In early September, 2023, following the 15th annual BRICS summit, the BRICS nations announced its expansion, inviting Argentina, the United Arab Emirates, Egypt, Ethiopia, Iran, and Saudi Arabia. These states are set to become members of BRICS at the start of 2024. Whilst some see this expansion to have little effect on the international political and economic order, many others have begun to realise the true impact this expansion could have. After briefly discussing the history of the BRICS organisation, this article will explore the economic and political risks and opportunities of this expansion. This topic was also discussed in Episode 138 in conversation with Professor Bruce Jones
BRICS – A Brief History
BRICS is an intergovernmental organisation (IGO) comprising Brazil, Russia, India, China, and South Africa. The term ‘BRIC’ was first popularised by Goldman Sachs in 2001, drawing attention to the significant economic growth being experienced by Brazil, Russia, India and China. In 2006, the foreign ministers of these countries started meeting informally, and with the inclusion of South Africa in December, 2010, the BRICS organisation was born. Together, these states represent over 42% of the global population, 30% of the world’s territory as well 31% of the global GDP and 18% of global trade. One of the founding values of BRICS is the shared commitment to restructure the global political, economic and financial architecture to be fair, balanced and representative; this rests on the core pillars of multilateralism and international law.
The BRICS alliance has expanded in both breadth and depth as its members investigate real-world collaboration in an open, supportive, and cooperative manner to discover shared values and interests. The three pillars of BRICS collaboration—political and security cooperation, financial and economic cooperation, and cultural and people-to-people cooperation—see about 150 meetings a year. A legal basis for cooperation in areas as diverse as the Contingent Reserve Arrangement, customs, taxation, interbank cooperation, culture, science, technology, and innovation, agricultural research, energy efficiency, competition policy, and diplomatic academies is provided by more than 30 agreements and memoranda of understanding.
Risk 1 – threat to UN Charter
It is in the founding values of the BRICS organisation that we see the first potential international risk. These values of BRICS signals a direct restructuring of the world order in which western based organisations such as the United Nations were formed. The UN Charter (Article 1.1) states the ‘Purposes of the United Nations’ to be ‘maintain[ing] international peace and security… and tak[ing] effective collective measures for the prevention and removal of threats to peace….in conformity with the principles of justice and international law’. Despite how similar the foundational values of both IGOs seem, it is argued that as a non-Western organisation, BRICS offers direct opposition to the ‘Western way of doing things’. This, in conjunction with the growing criticisms facing the UN and its lack of effectiveness, and its bias towards Western democracies (particularly with regards to human rights) poses huge international risk to the current world order. In recent years, it has become clear that there is a growing disenchantment with the current international system due to a number of factors, including the West’s tendency to impose unilateral financial sanctions, misuse international payments mechanisms, break climate finance commitments, and pay little attention to the food security and health imperatives of the Global South during the pandemic.
The expansion represents a growing convergence of the BRICS countries’ geopolitical and economic goals. Major international oil producers are included that are close to important commercial chokepoints, like the Suez Canal, the Strait of Hormuz, and the Bab-al Mandab Strait. The International North-South Transport Corridor is already being developed by Russia, Iran, and India. China gets the majority of its energy imports from Saudi Arabia and the United Arab Emirates, two of the biggest oil and gas exporters in the world. Argentina’s inclusion was expressly requested by Brazil, the final BRICS country to approve the expansion; this was presumably a requirement for Brazil to consent to the enlargement in its entirety. South Africa, in its capacity as the host, successfully negotiated the inclusion of two African nations, bolstering its continuous endeavours to foster integration, development, and expansion through the African Continental Free Trade Area.
Such international risks are heightened by the geopolitical tensions between individual spearheads of the Western, and non-Western world order, namely the US and China, which has served as a backdrop for many recent BRICS meetings. With 40 states having shown interest in joining BRICS, it is becoming more and more clear that states are increasingly looking for economic, and political structures that show movement away from the traditional Washington led world order, potentially posing international risks to the West should this trend continue.
Risk 2 – BRICS Currency as a challenge to the dollar
The second key international risk we can see from the BRICS expansion comes from the fact that, at present, the BRICS nations have a larger combined GDP than the G7 in purchasing power parity. Despite this, and the significant proportion of global GDP they are responsible for, the BRICS only has 15% of the voting power at the International Monetary Fund (IMF). Alongside anger about such disparities come growing concerns in the Global South that the US could continue to weaponise the dollar in a similar way it has with regards to Russian sanctions. Since the end of World War II, the dollar has been the world’s principal reserve currency; estimates show it to be used in over 80% of international trade. In an article about the BRICS summit of August 2023, the states promised to “reduce the reliance on the U.S. dollar and promote the use of national currencies in international trade.” At the summit, Russian President Vladimir Putin told those attending (through a video feed) that “the objective, irreversible process of the de-dollarization of our economic ties is gaining momentum”. An increase in bilateral and multilateral trading within the BRICS nations, using their own currencies, has posed a huge risk to the bargaining power of the US dollar, and its power in the global economic system as these nations reduce their dependency on it.
Extrapolating out to the BRICS expansion, it is possible to argue that, with increased membership, the organisation’s sphere of influence will also expand amidst tensions between the West and the new members of BRICS. The Iranian membership, for example, falls in line with growing tensions with the USA in the midst of a stalemate over the 2015 nuclear deal, and tense encounters in the Persian Gulf. With this growing sphere of influence, one could argue, will also come increased efforts from the Global South to move away from the dollar, furthering the international risks to the Western economic system.
Minimising threats, internal rifts
It is important to note, however, that ideas of de-dollarization, and reforming the current international world order are note new, nor have they purely come about as a result of BRICS’ increasing influence. Academics and politicians alike remain in agreement that an attempt to overthrow the current world order would be a long uphill battle, with some subscribing to Mearsheimer’s offensive realism mindset arguing that BRICS would be better off ensuring its survival by growing its influence in the current world order rather than trying to overthrow it.
In order for BRICS to pose a more significant risk to the current world order, it must first solve its internal rifts. Since May 2020, China and India have been locked in border disputes; at the same time, India, Brazil and South Africa have found themselves in a situation where they want amicable relations with the West as much as they do with Russia and China. From this, it is possible to argue that, whilst there is unanimous agreement amongst the BRICS+ members that something needs to change, reaching agreement on how to bring about such change will take more time, minimising the international risks posed by the organisation.
BRICS+ as a beacon of hope
This article has spent time focusing on the risks posed by the BRICS expansion to the Western world order, a world order which many of those reading this article will have taken comfort from for their entire lives; however it is crucial to take into account that, for many of those living in the Global South, the BRICS expansion creates hope for a much needed change. It is possible to argue that, since the fall of colonialism, the Global South has been placed in a position of subservience by the West, from harsh conditionality placed on development loans, to accusations of arrogance towards the needs of the Global South. The BRICS expansion offers a move away from such arrogance towards a change in the rules surrounding global finance, and trade, offering a much increase in strategic autonomy for the Global South.