BRICS vs. G7: Renewal of East-West Tension

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Written and researched by World Affairs Council Intern, Jill Fronk

It has been a little over two decades since the end of the Cold War, and already a new burst of cold air is beginning to blow through. The crisis in the Ukraine is drawing a line in the sand with the G7 nations on one side and the BRICS on the other. The G7 is a group of financial and economic ministers from Western nations, formerly the G8 before they ousted Russia over its current actions. BRICS (Brazil, Russia, India, China, and South Africa) are emerging economic and political powers, who make up a new growing bloc of influence and power. These emergent powers are a diverse set of governments who struggle to find common ground, but when it comes to a struggle with Western powers they will side with their BRICS compatriots.

Lines Drawn

All international groups have their moment of coming of age, where the international community recognizes the legitimacy they have to influence world events. BRICS’s moment was during the Syrian crisis, when the majority opposed any further military action out of respect of Syrian sovereignty.  Syrian President Al-Assad sent a letter to the BRICS’s summit in South Africa in 2013 requesting their help against Western interference in contradiction with the UN Charter. This letter cemented their legitimacy as a global power bloc, and the potential beginning of a new world order. It also began the clear division in goals between BRICS and Western countries, along with political divisions within BRICS itself.

Now there is the separatist movement in the Ukraine, with Russia annexing Crimea much to the condemnation of Western powers.  Even with political divisions, historical disagreements with the U.S. and other G7 countries push the remaining BRICS countries towards Russia.  It gives rise to old feelings of east against west, the Soviet Union versus the U.S.  As the sanctions against Russia continue, Russia turns to China for help to stave off a worsening recession.  We all flashback to a rocky Sino – Soviet alliance at the beginning of the Cold War which ended in a war in the 1960s.  Only today, their bond is much stronger and sealed in a gas deal that will be paid out in their own domestic currency instead of the U.S. dollar, which is the traditional currency used in trade deals.  This is a symbolic move for the BRICS by undercutting the hegemony of the U.S. dollar as the international currency. BRICS have been attempting to overthrow the U.S. dollar for years, but there is not a viable alternative making any change difficult.  However the symbolism of using domestic currency is not lost on the U.S.

The Beginning of a New Era

This week at the sixth summit of BRICS countries located in Brazil this year, the separation from the G7 grows wider.  Their goal is to finalize plans for the New Development Bank (NDR) and Contingency Reserve Arrangement (CRA) to reduce dependence on Western Institutions. These two agencies will assist developing countries by giving loans for things such as infrastructure projects and economic shock waves from countries like the G7. This is in response to failed attempts to increase BRICS’s influence in global governance especially with the International Monetary Fund (IMF) and the World Bank. A top priority is to ensure equal voting rights within the NDR and CRA which is one of their major issues with Western institutions. These two new international agencies will give developing and emerging economies a new option with the allure of no policy requirements that the IMF and World Bank are infamous for demanding. But really the main goal, is to knock down the U.S. and other G7 countries a peg or two, to show that their time of domination is coming to an end.

Russia’s reactions to G7 pressure over Ukraine can be seen as a signal in the readiness of Russia and the other BRICS countries to counter Western influence. The current state of the world is filled with general uncertainty, economic insecurity, and a sense of unfairness which can be seen in the high number of separatist movements in the last couple of years. The world is ripe for the picking for BRICS this new world division. This leaves an opening for an economic power shift from West to East and the beginning of a new era of bipolarity.