The expansion of the BRICS group also has profound implications for global economic affairs.
Leaders from Brazil, Russia, India, China, and South Africa, collectively known as the BRICS nations, have embarked on a historic endeavor to expand their bloc’s influence on the global stage. This momentous decision comes after a summit held in Johannesburg this week, where the inclusion of Saudi Arabia, Iran, Egypt, Argentina, Ethiopia, and the United Arab Emirates (UAE) was confirmed. This expansion, slated to take effect from January 1, marks the first enlargement of the BRICS group since its inception in 2010.
The decision to include these major emerging market nations, along with the existing BRICS members, reflects a strategic move to enhance economic clout, reshape the global financial architecture, and foster an alternative to the prevailing international system centered around US hegemony.
South African President Cyril Ramaphosa, the host of the summit, announced the consensus reached among the leaders. As the world’s largest oil exporter, Saudi Arabia joins Russia, Iran, UAE, and Brazil in creating an amalgamation of powerful energy producers and prominent consumers from the developing world. This coalition not only holds significant sway in energy markets but also possesses the potential to reshape the dynamics of global trade.
The expansion of the BRICS group also has profound implications for global economic affairs. In contrast to the market-oriented approach of the Group of Seven (G7), the BRICS, with their diverse economies, brings a fresh perspective. As BRICS gains prominence, it could contribute to the formation of a more multipolar global economy.
Hasnain Malik, a strategist at Tellimer in Dubai, emphasizes the distinction between the use of the US dollar as a trading currency and its role as a reserve currency. While alternatives to the dollar in trade are being explored, its status as the world’s primary reserve currency remains largely unrivaled due to factors like institutional credibility and convertibility.
China’s pivotal role in driving this expansion is evident, backed by Russia and South Africa. However, the move has also raised concerns. India expressed apprehensions about becoming overshadowed by China’s dominance, while Brazil worries about potentially alienating Western nations.
Charlie Robertson, head of macro strategy at emerging-market investment firm FIM Partners, noted that the BRICS group, formed in 2009-10, has achieved relatively little thus far. However, the establishment of the New Development Bank (NDB) has been a significant achievement. The bank’s membership expansion holds promise for injecting capital and fostering cooperation among developing nations. Countries like Saudi Arabia, UAE, Egypt, Argentina, Ethiopia, and possibly Iran stands to both contribute to and benefit from the bank’s initiatives.
Beyond the immediate BRICS group, more than 20 nations from the Global South expressed their formal interest in joining this influential alliance. Indonesia, although deferring its membership for consultation with the Association of Southeast Asian Nations (ASEAN), is poised to potentially become a member in the near future.
Chinese President Xi Jinping hailed the expansion as a historic event that heralds a new era of cooperation among developing nations. Indian Prime Minister Narendra Modi pledged to work closely with aspirant members to facilitate their inclusion in the grouping.
Notably, the inclusion of Saudi Arabia, the UAE, and Egypt underscores their aspirations for global governance. Hasan Alhasan, Research Fellow for Middle East Policy at the International Institute for Strategic Studies, points out that these nations seek to exert leadership and further their global ambitions through this alliance. However, this strategic cooperation doesn’t entail a departure from their existing security partnership with the US. Instead, they are embracing a more nuanced approach, building coalitions based on specific issues, aligned with their national interests.
The expanded BRICS group ushers in a new chapter in global diplomacy and economic cooperation. The addition of Saudi Arabia, Iran, Egypt, Argentina, Ethiopia, and the UAE not only bolsters BRICS economic strength but also broadens its geographic and geopolitical influence. As these nations integrate into the alliance, the BRICS group assumes a more pronounced role in shaping the contours of the global economy, trade, and international relations. The challenges ahead, including aligning diverse interests and priorities, will require astute diplomacy and collaboration among the members. Nevertheless, this expansion reflects the evolving nature of international alliances and the quest for a more multipolar world.