Why a Brics plus Belt and Road Initiative is what the world needs

What if the Brics nations – the grouping that until last year comprised Brazil, Russia, India, China and South Africa – were to formally adopt the China-led Belt and Road Initiative and make it a joint international project with an institutional structure and an international headquarters?

If this were launched at the annual summit of the enlarged Brics group – which now includes Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates – in October in the Russian city of Kazan, it would serve as a powerful symbol of China-Russia and Global South economic cooperation.

Chinese President Xi Jinping, a leading proponent of enlarging Brics, suggested before the decision to admit new members was announced at the group’s summit in Johannesburg in August last year that admitting new members would give Brics the grouping a greater voice on the world stage.

That voice could be amplified considerably if the grouping were to take on the role of a global infrastructure power by integrating the functions of the Belt and Road Initiative into its trade and investment capabilities, amplifying the initiative’s geographical and strategic reach.

The Belt and Road Initiative needs three things to give it new impetus: wider ownership, a stronger institutional structure and, of course, more money. All these could be achieved by making it an organ of the Brics group which is gaining increased international credibility.

(Left to right) Brazilian President Luiz Inacio Lula da Silva, Chinese President Xi Jinping, South African President Cyril Ramaphosa, Indian Prime Minister Narendra Modi and Russian Foreign Minister Sergei Lavrov pose for a group photo, at the Brics Summit in Johannesburg, on August 23 last year. Photo: DPA

This might all sound rather speculative but there is sound geographical and economic logic behind the idea. Ocean-borne commerce is becoming more risky with new war fronts opening up in key parts of the Middle East and flashpoints heating up in Asia, making overland routes look attractive by comparison.

The original belt and road concept was based on the ancient Silk Road, the overland highway across the Eurasian continent which was overtaken over time by fundamental changes in global trade and economic development. But shifts are happening again now, and not only in transport security.

Emerging powers – critically those in the enlarged Brics group – will continue to increase their share of world trade in goods and services at the expense of existing powers, who are anyway retreating onto defensive alliances. This in itself will demand new infrastructure patterns.

The Belt and Road Initiative, announced in 2013 under a different name, was met with intense rivalry by maritime powers in North America and Europe. The venture then went into defensive mode and lost something of its global image in favour of more local objectives in Southeast Asia, Africa and Latin America. But the Belt and Road Initiative could revert to a Eurasian continental focus again now given recent developments.

The massive Eurasian continent forms a vast land bridge not only between China and Europe (via Central Asia and Russia) but also between those two and North Africa (via the Middle East). China realised this in designing its initiative but others struggled to embrace the vision.

The countries and continents involved represent major markets, so linking them together by land, whether road, rail, inland waterway or pipeline, makes a lot of sense for freight, travel and tourism. But the Belt and Road Initiative is still far from reaching its potential in this regard.

Commodity exports, in which Brics is richer now with the addition of oil and gas from the Middle East, can be moved easily by rail or pipeline, as can timber, iron and multiple other minerals from Brics members, especially with many more countries interested in joining the bloc.

Such countries, along with newly-industrialising Saudi Arabia and Egypt, are anxious also to find markets for their increasingly sophisticated manufacturers. Here, again, transport infrastructure is vital.

But infrastructure does not come cheap. New funding sources are needed for the Belt and Road Initiative if China is not to shoulder the financing load on its own, and the initiative could see its financial clout enhanced by the inclusion of Middle Eastern oil exporters among Brics members.

The Belt and Road Initiative lacks an international institutional structure, however, and this is where a breakthrough in thinking could come following the expansion of Brics.

If China is to retain fulcrum power within the Belt and Road Initiative and Brics, it will need to diversify ownership of institutions among the growing numbers of member countries, not least with regard to infrastructure. Funding needs alone will demand this, as will the need to coordinate cross-border development.

If Brics members are going to participate actively in belt and road projects, they will need a way to express their wishes and needs via voting participation in a formal institution, which they cannot do at present. Calls for institutional reform within the Belt and Road Initiative would be likely to grow.

There is scope for rationalising the activities of the Belt and Road Initiative itself, Brics’ New Development Bank in Shanghai and the Asian Infrastructure Investment Bank in Beijing, all of which currently seem to exist in parallel universes.

The AIIB and New Development Bank seem to have largely stayed at arm’s length from the Belt and Road Initiative so as to establish credibility as multilateral institutions but relations between China and Western powers have deteriorated to the point where maintaining this semblance of independence may become pointless and establishing more overt links could make sense. The architects of change are at work.

Anthony Rowley is a veteran journalist specialising in Asian economic and financial affairs