Context
Following parts 1 and 2 of our consideration of BRICS+ and PIIGS, this third part analyses the influence of the rise of BRICS+1 and PIIGS2 on the world order. In it, we will discuss reform proposals for the United Nations (UN) Security Council, the necessary evolution of the International Monetary Fund (IMF), and the growing influence of PIIGS’ place within the European Union (EU). We will also highlight the role that France may play in order to (re)position itself as a geopolitical fulcrum, both at a continental and international level.
Introduction
International institutions such as the World Bank, the IMF, the EU and the UN are facing growing influence from BRICS+. The same goes for the European Union with regard to PIIGS. This is evidenced by the implementation of the New Development Bank (NDB), the plan for the new payment system parallel with SWIFT or the annual BRICS+ summit. In addition, recent geopolitical evolutions, with the war in Ukraine and the tensions in the Middle East, illustrate the new challenges facing the international institutions. Given the competition from emerging international institutions and the limited capacity for influence of the established international institutions, it is in the interest of the latter to undertake significant reforms.
UN Security Council: Reform or the end
The United Nations were created at the San Francisco Conference in 1945. The five permanent members of the Security Council – the United States, Russia (initially the USSR), China, the United Kingdom and France – were chosen because of their geopolitical influence resulting from their crucial role in victory during the Second World War. Thus, as the historian Stephen Schlesinger explains, “the Security Council was designed to be the ultimate guarantee of world peace, with unique and binding executive powers” (Schlesinger, 2003).
However, the current structure no longer reflects contemporary international dynamics and raises increasing questions about its legitimacy. Entire continents (Africa, Latin America…) or large countries (India, Japan, Brazil, South Africa…) do not have a power of influence that is proportionate to their size and importance. A Security Council reform was undertaken in 1965, with the integration of ten non-permanent members serving two-year terms, renewable each year but without the right to veto. This reform gave the Security Council more representativeness yet, with the veto system, the balance of power is uneven. As highlighted by the Columbian economist and politician José Antonio Ocampo (2013), global governance should reflect the new economic reality. So, well before the rise in prominence of BRICS+ and PIIGS, this reform seemed necessary for the sake of representativeness of the contemporary world and for legitimacy in its goal of “promoting peace and development” (Hathaway & Shapiro, 2017).
Integrating new members to restore credibility
Dr Sabine Hassler maintains that “a well-designed expansion of the Security Council could encourage more balanced decisions that are better accepted by the international community” (Hassler, 2013). Such diversity would enrich debate and enable the Council to deal with international crises more effectively. In 2005, the “G4”, a group made up of Germany, Japan, India and Brazil, had already proposed a draft resolution to add six new permanent members (United Nations, 2023). Including these countries would modernise the Council and make it more representative of the current geopolitical realities. But it would rather reinforce the United States- United Kingdom- France bloc, facing a Russia-China bloc, two blocs that generally vote in agreement. Another option would be to simultaneously integrate two BRICS+ members and two G7 members. This would resolve the issues of representativeness, while respecting the existing geopolitical equilibria. This would leave the question of Africa, which, as Kofi Annan insists, would remain, with its 54 UN Member states, the only non-represented region (Annan, 2012).
Moreover, there is the question of the right to veto, which has de facto often limited the action of the Security Council… Certainly, the veto is often used by one of the Security Council member countries when this country is a direct or indirect player in the conflict. However, would its limitation not lead to coalitions of convenience with the same result? The proposals were summarised in the book Key Documents on the Reform of the UN Security Council 1991-2019 (Fassbender, 2020). These can be grouped into three categories. The first is the granting of this right to the new potential members of the Security Council, subject to a moratorium of several years (15 years). The second is based on the limitation of its use to questions related to Chapter VII3 and the prohibition of its use for the Council’s actions aiming to prevent or end a genocide. The third suggests the requirement of votes “against” from at least two permanent members to block the Security Council’s action (today, a single vote against is sufficient).
Is reform possible?
The integration of the ten non-permanent members in 1965 gave the Security Council a little more representativeness and recent work, while incomplete and insufficient, is a positive sign of progress.
