BRICS: Is the economic sun now rising in the East?
BY SANJANA IYER
From Bollywood to Brazilian soaps, the BRICS nations (Brazil, Russia, India, China and South Africa) certainly have a flair for the dramatic, and their 15th summit held this August in Johannesburg was no different. From Vladimir Putin being beamed in virtually upon fear of arrest in the host nation for war crimes, to Xi Jinping mysteriously missing the delivery of a key speech, yet appearing later at dinner without any acknowledgement of his prior absence, the summit saw its fair share of theatrics. But despite these perfunctory problems, there stands an unshakeable message at the heart of the group: the desire for a reshaping of the current world order.
While that sounds like a line straight out of an Orwell novel, it cannot be denied that the world economy runs on a Western wheel. From the United Nations to the IMF to the World Bank - three institutions which have all been called for reform by the BRICS nations - the figures speak for themselves, as African nations pay four times more than the US and eight times more than the richest European countries to borrow from international financial institutions. This disparaging difference only digs the development gap deeper - the exact premise upon which BRICS formed the New Development Bank in 2014, an initiative with an initial capital of $50 billion that supports infrastructure projects across the Global South.
However, with Russia as a founding member and the use of the dollar to impose sanctions upon the Eastern European nation, the New Development Bank is inevitably suffering. This has certainly contributed to a rekindling of the ‘de-dollarisation’ mantra (the move away from conducting forex in USD) BRICS has held since its foundation, an ideal it shares with almost every emerging and developing nation waiting to join the group (of which there are 23 formal applications and 40 interested in total). Once again the numbers don’t lie: BRICS nations hold an aggregated 31.5% of global GDP - more than that of the G7 - and contain 40% of the world’s population. So with a now heightened interest in moving away from the dollar and conducting trade in their own currencies, the BRICS nations are definitely an economic force to be reckoned with. Given the diminishing reliance on the dollar after the Federal Reserve raised interest rates (increasing the cost of dollar debt and numerous imports), the BRICS nations’ economic independence is entirely conceivable.
And it is made only more convincing after the biggest bombshell of the summit (except for Brazil being the only nation to condemn the invasion involving literal Russian bombshells): the accession of 6 new countries into the group, more than doubling the number of members. With their complete membership in effect from 1 January 2024, Egypt, Iran, Saudi Arabia, the United Arab Emirates, Ethiopia and Argentina are joining the ranks of this rising political powerhouse, although some argue the actual extent of the group’s influence is up for debate.
The greatest barrier the BRICS bloc faces is constructing a cohesive world-facing image. They are now embracing the notoriously authoritarian regimes of Saudi Arabia, the UAE and Iran (in addition to China and Russia) while claiming to uphold democracy and protect human rights, alongside further complicating an already rocky relationship with the West. With China and Russia declaring a ‘new era’ for the world order in 2022, the premier nation cited the New Cold War as reason to expand the bloc to gain greater freedom and support, referencing the rising tensions between these two nations and the US. Yet on the complete other end of the spectrum stands India-US relations, with Biden’s tacky t-shirt gimmick during his visit with Modi delivering the more serious message of the nations’ collaboration, ironically including the issue of countering Chinese influence in the Indo-Pacific. This certainly doesn’t sound like a group that can reconcile a united front, and is made all the more complicated with Brazil’s President Lula da Silva rejecting the BRICS bloc as a rival to the US and G7, but simultaneously welcoming Iran - a historical enemy to Washington - with open arms.
Yet, through crucially trying to present themselves as ‘non-western’ rather than ‘anti-western’, BRICS ultimately champions developing and emerging nations’ right to have a seat at the international table. With 40% of oil reserves now belonging to BRICS and more oil transactions being conducted in yuan than dollars, this bloc is certainly gearing up to become a key player on the world stage, arguably with China making the largest strides for themselves at the forefront of the expansion. Being some of the world’s fastest growing economies, these nations cannot be quietened much longer, just as soon as they all agree on the same table to sit at.
Image: Wikimedia Commons