Introducing the BRICS
In 2009, the foreign minister of Brazil and Russia proposed the establishment of a formal BRIC political grouping, building on Lord Jim O’Neill’s acronym. The initial BRIC group included Brazil, Russia, India, and China, with South Africa joining their ranks in 2010 as a regional power and gateway to Africa. Operating as an informal assembly, BRICS positions itself as an alternative platform, inviting the participation of least developed and developing nations in global decision-making and fostering enhanced economic collaboration. In 2014 the BRICS announced the creation of the New Development Bank (NDB), and a Contingent Reserve Arrangement (CRA) as complementary initiatives to the existing financial and economic institutions and Multilateral Development Banks (MDBs) such as the International Monetary Fund (IMF), and the World Bank (WB). This strategic move aimed to rectify the disproportionate allocation of decision-making influence historically skewed towards Western powers such as the United States and Europe. Given the BRICS’ share of the world’s GDP and population mass, an increase of their share in global political decision-making would be a step toward more nuanced global governance. The combined GDP of the BRICS is expected to be around 27.6 trillion USD in 2023, representing 26.3% of global GDP. Furthermore, the BRICS countries represent roughly 40% of the world’s population. The BRICS thus aspire for a more equitable representation and systemic reform within the existing multilateral institutions.
All Eyes on the BRICS Summit
During the rotating annual BRICS summit, their distinguished heads of state and government convene to discuss spheres of political, and socio-economic coordination. In addition, invitations to attend the summit have been extended to other heads of state, or dignitaries such as the secretary general of the United Nations (UN), the president of the Development Bank, or certain business leaders. The first ever official summit was held on 16 June 2009 in Yekaterinburg, Russia. This year’s 2023 gathering marked their 15th annual summit, which took place in South Africa on 22-24 August 2023, with President Cyril Ramaphosa presiding as chairman. This year’s theme was “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism”.
In the lead-up to the summit, considerable media attention was directed towards the possibility of Russian President Vladimir Putin attending in person, who ultimately participated via videoconference. A pivotal moment at the annual summit materialised with the announcement of the BRICS expansion. In the Johannesburg II declaration the BRICS announced their decision to formally invite Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates (UAE) to become full members of BRICS as of 1 January 2024. According to Chinese president Xi Jinping, the BRICS expansion demonstrates the commitment of the organisation to cooperate in unity with all developing countries. However, the selection of the new member countries came as somewhat of a surprise.
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The New Club Members
The new member countries have a regional concentration on the Middle East and Northeastern Africa, with an exception of Argentina. More so, all are located in the Global South. Perhaps the most surprising addition to the BRICS was the Islamic Republic of Iran. Iran has been subject to economic sanctions from the United States and its addition to the group may increase tensions with the US. However, Iran’s deepening security and military partnership with Russia, and its economic ties with China (as exemplified in their 25-year cooperation agreement) seem to have opened the door for BRICS membership. Furthermore, after a seven-year dispute between the two countries China brokered an agreement between Iran and Saudi Arabia in March 2023 to restore their diplomatic relations. This agreement paved the way for both Iran and Saudi Arabia’s BRICS admissions. The invitations ushered to the Kingdom of Saudi Arabia and the United Arab Emirates may seem less surprising, as both are political and financial heavyweights in the Middle East with significant oil resources. While the two countries are long-time allies of the US, they have recently diverged from the western views on key issues such as the war in Ukraine and relations with Iran or Syria. However, according to the Saudi foreign minister, Saudi Arabia has not yet decided whether to join BRICS. Nevertheless, should both countries decide to join the BRICS, this would add substantial weight to the grouping.
An invitation was also extended to the Argentine republic. As the third-largest economy in Latin America that is currently mired in one of its worst financial crises in decades with inflation rates breaching the 100% mark, Argentina my seem a less obvious choice. However, it has strong economic and political relations to Brazil, India, and China. Furthermore, it is a major producer of lithium, which is a critical raw material for the clean energy transition. Argentina’s entrance into BRICS represents an important economic opportunity for the country, especially in view of the BRICS New Development Bank. Similarly, the Arab Republic of Egypt has been going through an economic struggle and has been one of the top recipients of US aid. Nevertheless it has maintained a strong relationship with Russia while expanding its trade ties with China. Egypt’s interest to join the BRICS follows its aim to reduce its US dependency after American investors pulled millions of dollars out of Egypt in response to Russia’s Invasion of Ukraine. The investors assessed that Egypt’s economy would face significant vulnerability due to the Russia-Ukraine conflict, given that 80% of Egypt’s wheat imports are reliant on these two nations. As the Egyptian pound has been devalued, BRICS membership would allow Egypt to trade in local currencies, offering significant economic benefits.
