Aqsa Shaukat is a student of defence and strategic studies at Quad-i-Azam University, Islamabad.
Introduction
The story of the BRICS began in 2001, when the term was coined by Jim O’Neil as a matter of convenience to describe the emerging powerhouses, Brazil, Russia, India, and China, that were expected to take over the political economy of the 21st century. South Africa became part of BRICS’ members later in 2010. Consisting of the three major economies of the world, BRICS had not received much coverage. Many people never even heard of it until a few months ago when the group came forward with a newfound force to thwart the position of the dollar as the world’s reserve currency.
Not to forget, BRICS nations also have ambitions of replacing the G7 on the global stage, and when we look at the statistics, one may think that it is already a better organization than the G7. The current BRICS five now contribute 31.5 percent to the global GDP, while the G7 shares have fallen to 30 percent. By 2030, the BRICS are anticipated to contribute more than 50% of the global GDP, and the proposed enlargement will almost probably accelerate this.
The BRICS control 26.7 percent of the world’s surface area, 41.5 percent of the world’s population, and around a quarter of the world’s total economic output, making them larger than the USA or the European Union in every way, and they are only getting bigger over time.
The Current Economic State of BRICS
One of the reasons why BRICS never looked scary to the world was its existence of 14 years without getting much done. When the group was formed, the economies of these countries were doing so well that it seemed that the group would be able to control the political economy in the 21st century but, if we look at the statistics, only China has been able to get the job done. The overall outlook of the BRICS bloc makes it look intimidating, but it is basically all about China. Its output is twice the combined output of all the other countries in this group.
Russia’s economy has been in decline for more than ten years, and the war it is waging in Ukraine is also anticipated to have a significant impact on it. South Africa and Brazil are also experiencing economic difficulties. India, the second-largest economy in the group, is also performing remarkably well, albeit more slowly. Again, this is undermined by the fact that the two biggest economies of the group can’t even get along with each other. Their antagonism and their resentment are not hidden from the rest of the world. This is probably the reason why BRICS has not been given as much weightage. For an organization to move forward, the key is the convergence of the interests of its members. Opponents pointed this out by saying that the countries were too diverse to be grouped together.
The Western Perspective of BRICS
As was previously mentioned, BRICS’s detractors were not overly mystified by this because it seemed the nations were too diverse to be put together. Take China and India’s conflicting interests as an illustration. Even the regime types of all countries are different, given Russia and China have authoritarian regimes while the other ones are democratic. The border conflict between China and India and their hegemonic ambitions in the Indian Ocean do not make the group alarming for the West.
But the fact that may have been overlooked is that international politics is very unpredictable and that economic cooperation has been one of the biggest tools to group nations together despite their differences. This is not the first time that countries within a group have contradictory opinions. NATO is made up of nations with a variety of interests and political viewpoints. For example, the UK and France had different opinions on military participation in Iraq, but this didn’t stop NATO from carrying out its missions. The BRICS countries have promised to trade more aggressively despite all the predictions, and they intend to usher in a new age of collaboration with the announcement of the introduction of their very own BRICS currency.
Projects
The New Development Bank (NDB), often known as the BRICS bank, is one of the largest projects to come out of this varied group of nations. The New Development Bank, which aids struggling as well as developing countries to increase their economic production, is structured and operated much more like the IMF. Apart from the BRICS countries, the membership is limited to just nine nations, including Egypt, the United Arab Emirates, Uruguay, and Bangladesh.
The countries have even pushed for their own games and tournaments. They even talk about building their own undersea optical fiber connections to connect all the other members. The incentive is clear, BRICS wants everything of its own – banks, currency as well as its own Olympics – whatever it takes to be out of the Western sphere of influence.
De-dollarization and BRICS’ New Reserve Currency
A wave of de-dollarization is going on and with the talk of BRICS’ new currency, most probably backed by gold, it should ring the alarm bells for the dollar. Saudi Arabia and China are now seeing a somewhat closed relationship, and the Saudi foreign minister recently shocked the world when he announced that Riyadh is open to oil deals in other currencies besides the dollar. Another peculiar turn of events is China brokering deals between Saudi Arabia and Iran, sending a strong message to the USA that the Middle East is now out of its influence.
The Russian war on Ukraine and the resulting consequences for Russia in the form of sanctions have caused distress to many countries all around the world. Considering that the US was able to freeze $300 billion of the Russian Central Bank’s foreign exchange reserves, China claims that the US is “weaponizing the dollar” and abusing its position. It sends a strong incentive to the countries already wary of the US actions. They may be worried that they can be subjected to the same treatment whenever the US feels like it. This is why many of them weren’t against the notion when Putin discussed the creation of a new reserve currency. A recent announcement by Argentina to trade in the Chinese yuan instead of dollars is confirming the assumption that states are now looking for dollar alternatives.
Effect of Russian-Ukraine War on BRICS
The sanctions on Russia, resulting from its invasion of Ukraine, have intensified the grievances of BRICS. They hold the opinion that the G7 controls everything and sets global policy, whether it be in the areas of politics, economics, or the environment. The sanctions policy against Russia only heightened the BRICS’s awareness to have a stronger lobbying force, not necessarily to counter G7 but to have a level playing field. The bloc wants its own representation and voice, and it seems to motivate many other countries that want to be free of the crutches and clutches of the West.
