Russia – which took over the chairmanship of the grouping for 2020 – has declared its intention to pursue ‘expanding foreign policy coordination’ among members on key international platforms particularly the UN during its presidency.

BRICS is an integral part of Russian attempts to pursue a multi-vector policy that is not reliant solely on western dominated institutions. This was reflected in the 2013 approval by President Vladimir Putin of the Concept of Participation of the Russian Federation in BRICS. Identifying the organization as a ‘key long-term foreign policy vector’ for Russian policy, it listed the strategic objectives of the country in BRICS as follows:

  • Reform of international monetary and financial system to facilitate economic growth of Russia.
  • To progressively expand the foreign policy cooperation with BRICS partners.
  • Use BRICS participation to enhance the multi-vector character of Russian foreign policy and strengthen international positions of the country.
  • Through BRICS, promote bilateral relations with member states.
  • To widen the Russian cultural presence in the world.

The BRICS members have taken a united position on reform of the international monetary system and the process is ongoing. The involvement in BRICS has helped Russia to initiate regular contact – especially in the case of Brazil and South Africa. While Indian and Chinese leaders already meet regularly with Russian leadership, the annual summits become yet another location to touch base – further helping in discussing bilateral issues face-to-face.

A new regional office of the New Development Bank (NDB) was opened in Sao Paulo and Moscow is next in line to get one in 2020. Russia has steadily maintained its involvement in NDB, with loans worth $840 million being approved in 2018 for Russia. These include the sectors of environmental protection, urban infrastructure and water, sanitation and flood protection. Four other projects are also ongoing in the areas of energy, transportation, social infrastructure and clean energy. In fact, Russia has been an enthusiastic participant in the activities of NDB, with its cumulative borrowings only behind India and China.

Source: NDB annual report, 2018
Source: NDB annual report, 2018

The 2019 Brasilia declaration also noted a BRICS survey on an International Payments System, which currently largely takes place through SWIFT. Russia has taken the lead in developing an alternative to it in the aftermath of western sanctions over the Ukraine crisis in 2014, when there was a threat of it being cut off from SWIFT. This resulted in formation of System for the Transfer of Financial Messages (SFPS) for carrying out bank-to-bank transfers that came into force in 2017. It is unclear as of now what form the BRICS mechanism will take.

The BRICS Local Currency Bond Fund, which will facilitate use of national currencies in intra-BRICS trade saw no concrete announcement. The members only noted the progress made during the year, as was the case in 2018 declaration. Russia again has been a leading proponent of the trade in national currencies, as seen at the bilateral level, and has been even reducing its reserves from US dollars to the Chinese RMB. Having assumed the chairmanship of BRICS for 2020, Putin has announced the intention to carry forward the work on these economic issues and further expand cooperation, including updating the Strategy for BRICS Partnership in Trade and Investment approved at the 2015 summit.

As 2019 BRICS summit focused on economic growth, the Russian president noted that Russia’s trade with BRICS countries reached $125 billion in 2018. However, out of this, $108 billion consists of trade with China who has emerged as Russia’s closest partner in recent years. The benefits of intra-BRICS trade, which the Indian Prime Minister Narendra Modi has called for increasing to $500 billion by 2020, have been less than apparent in the case of Russia’s economic ties with other countries.

Source: UN Comtrade
Source: UN Comtrade

Yet, at $5 billion, Brazil represents one of the closest trade relationships Russia has in Latin America – alongside Mexico. Seven per cent of Brazilian arms sales between 2008 and 2018 came from Russia putting it behind Germany, the US, France, UK, Israel and Italy. India continues to be an old, close strategic partner with a deep defense relationship that has resulted in mutual arms deals to the tune of $14.5 billion in 2018-19. Both the sides are also attempting to improve the economic partnership.

South Africa currently is not a major arms importer for Russia, having placed only a $50 million order in 2014 in the past decade. This puts Russia behind Sweden, Germany, UK and the US with a share of $684, $258, $92 and $58 million respectively in the list of arms exporters to South Africa. For the first time, the two countries and China will hold a naval exercise in November 2019. This is in line with Russia’s renewal of interest in Africa beyond arms sales, which was evident in its hosting of the first Russia-Africa summit in October 2019.

Overall, forums like BRICS/SCO/RIC are important for Russia, where without being ‘a dominant player’ – has been able to ‘maintain balance with more powerful or advanced countries.’ In the light of western sanctions, the relevance of the BRICS grouping for Russia has been enhanced further. It must be noted that BRICS as a grouping has refrained from positioning itself as an anti-west alliance and the member-states have instead pursued their respective foreign policies, which in most cases includes close cooperation with the west. They, however, agree to coordinate with each other on issues of common concern.

Possible areas of contestation

Given that BRICS as a group consists of countries with widely diverging foreign policy goals, its impact as a collective has been less than apparent, especially in the political domain. Thus, the lack of a common vision for BRICS would also be a challenge that member states would have to resolve in the coming years.

This is particularly in view of rise of China with its vision of Belt and Road Initiative, India’s interest in the Indo-Pacific and Russia promoting its own idea of Greater Eurasia. As the member states begin focusing on other initiatives in a response to the geo-political situation around them, BRICS would have to focus on ‘developing its institutional capacity’ to maintain its continued relevance and strengthen the intra-BRICS economic engagement.

Conclusion

In a nutshell, the working of BRICS has been characterized by a flexibility of approaches on issues of common concern. Having established a regular summit meeting as well as ministerial level mechanisms in different areas has led to a framework for continued cooperation. The setting up of business forum and business council of BRICS is also an encouraging development to promote trade and investment. With the successful establishment of NDB and now even its regional offices (with plans to expand the membership), it is likely that economic cooperation will remain a central goal for BRICS alongside focus on science and technology, innovation, trade, agriculture and energy.

For Russia, this ‘free and informal nature’ of BRICS has not been a disadvantage and has been used to reiterate its position as an important player in emergence of a non-western global governance structure. Much of Russia’s own geostrategic gains over the past years have come due to a pragmatic policy to advance Russian interests, despite it not being ‘backed by commensurate economic might’ and impacted by the absence of a ‘grand design.

Therefore, for Russia, BRICS continues to be important in terms of ‘reasserting its global aspirations’ in a ‘non-confrontational’ manner with the West as the global order realigns itself. Also, at a time when the future contours of the emerging world order are unclear, the alignment of BRICS is ‘worth maintaining’ for Russia. But given the limitations discussed above, the Russian strategic objective for transforming ‘the association from a dialogue forum and a tool to coordinate positions on a limited range of issues into a full-fledged mechanism of strategic and ongoing cooperation on key international political and economic issues’ might be a little too far-fetched.

The views expressed above belong to the author(s).

Observer Research Foundation

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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