The political reasons for the absence of in-depth reform are obviously the national interests of the Member States, concerned about losing influence in relation to the current status quo (Hosli & Dörfler, 2019). There are then legal reasons due to the fact that a change of status concerning the UN Security Council requires both a majority of two-thirds of the members of the General Assembly and a ratification by the five permanent members. Currently, this legal threshold seems to constitute an insurmountable obstacle to a formal revision of Article 27 of the Charter, reserved for the use of the right to veto.
The war in Ukraine, directly involving one of the permanent members, has been a catalyst for significant developments but without resolving the reform issue. First, there was the veto initiative4 of 22 April 2022, followed by the commitment made by the United States to “refrain from the use of the veto except in rare, extraordinary situations” (Schäfer, 2022). Then there was the Franco-Mexican resolution to propose a collective and voluntary agreement among the permanent members of the Security Council to refrain from using the veto in case of mass atrocities (Global Centre for the Responsibility to Protect, 2015). It should, however, be noted that the notion of mass atrocity is deemed inapplicable to the current events in Ukraine and the Gaza Strip.
The process to integrate new countries in the name of better representativeness could come as a matter of priority from those countries with the most to “lose” such as France and the United Kingdom. In exchange, the other Council members would see themselves compelled to reform the use of the vote by limiting its use to a restricted number. We could also imagine a group of countries with more remote interests joining forces to present these reforms within the UN. For example, an association of PIIGS (members from the “North”) and MINT5 (members from the South) would have the advantage of being balanced and devoid of interests, since none of the members of these two groups of countries would become a member of the Council.
World Bank and IMF facing competition from the New Development Bank
The creation of the NDB by BRICS+ in 2014, a real alternative to the IMF, is an example of what a group of powerful countries can do if it considers that an existing organisation, the IMF in this case, does not sufficiently reflect its interests. Even if, ten years later, it could be considered that the NDB has not been completely established as a credible alternative, as much in terms of the volume exchanged as in terms of the attribution of projects (Millar, 2023). However, it has successfully positioned itself as the Bank for countries in the South. Even more so, as many countries having taken out loans before the COVID-19 pandemic have had great difficulties paying them back; which has strengthened a certain image of the IMF as a “non-friendly” institution (Jha, 2022). Nonetheless, this criticism has to be qualified, insofar as similar accusations can be made against Chinese loans that are strangling economies. In 2022, a report from the China Africa Research Initiative noted the Chinese loans that contributed to the economic crisis in Sri Lanka.
The main sticking point with the IMF is not its principle, which is to help finance developing countries, but rather the reasons for attribution, the conditions and the weight of countries’ votes. In fact, unlike the NDB which attributes the same number of votes to each member, the 24 members of the IMF Executive Board do not have the same weight in decisions: “The United States, which has 17.4% of the quotas (share of capital) of the Fund, is not ready to reduce them in favour of large countries such as China, which has only 6.4% of the quotas, despite its global economic weight” (Hiault, 2023). In addition the IMF mainly approves attributed projects based on debt restructuring criteria that comply with the Paris Club rules. The lending policies should, therefore, be adjusted to better meet the needs of emerging economies, fostering sustainable development instead of austerity (Stiglitz & Gallagher, 2022). Without this reform, emerging economies could face greater economic stagnation and more financial crises, or simply more frequently approach the NDB for financing. We will stipulate the decisive role of the United States in blocking this reform.
The place of the dollar in financial exchanges is not yet at stake, such is its reign over the economy. However, the BRICS+ countries have agreed to reduce its influence. Aglietta reminds us that China is gradually imposing the yuan as the international reference currency (Aglietta et al, 2022). This strategy is conditioned by the very structure of its economy, whose trade takes place in dollars. However, the relative financial openness of Beijing, the indebtedness of the private sector due to the 2023 property bubble, and the hardening of many regulations support the hypothesis of a slow internationalisation of the yuan. This seems inevitable and, sooner or later, it will challenge the American financial and monetary power. While all the IMF loans are taken out in dollars, the NDB itself issues bonds in yuan to finance itself.
