Countries cast their lot together into a regional trading bloc if they are contiguous to each other. The other glue that can bind nations is cartelisation a la the OPEC, the oil producers' association that ramps up the oil prices at will by creating an artificial scarcity. BRICS perhaps is the only grouping that defies the conventional rationale for economic togetherness.

It is perhaps the only grouping that was born of an effusive comment by an Ivy League international consultancy firm.

The American consultancy firm, Goldman Sachs, a few years ago hailed Brazil, Russia, India and China as emerging economies no one could ignore.

South Africa came to be added as an afterthought perhaps because it added to the acronym nicely and sat well with it. To be sure the five nations together account for over 40 per cent of the world population and 22 per cent of the global GDP but these by themselves do not constitute a rational explanation for the banding together of nations that are far away from each other, with the exception of China and India.

CURRENCY PACT

If these nations want to increase trade with each other manifold, no one can quarrel with that objective. But what they have set for themselves is an egregiously ambitious agenda.

BRICS Bank and BRICS Monetary Fund are to rival and take on the World Bank and IMF, respectively, but with a narrower focus — lubricating the wheels of finance of these five nations alone.

Would China, the richest of them all in terms of forex at its disposal deign to fill the coffers of these institutions? And why should it show such benevolence?

To be sure, as a quid pro quo China may arm-twist the other nations into importing more from it. But that would not fill its coffers with hard currencies because the group members have agreed to pay for imports from the other members of the group in their respective domestic currencies.

Thus India would pay for imports from China in Indian rupees and China would reciprocate by in turn paying for imports from India in Yuan.

This would be a throwback to Rupee-Rouble trade arrangement between India and the former USSR.

Incest is bad even in international trade and investments. Accumulation of rupees by China would impel it to import more from India, paying for it in rupees. A stage might come when everyone starts pining for hard currencies, rocking the incipient if not the upstart trade union.

ANTI-US AGENDA

And it is not as if the five nations can give each other the most favoured nation treatment and mollycoddle each other. Russian oil has many takers and it has no reason to humour India with concessions or a long-term contract that can cushion its fiscal position.

Likewise, Brazil too would not like to give away its formidable mineral resources cheap.

In short, each nation in the club has its own individual agenda to pursue; the only common agenda seems to be the open or latent animus for the US and the institutions promoted and spearheaded by it.

This smacks of the unstated object of Euro at its birth — taking on the might of the US dollar and eventually humbling it. To be sure, BRICS nations are not talking of a common currency and are happy to work as a pressure group even while seeking to have greater trade and investments with each other.

Will BRICS then be a loosely-structured edifice amenable to entry by others bearing a similar animus to the US —even at the risk of having to give up the acronym that has a nice ring to it?

Will US's bête noire Iran join forces with the BRICS, if only to spite the US? The BRICS nations have already sounded the bugle by making it clear that they would not toe the US line on boycott of Iran.

Goldman Sachs' gratuitous grouping could have willy-nilly sown the seeds of yet another economic power centre challenging US hegemony. But US hegemony consists more in its currency holding sway across continents. And to this, there are signs of challenge even from the nascent BRICS.

(The author is a New Delhi-based chartered accountant. >blfeedback@thehindu.co.in )

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