It appears that after the conflict, the initial concerns about BRICS not sticking together in the future, owing to their disagreements, are now dispelled. It brought the member states closer than before. Brazil’s president has voiced what has been a widely held narrative in the Global South and criticized Western politicians for “encouraging war” and not doing “enough to negotiate with Russia,” and that NATO should not have installed military bases that close to Russia. He even accused Vladimir Zelensky of being “as accountable for the war as Putin.”
Unsurprisingly, China has not denounced the Russian incursion and instead attributed it to NATO expansion. In other words, BRICS considers sanctions unfair and refuses to support the US and NATO. The Global South is experiencing a tsunami of concern as more and more nations realize the consequences of their excessive reliance on the dollar and if they choose a course that would not be supported by the US and the G7. In a study, the British historian Geoffery Roberts stated, “Could the war have been prevented by a Russian-western deal that halted NATO expansion and neutralized Ukraine in return for solid guarantees of Ukrainian sovereignty and independence? Quite possibly.” That basically sums up the narrative.
The 15th BRICS Summit and Expansion
On the third day of the 15th BRICS Summit – which took place in Johannesburg from August 22 to 24 – Cyril Ramaphosa, the president of South Africa, announced, “We have decided to invite the Argentine Republic, the Arab Republic of Egypt, the Federal Democratic Republic of Ethiopia, the Islamic Republic of Iran, the Kingdom of Saudi Arabia, and the United Arab Emirates to become full members of BRICS. The membership will take effect from the first of January 2024.”
There is an increased representation from African countries in the form of Ethiopia and Egypt as well as from the Islamic world in the form of Iran, Saudi Arabia, and the United Arab Emirates. It makes sense to include Saudi Arabia, Iran, and the United Arab Emirates because of their prominence in the oil industry and because doing so will more than quadruple the BRICS’ share of world oil production. For Iran, membership is a victory because it shows that it is no longer as isolated as the US wanted it to be, and it will alter how the West views the bloc as a whole because of its inclusion.
Nevertheless, Ethiopia’s inclusion above Algeria’s is somewhat perplexing given that Ethiopia’s GDP is projected to reach $134.13 billion in 2023 while Algeria’s is projected to increase to $206 billion. The African Union’s headquarters are in Ethiopia; therefore, it might be a tactical move on the side of the core BRICS group. According to BRICS officials, the group has captured the interest of almost 40 nations. Twenty-two countries have formally sought the BRICS states to become full members, according to South African envoy Anil Sooklal. A similar number of nations have formally inquired about joining the BRICS.
Impact on the US
How this expansion will affect the United States of America is somewhat tricky to determine. It will depend on the next steps that will be taken by the BRICS nations, but one thing is for sure, the group plans to hasten the shift to a multipolar world that will be financially independent of the US dollar. This is something the US can no longer ignore. The hegemony of the US dollar is in peril if these 11 nations opt to trade among themselves using their own currencies rather than the dollar. In addition, the BRICS have shown that the US’s main weapon, the use of sanctions against nations it considers to be a challenge to American hegemony, is no longer as effective.
It is easy to predict that the US’s most potent weapon will lose some of its credibility in the coming years if Iran is successful in lessening the impact of Western-led sanctions, as Russia has done. BRICS served as a symbol of unity when its members chose not to follow the Western-led sanctions against Russia. Trade between China and Russia reached a record-high $188.5 billion last year, up 97% from the previous year. In order to lessen the effects of the sanctions, Russia has also been diversifying its exports. The expansion is a part of the ambition to make the voices of the Global South a top priority on the global agenda. The group will probably reach new heights as a result of expansion.
What came as a shocker was the request of French President Emmanuel Macron to let him participate in the upcoming summit. He even mentioned that the West’s hegemony might be ending as a result of its own errors. This demonstrates how unreliable the US is getting. BRICS has been regarded by the G7 as a fringe organization, but if 40 more countries join the bloc, it will be a force to be reckoned with. Saudi Arabia’s involvement will shift the game strategically since it may have a significant impact on controlling oil prices around the world.
If China and India (two major economies of the world), Argentina (a major agricultural economy as well as a global supplier), Egypt (energy and agricultural export economy), and Iran, Saudi Arabia, and the United Arab Emirates (leading oil producers and exporters) are all going to be a part of one bloc, it can change the symmetry of world politics. Their diversity, which was once seen as a weakness, will instead become a strength, which will be troubling for the G7.
Conclusion
Without a doubt, the rise of the BRICS will pose a threat to the dominance of the West. However, that doesn’t mean that the BRICS won’t have their fair share of difficulties. We can use the situation in South Africa as an illustration. South Africa was obliged to arrest Vladimir Putin as a signatory of the International Criminal Court. The creation of a new common currency is similarly difficult and will take a long time to complete. For BRICS, the expansion will be advantageous, especially with the inclusion of Saudi Arabia, the UAE, and Iran.
Although relations between the Middle East and the United States are not good, it is reasonable to believe that after Saudi Arabia and Egypt, additional Middle Eastern nations will follow suit, making the region entirely independent of Western influence. An additional desperately needed element is improved cooperation, especially between China and India. If not, the BRICS could end up looking like a house of cards.
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