Another visible trend: under pressure from China and Russia, the dollar is used less to pay various raw materials, especially since the sanctions on Moscow. Moreover, to reduce its dependency on the SWIFT network, the main Western financial messaging system, Beijing launched its own system, CIPS, which processed over 19 billion dollars in transactions daily in 2020, the Russian Federation also launched its own system, in 2023.
The reform of the IMF and World Bank are thus essential steps for their continuity and for two reasons: on the one hand, the countries from the South, led by BRICS+, which moreover represent two-thirds of the world population and the global economy, are increasingly using the NDB. On the other hand, because the place of the dollar in the global economy is already at stake, with this same NDB issuing many loans in yuan.
Given this situation, the United States are going to face an important dilemma: the first option is agreeing to reduce the share of their voting right at the IMF, to make this institution more balanced, which would give it back legitimacy, reduce at the same time that of the BRICS+ bank, and maintain the dollar as the reference currency. The second option is freezing the voting rights (favourable to the United States), even if it means continuing to reinforce the influence of the NDB.
The EU is changing its criteria to adapt to the new balance of PIIGS
The pressure from partnerships between countries, such as BRICS+, could push international institutions to reform to be more representative of the global equilibria, at a geopolitical level with the UN Security Council and at an economic level with the IMF. We can expect a similar approach from the PIIGS countries within the EU with an ambition to reduce the influence of Germany and, to a lesser extent, that of the Franco-German couple on political tools (European Commission) but above all on economic and financial tools (ECB).
The reform of the Stability and Growth Pact (SGP): a first victory for PIIGS
This pact, which imposes a framework on each EU member country, has two main constraints. It adopts certain principles laid down by the 1992 Maastricht Treaty regarding States’ commitment to maintain their deficit below 3% of GDP and their public debt at a level below 60% of their GDP. As of 2019, Jean Pisani-Ferry suggested changes (Pisani, 2019). Since the end of the pandemic, the economic development of the PIIGS countries, combined with a slowdown of growth in Germany (and, to a lesser extent, in France), has enabled the rules to evolve: the Commission has begun to review the SGP. Since the end of 2019, the most indebted countries, like Italy, Spain or France, have been in favour of the pact being revised, whereas the Nordic countries and Germany have instead supported maintaining the SGP in its traditional version, namely with a policy of austerity.
This revision introduced less severe but easier-to-apply sanctions, while enabling indebted States to continue to invest in the European Union’s priorities (Toute l’Europe, 2024). In November 2022, the European Commission presented the first proposals for its SPG reform. The Member states then reached an agreement in December 2023. Then, the European Parliament finally approved this reform on 23 April and the Council on 29 April, for it to come into force on 30 April 2024.
The PIIGS countries were also at the forefront of initiatives for a green and digital transition of the European economy, which took shape in particular with the Next Generation fund project (Europe en France). Italy and Spain were the first two beneficiary countries, and Greece and Portugal respectively 5th and 7th, of this €750 billion plan (France was the 4th beneficiary). The SGP reform incorporated these priorities by enabling substantial public investment in green and digital infrastructures, even for countries with high levels of debt. This approach intends to support sustainable growth and reduce economic inequalities within the EU.
The energy crisis and European solidarity
Russia’s invasion of Ukraine in 2022 triggered an energy crisis in Europe. PIIGS, particularly Spain and Portugal, obtained specific exceptions to alleviate the impact of the increase in energy prices on consumers. This situation highlighted the need for closer coordination of energy and fiscal policies within the EU. In 2024, PIIGS are trying to extend the Iberian exception, which de-indexes gas and electricity prices on a long-term basis, to the rest of the Union.