While the Federal Democratic Republic of Ethiopia was once one of the fastest growing economies in Africa, it was caught in a civil war for two years with tensions remaining high to date, severely disrupting its economy. Although Ethiopia is closely allied to the UAE, the question is what it can bring to the table. Its admission might be more of a symbolic choice, given Ethiopia’s stance as a founding member of the African Union and home to its headquarters. However, for Ethiopia the BRICS membership is an economically beneficial endeavour.
Where is BRICS headed?
The expansion of BRICS indicates that there is an increasing desire for a platform that allows developing countries to take part in and shape international decision making. The BRICS’ call for greater representation and agency resonates with the Global South. It also offers countries under western sanctions, such as Iran and Russia, an alternative way to trade. With the admission of Saudi Arabia and the UAE, an economic backbone is added to BRICS, as they are among the 10 largest oil producers worldwide, while Iran too claims to hold large oil reserves. Against the backdrop of surging energy demands in India and China, an alternative energy market is opened within BRICS. Thus, the BRICS’ symbolic power is growing substantially through the new admissions, as is its economic relevance. This extended version of BRICS (BRICS+) will represent almost a third of global GDP (29.3%) and 46% of the world’s population. Thus, it is not surprising that the Johannesburg II declaration also calls for a comprehensive reform of the United Nations Security Council (which currently includes neither a South American, nor an African country among its permanent members), as well as of the Bretton Woods institutions (WB and IMF).
Another key take-away from the BRICS Summit is the apparent frustration among many developing nations with existing asymmetries in international trade. The Johannesburg II declaration stresses the importance of using local currencies in international trade rather than having to rely on the US dollar (a de-dollarisation). The BRICS countries have entrusted their Finance Ministers with the responsibility of examining this matter by their next summit in 2024. This comes a month after the 2nd Russia-Africa summit where similar frustrations regarding the international trade system had been voiced. During that summit in St. Petersburg South Africa’s President Cyril Ramaphosa stressed that the African countries no longer want to “export ore, soil, dusts and rocks”, but rather want to export finished products with a high value. Ramaphosa’s stance showcases Africa’s determination to establish a more fair and levelled playing field in international trade and underscores a shift away from the exploitation of African resources. This resolute stance sets a profound expectation for changing future trade practices between African countries and the EU, as well as other powers.
While the BRICS appear to have experienced a resurgence, their effectiveness as an alternative bloc to the west has been questioned in the past. The ambivalent bilateral relations between key members of BRICS, such as China and India, has previously made the pursuit of shared goals difficult. Moreover, the recent announcement that Xi Jinping will not be attending the G20 summit in India, is interpreted by some as a snub to Delhi. With the addition of Iran and Saudi Arabia to the Club, themselves sharing a tense relationship despite recent reconciliation efforts, a lack of alignment among BRICS members risks to be sustained. Thus, the success of BRICS, especially in its expanded version, will largely depend on its internal dynamics rather than its magnitude.
EU Engagement with the BRICS
The expansion of BRICS as a political grouping does not necessarily pose a direct challenge to existing blocs such as the EU. Yet, it underscores an existing call by the global south for a significant reform of global governance and multilateral systems. To be able to meet present day challenges and strengthen ties with least-developed and developing countries, the EU must engage more politically and economically with countries from the global south, as partners on an equal footing. Especially in regard to multilateral institutions such as the IMF or the WB, the EU should proactively advocate reforms that integrate a broader spectrum of nations, rather than passively await the emergence of alternative global structures. Werner Hoyer, the President of the European Investment Bank (EIB), has voiced concerns of the global south losing confidence in the west. The EU should expand and draw on its strong existing collaborations, such as those centred on industrial development in Africa. The EU should also upgrade its engagement, pursue joint development initiatives alongside the nations in the global south, and create a level playing field. African and other nations no longer want to export only raw materials, and the global south seeks recognition and a seat at the international governance table. It is up to the EU and other leading powers to recognise these aspirations and prevent pushing the BRICS further away.
Author: Maria Kienzle, EIAS Junior Researcher
Photo Credits: Pixabay