Words by: Pranav Doshi
At the end of the 15th BRICS Summit in August 2023, South African President Cyril Ramaphosa announced that Iran, Saudi Arabia, United Arab Emirates (UAE), Egypt, Ethiopia, and Argentina would be formally inducted into the group. They would become full-fledged members by January 1, 2024.
This is a significant move considering that Saudi Arabia, UAE, and Iran are major oil-producing countries and members of OPEC. Expanding the BRICS to a BRICS+ format and adopting guiding principles, standards, and procedures for the same have made the BRICS a more attractive institution for consensus-building and dialogue in the developing world. Even the profile of the new members suggests that the system is headed for something beyond traditionally “acceptable” partners in the eyes of the West.
With the addition of these six countries, BRICS now represents 42 per cent of the world’s population and 36 per cent of global GDP. The primary economic bloc was created initially as an alternative to the U.S.-led international order to offer growing countries in the Global South a counterbalance to Western institutions.
In a not-too-distant future, BRICS could pose a significant challenge to the current Western-led global financial institutions. The developing nations have often been critical of the World Bank and the International Monetary Fund (IMF), which they say have been geared to look after the interests of the wealthy industrialised world. Brazil, Russia, India, China and South Africa are all on the same page on the need for an alternative to the Bretton Woods institutions.
BRICS had set out to build an alternative financial system by setting up the New Development Bank —earlier called the BRICS Bank— with headquarters in Shanghai. NDB is lending money for infrastructure projects to member states and developing nations. BRICS is also encouraging trading in local currencies. Bilaterally, Brazil and China do over 30 per cent of their trade in local currency. India and UAE began trading in local currency in July this year. New Delhi is hoping to extend it to other countries. Not switching to US Dollars will save many developing countries from currency market fluctuations.
However, hype about a common BRICS currency might be impractical and premature, but trading in national currencies is becoming a reality. The recent rupee-designated oil transaction between India and the United Arab Emirates is not merely a swipe at the petrodollar arrangement that has prevailed since 1973. It also signals that the world’s principal commodity exporters and importers can try to reduce their dependence on the dollar. If not a new world order, the BRICS expansion is undoubtedly an attempt at an alternative world order, one with a more sympathetic ear for the developing many versus the moulded few.
The BRICS group is already expected to surpass the GDP of G7 nations this year. According to the IMF, the bloc will account for 32.1 per cent of global GDP in 2023, against the G7’s share of 29.9 per cent.
However, while the group seeks to increase the representation of emerging markets and developing economies in international organizations, claims that BRICS represent the “rest” coming together against the “West” are simplistic. Not least because BRICS – and the new wall of BRICS, which emerged after the last summit – are a very heterogeneous group.
China, the primary challenger of American power, plays a leading role. Beijing sees global or regional organizations like the United Nations or the Shanghai Cooperation Organisation as arenas where it can expand and consolidate its vision for the international order through both general ideas – such as its concepts of “development” or “human rights” – and concrete initiatives, such as the Belt and Road Initiative. For Russia, BRICS is a platform for mitigating the effects of isolationism, including sanctions and establishing alternative diplomatic ties and trade networks.
And for South Africa, which competes for regional hegemony in Africa, the group provides easier access to global and regional powers in the so-called Global South and a platform to lobby for the interests of Pretoria and of the African continent in international forums.
India and Brazil, in turn, are less willing to challenge the US and the European Union. For them, BRICS represents an additional cooperation platform that does not replace cooperation with Washington or Brussels, as evidenced by the recent accords established between New Delhi and Washington or by the declarations of Brazilian President Luiz Inacio Lula da Silva stating that BRICS should not be a counterweight to the G7, the G20 or the US.
There are, of course, tensions within the group. India and China are longstanding rivals engaged in disputes, such as the standoff along the border in the Himalayas. India has no interest in a BRICS or a world dominated by China.
Scenarios Of The Future Evolution Of The BRICS:
One of them is the evolution of U.S.-China relations, which will depend to a large extent on the Taiwan issue. For Beijing, the One China principle remains non-negotiable. If tensions around the status of Taiwan increase, and if Washington strengthens its support to Taipei, China will likely use its dominant position within BRICS to counter American influence aggressively. In this case, members like India, Argentina or Ethiopia would face tough choices.
Another critical factor is the actual ability of the organization to reach and implement decisions in diplomatic, economic or security fields. Formal or informal international organizations can expand by increasing their goals and areas of activity, their competencies or the number of members. BRICS is a platform for interstate cooperation, and its resolutions depend on consensus. As it grows from five to 11 members, its resources increase, but so does the difficulty in reaching an agreement. And, for the foreseeable future, persistent negotiation among various regional and state interests is expected to prevail, rather than any Cold War 2.0 logic that aligns a united BRICS against the West.
However, as Western economies experience demographic decline and economic stagnation, BRICS – by integrating some of the world’s top emerging economies and demographic heavyweights – will offer more potential in terms of economic growth. Nevertheless, concerns about the world economy’s de-dollarisation may be, if not greatly exaggerated, premature. The dollar is expected to remain the primary medium of exchange and unit of account in the coming decades, and BRICS members, including China, while working to reduce their dependence, are not interested in an accelerated process of de-dollarization. Moreover, since its creation in 2014, BRICS’ New Development Bank has disbursed around $33 billion in loans, far less than the World Bank committed to expend in 2022 alone.
However, BRICS may become a key forum for negotiations in energy-related areas. Interestingly, although it integrates some of the world’s most carbon-intensive economies, climate change, trade, and energy are not priorities, judging by official declarations made throughout the recent summit. Members are instead expected to push for the reform of international institutions, namely the UN Security Council. Ultimately, the great advantage of BRICS is some of its economies’ growth potential and flexible structure.
The outcome of the Johannesburg summit should be considered not from the point of view of rivalry but in the context of objective international trends. The supporters of turning the BRICS into an anti-Western association could not prevail. Apart from Russia, the members are not interested in direct conflict with the West. Moreover, the interests of member states coincide only to a certain extent. The decision to invite new members is a choice of development model for the next stage. The BRICS chose expansion at the fork in the road between deepening and institutionalizing ties or expanding outward.
The accession of countries will now be regular. Judging by the set of first invitees, no clear membership criteria is established, only the matter of agreement among those at the table. Only one condition applies—no binding relations with the West.
As a result, the direction has been determined. The BRICS will move toward the alt-West rather than the anti-West. The grouping will expand the space of interaction, bypassing the Western world and without the participation of Western countries.
Each of the BRICS states is free to develop its relations with the United States and Europe, but it should not harm its ties with the BRICS states. Current and future BRICS members have one thing in common: they reject the right of the United States and the European Union to impose restrictions on other countries’ foreign policy and economic activities.
Brazil, India, and South Africa, the oldest members, will have difficulty ensuring that the new BRICS is not a platform for defending the geopolitical interests of China or Russia. Topics of interest to the Global South should be prioritized: cooperative mechanisms for energy transition, technology transfer, financing the New Development Bank, resumption of the World Trade Organization dispute settlement mechanism, and UN Security Council reform.
The BRICS space can be developed to diversify the world and move away from Western domination toward a far more multifaceted scenario. It will be further enhanced and strengthened in the process, albeit long.
