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BRICS Membership Expansion: Implications to the World Order

Per-Anders Pettersson/Getty Images via Foreign Policy


Introduction

In 2001, a Goldman Sachs economist, Jim O'Neill, coined the term ‘BRIC’ to refer to Brazil, Russia, India, and China. He predicted that these four economies will dominate the global economy by 2050 (O’Neill, 2001). BRIC became a reality in 2009, and they welcomed South Africa in 2010, forming what we know today as 'BRICS'. Currently, BRICS accounts for more than 40% of the world population and around a quarter of the global economy (Acharya, 2023). This “informal” organisation has gained international attention not only because of the similarities shared by its member states, such as fast-paced economic growth and emerging market, low labour costs, favourable demographics, and rich natural resources, but also of the states that were not included in the association, for instance, none of the Group of Seven (G7) member states are inside of it, which spark discussion on whether the bloc would be a new force to challenge the global order.


Effective from January 2024, the bloc has its second expansion, which includes Saudi Arabia, Iran, the United Arab Emirates, Ethiopia, and Egypt (Hancock & Cohen, 2024). Argentina was originally among the states to join the coalition in this round. However, the newly elected president, Javier Milei, opposed this decision made by the previous state’s head to “align the country with the US and Israel geopolitically” and refuse to team with communists” (Guo, 2024). With the increase in membership, although the bloc's influence and importance to the global economy and population remain roughly the same since its early formation, it is worth noticing that the bloc will also account for more than 40% of the global oil production, nearly a quarter of the global exports, and representing nearly half of the world’s population (Lu, 2023), which increased the oil production from BRICS by 21% and doubled it to that produced by the G7 and the European Union (Afota et al., 2024).


Moreover, although there were only five countries accepted to the bloc, there are more than 40 countries that have expressed interest in joining them with different aims. For example, Bolivia would like to reduce its dependency on the US dollar (Ramos, 2023), and Algeria would like to strengthen partnerships with the BRICS member states and diversify its economy (Amara, 2023). Apart from the increased influence of natural resources and global manufacturing, how will BRICS’s membership expansion influence the global order?

 

BRICS in the Middle East and North Africa region: Accelerant or Distinguisher to International Conflicts?

Before the recent expansion, the BRICS bloc was mainly comprised of states in Eurasia (Russia, India, and China). Four of the new member states (Egypt, Saudi Arabia, the United Arab Emirates, and Iran) are in the Middle East and North Africa (MENA) region. By joining BRICS, the four MENA countries could strengthen their influence, both as emerging economies and major oil producers, within the current international system. At the same time, by incorporating states from the MENA region, BRICS could strengthen their influence in the international system. It might not necessarily be a challenger to the other existing powers, for instance, the G7 (Philip et al., 2023) and the international norms and international institutions established by the United States and its alliance, such as the creation of the New Development Bank after the International Monetary Fund failed to carry out the governance reforms demanded by BRICS (Green, 2023).

Instead, it could be an opportunity for a balanced power distribution as the bloc may have greater power to shape global policies and advocate for their interests, which, indeed, is one of the desires that the BRICS member states would like to pursue through the multilateral cooperation (Stuenkel, 2020).

Before the membership expansion, the BRICS community was still intact, even though there were still disputes among them. For example, the border dispute between China and India along the Himalayas led to several military clashes in 2020 (International Crisis Group, 2023). The disputes originated from their political (such as political systems and ideology) and economic differences (such as economic system) and led to internal competitions or disputes among the community. For example, China and India are competitors in commodities imports, and Russia and Brazil are competitors in commodities exports (Mottet, 2013). Though there are competition and disputes among the member states, they also formed complementary relationships within the community using their comparative economic advantages. For example, the service textiles industry in China and the agricultural industry in Brazil and South Africa (Wang et al., 2018).


Their solidarity, to some extent, can be reflected in their attitude toward Russia’s annexation of Crimea in 2014 and its role in eastern Ukraine (Stuenkel, 2020), in which the BRICS foreign ministers warned Australia’s intention to isolate Russia in G20 and BRICS countries abstained from, not against, a General Assembly resolution criticising the Crimea referendum (Keck, 2014). Before the expansion, the bloc, apart from multidimensional cooperation (political, security, economic, and cultural) with its members, also an important pillar in other international and regional organizations, had become an alternative to countries that "reject the legitimacy of Western order aspirations" (Coning et al., 2014). With the expansion, the bloc could be stronger and more influential, especially for those holding the same idea to "reject the Western order" or wanted to re-position themselves in a different international norm. A norm that, as documented in the XV BRICS Summit’s Johannesburg II Declaration (2023), “more representative, fairer international order, and a reinvigorated and reformed multilateral system.” (BRICS, 2023)


Moreover, with the acceptance of the four new member states in the MENA region, it is reasonable to assume that the BRICS community will expand its solidarity with them. Their stance and role in international conflicts, particularly those involved in the new members, will become an importance force in the Middle East.

