BRICS: Establishment and Cooperation

BRICS cooperation was initially advanced by Brazil, Russia, India and China, known by the English acronym BRIC. The four countries began high-level diplomatic consultations in New York in September 2006, and held their first leaders' summit in Yekaterinburg, Russia, in 2009. After South Africa joined, President Jacob Zuma attended the Sanya meeting in April 2011 as a full member, and the five-country grouping accordingly used the acronym BRICS. The diplomatic contacts of 2006, the summit of 2009 and the later specialized institutions need to be understood separately.

The four countries were situated in different regions and differed in economic structure and diplomatic interests. They were connected by a common desire for a stronger voice in global governance and a need to coordinate positions on finance, trade and development. Early cooperation was therefore a process of gradually establishing meetings and contacts among government departments.

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On 16 June 2009, the leaders of the four countries held their first formal meeting in Yekaterinburg, Russia. With the global financial crisis still under way, their discussions focused on responding to the crisis and reforming the international financial system. The joint statement supported policy coordination through the Group of Twenty, called for greater representation of emerging markets and developing countries in international financial institutions, and advocated open, transparent and merit-based selection of those institutions' leaders.

The statement also addressed trade, energy, science and technology, education, disaster mitigation and food security, demonstrating that cooperation extended beyond investment or finance from the outset. The four countries welcomed Brazil's offer to host the next leaders' meeting, connecting their joint declaration to a subsequent gathering. These shared positions were, however, acts of policy coordination: they did not themselves create a common currency or automatically bring national economic policies into alignment.

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Early BRICS cooperation followed a forum-based structure. Marius Glitz's formal research report of 2013 noted that it then had no permanent secretariat and that the rotating chair exercised considerable influence over the political agenda. The succession of meetings can also be verified in the original statements: the 2009 statement invited Brazil to host the next summit, and the 2010 statement confirmed that China would host the 2011 meeting. Organizational work proceeded through the host country and the various specialized meetings.

Funding must be considered separately for each instrument of cooperation. The 2014 bank agreement established its own rules for capital subscriptions and management and designated Shanghai as the bank's headquarters; the Contingent Reserve Arrangement specified separate national commitments. These cannot be combined and treated as the summit forum's administrative budget. The early joint statements identified finance ministers, central bank governors, agriculture ministers, statistical authorities and courts among the bodies responsible for implementation, with cooperation carried out through these existing institutions.

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The Brasília joint statement of 15 April 2010 offers a concrete view of early activities. The four countries' agriculture ministers discussed food production and family farming in Moscow, decided to establish an agricultural information base system, and advanced cooperation in agricultural technology. National statistical agencies held their first heads' meeting and undertook joint research. Following a 2009 letter of intent on cooperation among supreme courts, an exchange programme for local judges was held in March 2010.

Finance ministers and central bank governors were asked to study regional monetary arrangements and possible forms of cooperation, while development banks, businesses and think tanks also began holding meetings. These activities broke broad political declarations into information exchange, professional training, technical research and institutional contacts. The first development-bank meeting mentioned in the statement brought together existing national institutions; it should not be confused with the New Development Bank, whose founding agreement was signed only in 2014.

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On 15 July 2014, the five countries signed the Agreement on the New Development Bank in Fortaleza, Brazil, to mobilize funding for infrastructure and sustainable development projects. The bank had a Board of Governors, a Board of Directors, a president and staff, with its own governance and financial arrangements. The agreement set initial authorized capital at US$100 billion and initial subscribed capital at US$50 billion, subscribed equally by the five founding members. Of the latter sum, US$10 billion was paid-in capital and US$40 billion callable capital. The total subscription should not be understood as having been received in full on the day of establishment.

The same summit also saw the signing of the Treaty for the Establishment of a BRICS Contingent Reserve Arrangement, providing liquidity and precautionary instruments to address short-term balance-of-payments pressures. Article 2 specified total commitments of US$100 billion: US$41 billion from China; US$18 billion each from Brazil, Russia and India; and US$5 billion from South Africa. Until a request was approved and a currency swap implemented, each country retained ownership and possession of its committed reserves. This was not a common cash pool immediately paid into a bank by the five countries. It had its own Governing Council and Standing Committee.

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The New Development Bank agreement entered into force on 3 July 2015, with K. V. Kamath serving as its first president. Its 2016 annual report recorded the approval of seven loans totalling more than US$1.5 billion that year: six for renewable energy and one for road improvements. In December of that year, the bank signed a RMB 525 million loan agreement for the Shanghai Lingang Distributed Solar Power Project, its first local-currency sovereign loan in China. Approval, agreement signing and actual disbursement were distinct implementation stages.

From diplomatic consultations and leaders' summits to the signing of specific financial agreements, BRICS cooperation gradually acquired instruments capable of mobilizing funding and considering projects. The bank had dedicated governing bodies, while Article 19 of the reserve-arrangement treaty explicitly stated that the arrangement had no independent international legal personality. Distinguishing the forum, the bank and the reserve arrangement explains how cooperation progressed from shared declarations to concrete action without treating these different institutions as a single unified organization.

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