Recognition of Palestine: the countries of the South are encouraging the rest of the Member states to reconsider their position
Spain, joined by Ireland and Slovenia (and, outside the EU, Norway), has been particularly active, announcing its official recognition of Palestine as an independent State in May 2024 (Stimson, 2024). This initiative intensified the pressure on other Member States to reconsider their position, highlighting the EU’s historic divisions on this question. PIIGS thus took a diplomatic initiative, forcing other partners like France or Germany, but also the EU in its capacity as an institution, to position themselves (Brunori, 2024). This approach enabled us to note changes from countries and European institutions with regard to the question. Josep Borrell, High Representative of the Union for Foreign Affairs and Security Policy, supported these initiatives, leaving behind the traditional neutrality and highlighting the necessity for a two-State solution and encouraging Member States to take concrete measures to support this process… The French President Emmanuel Macron declared that the recognition of Palestine was not a taboo subject, but that it should happen at a “useful” period (Le Figaro, 2024). France has yet to take the step of official recognition, preferring to work within the framework of a negotiated solution. The French Minister for Europe and Foreign Affairs Stéphane Séjourné has criticised the PIIGS initiatives, considering them as “political positioning” rather than efforts to resolve the Israeli-Palestinian conflict.
A unique opportunity for France to position itself as a geopolitical fulcrum
At an international level
The needs for reform within international institutions raised by BRICS+ could present an opportunity for France to (re)position itself on the global chessboard. Within the UN, France could act to change the Security Council by proposing the inclusion of new members. It still needs to find trusted allies. The question of the use of the veto remains. The idea is to position itself as a fulcrum between the respective United Kingdom-United States and China-Russia couples. Until the beginning of the 2000s, this was France’s influence strategy. By distancing itself from the Anglo-American couple, France would gain substantial credibility among the countries of the South, more particularly the African and South American ones, which today harbour a certain anti-Americanism. Its loss of image particularly vis-à-vis Russia in many African countries could be halted by a change in its international policy, less aligned with the American position. Since Russian propaganda uses the lever of the “North” – represented by France, the former coloniser supported by the United States, the dominant power for 50 years- against the “South” carried by Russia. Although risky as it would dilute France’s influence if the Council goes from 5 to 9 or 10 members, this position of independence could enable leadership to be (re)taken.
At a European level
Italy and Spain are the 3rd and 4th powers in the EU, and France could rely on PIIGS, which, as we have seen, are gaining credibility in economic, budgetary and diplomatic terms. Without moving away from the Franco-German, or indeed Franco-Swedish couple, Paris should make the most of the dynamics of Southern European countries to make the institutions become more flexible. This approach was already launched by French President Emmanuel Macron during the signatures of the Quirinal Treaty in 2021, and the Barcelona Treaty in 2023. These treaties aim to reinforce bilateral cooperation between countries, which could be strengthened in areas such as renewable energies, European defence, migratory policies or European policies in the Mediterranean.
Conclusion
Over the past ten years, the BRICS+ and PIIGS groups of countries have launched many economic and diplomatic initiatives, which have reinforced their strategic positioning at a European and international level. Outside of the annual summits, BRICS+ continue to expand and demand a more balanced global governance than what currently exists. In the same way, PIIGS are working to influence EU governance. With the UN and its Security Council, the evolution of the geopolitical balance of power is an argument for reform, the Security Council no longer represents the world in its diversity, the powers of 1945 are no longer those of 2024. France can use all of these dynamics to (re)position itself as a European and global geopolitical fulcrum.
Read all three notes below:
- BRICS+ is a geopolitical group made up of ten countries from the “Global South”: Brazil, Russia, India, China, South Africa, Egypt, Iran, Saudi Arabia, United Arab Emirates and Ethiopia. ↩︎
- “Flying PIIGS” or just PIIGS is an acronym used during the 2008 crisis to describe five European countries experiencing great economic difficulty: Portugal, Italy, Ireland, Greece and Spain. ↩︎
- Chapter VII of the United Nations Charter concerns the actions to be undertaken in the event of a threat to the peace, breach of the peace, or act of aggression. ↩︎
- Resolution 76/262 of the UNGA, “Standing mandate for a General Assembly debate when a veto is cast in the Security Council” (UN Doc. A/RES/76/262), 26 April 2022, adopted by consensus ↩︎
- Mexico, Indonesia, Nigeria, Turkey. A term used by the economist Jim O’Neill, who had popularised the BRIC term when he worked at Goldman Sachs (Les Affaires) ↩︎