For example, the ongoing conflicts between Israel and Hamas (Palestine), not to mention the relations between Israel and the Arab world and conflicts between Iran and the United States (Wright, 2024). In addition to the current conflicts in the Middle East, the expanded bloc could be a platform to normalize the relations in the region. For example, Iran and Saudi Arabia, which are the leading Shia and Sunni Muslim states in the region (Al Jazeera, 2023), and the relations between Iran and the UAE on their territorial disputes over the islands in the Strait of Hormuz (Al Jazeera, 2023). Furthermore, since four out of five new members are from the MENA region, on the one hand, it shows the BRICS’s interests in the region; on the other hand, it also shows that there could be more members from the region to be welcome to the bloc. For example, Algeria, Bahrain, and Syria have applied for membership but were not granted in this round (Katz, 2023). The bloc could, hence, be a platform for the MENA states or the Muslim world to a larger discourse power

 

Global Economy: The Hegemony of the US Dollar & Post COVID-19 Economic Recovery

The next BRICS summit will be hosted by Russia in October 2024. Russian President Vladimir Putin has stated the following goals for the bloc: 1) Increase the role of BRICS in the international financial system; 2) Develop cooperation between banks and expand the use of BRICS currencies; and 3) Promote collaboration between tax and customs authorities (BBC, 2024). This idea was echoed by Brazil’s ex-president, Luiz Inacio Lula da Silva, who proposed creating a common currency among the BRICS community at the BRICS Summit 2023. Though it was not part of the summit agenda, the bloc showed interest in the idea and would like to explore the possibility (Savage & Plessis, 2023).


According to a report from the Carnegie Endowment for International Peace (2023), the US dollar plays a dominant role in cross-border trade and finance across countries (Greene, 2023). The report also pointed out that the BRICS currencies are less likely to be widely used in international markets due to inadequate financial infrastructure, which would increase the transaction costs. As a result, most of the global commodity trade is priced and settled in US dollars (even for Russia, which remains under US economic sanctions). Moreover, among the original BRICS member states, only China and India have recorded significant economic growth since the bloc formation. China is the world's second-largest economy, and India is seeking to become the third-largest. The rest of the member states have either had their economic growth remain the same compared to 2001 or were surpassed by another country. For instance, South Africa is no longer the largest economy in Africa, as it was surpassed by Nigeria (O'Neill, 2023) since 2014 (FRANCE 24, 2014).


Besides, the multilateral circulation among the BRICS community has the potential to an economic boost. For example, China’s economy has become vulnerable after COVID-19, such as their manufacturing and transport industries that were severely hit due to the pandemic, technology industry that was crackdown, and the downturn in the real estate industry, not to mention the increase of the unemployment rate due to those challenges (Kurtenbach, 2023). Nevertheless, China’s economy has been gradually recovering. Its GDP increased by 5.5% in the first quarter of 2023, and by 6.3% in the second quarter. Part of the increase was contributed by its foreign trade with other BRICS countries, in which a 12.1% increase was recorded in the first five months of 2022 compared to 2021 (Devonshire-Ellis, 2023).


However, it is also worth noting that since 2016, the BRICS member states have started the de-dollarisation effort, for instance by increasing the usage of Yuan renminbi in cross-border transactions among them. Most of the cross-border transactions used by the renminbi involved Chinese enterprises, but there were also some renminbi transactions between Russia and Japanese or Southeast Asian enterprises (Greene, 2023). With the participation of the oil producers from the MENA region, it will not be a surprise for people to see the BRICS member states use their currencies in exchange for oil or between the energy cooperation among the community, especially for Iran, which is also under US economic sanctions.

 

Conclusion

Born from an economist's idea of an economic alliance, BRICS has become not only economic but also an alliance in other areas, such as security and culture. Recently, with the new five member states, the bloc's influence has reached the MENA region, not only strengthening its power in the international economy but also increasing the representation of the bloc in the international system. The community has also gained more influence on the international stage, be it cooperation or conflicts. Not to mention the economic benefits that the bloc could bring to its member states and the opportunities and challenges it could pose to other states, BRICS' influence is still growing and its role in birthing an alternate world order is to be seen in the future.


This article represents the views of contributors to STEAR's online digital publication, and not those of STEAR, which takes no institutional positions.


 

References

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