Brazil President Luiz Inacio Lula da Silva, China President Xi Jinping, South African President Cyril Ramaphosa, Prime Minister Narendra Modi and Russia’s Foreign Minister Sergey Lavrov at the BRICS Summit held in Johannesburg, South Africa.
Credit: Reuters Photo
While the 15th BRICS summit meeting, held at Johannesburg, South Africa from August 22 to 24, reiterated many points it stood for in the past decade and a half, the latest iteration is significant. For one, West Asia, which is currently witnessing a power transition, has attracted the attention of BRICS.
Additionally, apart from the five member countries, nearly 54 African countries' leaders participated in the summit. This iteration of the summit revisited the traditional agenda of the BRICS. However, three things stand out – membership expansion, interest in local currency transactions and intensification of multipolar trends in the backdrop of the Ukraine conflict and US-China tensions.
Expansion of membership
One of the most significant outcomes of the 15th BRICS meeting is its expansion in membership to include six new members, including Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates. Noticeable among the new members is the heavy representation from the West Asian and African region. China’s initial preference for Turkey, Mexico, Nigeria and Indonesia did not materialise.
The expansion of this group has been the subject of much inquiry, particularly in terms of its impact on global governance and economic arrangements. BRICS expansion was triggered by the recent global isolation of Russia in the backdrop of the Ukraine conflict, China’s aspirations to increase the multipolar camp against the US and South Africa’s desire to make a substantial contribution as the host.
India sees an expanded BRICS as a platform to enhance its economic opportunities and growth potential, as the Prime Minister’s speech at the Business Forum indicated. As one of the fastest-growing economies in the world, India is keen to tap into the vast markets of the expanded BRICS countries and attract investments from them. Saudi Arabia and UAE, for example, have committed more than $100 billion in investments in India.
The principles set forth in the BRICS Sanya Declaration of 2011 are aimed at increasing engagement and cooperation with non-BRICS countries, in particular developing countries, and to enhance the voice of the global south in international affairs. The Beijing Declaration adopted at the 14th BRICS Summit in 2022 paved the way for membership expansion. China had proposed the “BRICS Plus” expansion plan in 2017.
Of the new members, Saudi Arabia is the third largest global oil supplier, accounting for 11 per cent of the world’s petroleum production and holding 15 per cent of the world’s oil reserves. It has recently announced that it will attempt to boost its oil production from 10 to 13 million barrels per day.
US President Biden persuaded Riyadh to scale down oil production, but in vain. The US also had a 1972 “petrodollar” deal with Saudi Arabia that helped position the US as global currency. This also seems to be changing, at least in BRICS efforts. China had also brought traditional rivals Saudi Arabia and Iran together in a deal in March this year.
Saudi Arabia and UAE, for example, have committed more than $100 billion in investments in India.
The principles set forth in the BRICS Sanya Declaration of 2011 are aimed at increasing engagement and cooperation with non-BRICS countries, in particular developing countries, and to enhance the voice of the global south in international affairs. The Beijing Declaration adopted at the 14th BRICS Summit in 2022 paved the way for membership expansion. China had proposed the “BRICS Plus” expansion plan in 2017.
Of the new members, Saudi Arabia is the third largest global oil supplier, accounting for 11per cent of the world’s petroleum production and holding 15 per cent of the world’s oil reserves.
US President Biden persuaded Riyadh to scale down oil production, but in vain. The US also had a 1972 “petrodollar” deal with Saudi Arabia that helped position the US as global currency. This also seems to be changing, at least in BRICS efforts.
The inclusion of new members in the BRICS group will undoubtedly increase the economic weight and political influence of this bloc. In turn, this could potentially lead to further challenges to existing intergovernmental organisations and established economic powers. Furthermore, the inclusion of new members could also impact the group’s existing goals and priorities, such as its efforts to combat climate change.
It is widely acknowledged that the rise of BRICS countries has challenged the current international order, creating both opportunities and challenges for global governance. On the one hand, the expansion of BRICS could lead to a recalibration of global economic governance by promoting greater representation and participation from emerging economies in important international decision-making processes. On the other hand, some observers caution that expanding the group may exacerbate existing challenges such as competition for resources and political power and impose limitations on the existing members as well as their vision.
China is the largest economy in BRICS and its primary interest in the group is to expand its economic influence and opportunities. China initially expressed concerns on membership expansion without clear criteria as it believed that this would result in loss of coherence and effectiveness within the grouping and could dilute the focus and effectiveness of the existing members. China suggested that any new members should have a certain level of economic development and political stability.
Strategic autonomy
India promoted the BRICS Plus process before. It sees an expanded BRICS as an opportunity to retain its strategic autonomy, enhance its global influence, promote multilateralism and South-South cooperation, strengthening regional security and addressing global challenges such as climate change and terrorism. India is also linked to South Africa and Brazil through the democratic initiative of IBSA, indicating potential fault lines with authoritarian regimes in the grouping and elsewhere.
A second major outcome of the 15th BRICS meeting is de-dollarisation and an emphasis on transactions in local currencies. The BRICS declaration suggested an interest among member states in triggering de-dollarisation or implementing exchanges in local currencies. Indeed, a proposal was mooted for the respective finance ministries and central banks of BRICS countries to launch national currency-based payment systems. While Brazil and India are said to be lukewarm towards this idea, others such as a seized Russia and an ambitious China are keen on implementing this process.
Russia and Iran faced western sanctions due to the Ukraine conflict and the nuclear programme respectively. This generated concerns in China about potentially being the next country to witness sanctions due to the emerging US-China “decoupling” or “de-risking” trends.
Due to these bans and its political agenda of “occupying the centre stage”, China is exploring the possibilities of reduced dependence on the US dollar. China constitutes an overwhelming 70 per cent of the BRICS economy, India making up 13 per cent and the other members making up the rest. This has put enormous economic influence in China’s hands.
China had suggested the Belt and Road Initiative contracting countries transact in local currencies to start with. However, this was not successful. In fact, it is estimated that the US dollar is used in more than 88 per cent of global currency transactions, followed by the Euro.
None of the BRICS countries come anywhere close to this number. Hence, a unified BRICS currency is a distant dream, especially given the wide difference among the BRICS countries.
China also has other constraints in the BRICS. There are diversified economic structures and priorities among the member states — some, such as India, have territorial disputes that have the potential to complicate cooperation within the grouping. China itself is witnessing slowing growth (3.3 per cent last year) and rising debt levels that could constrain its ability to invest in and engage with other BRICS countries.
The BRICS countries supported multipolarity, since the idea was generated by late Russian Premier Primakov and reflected the aspirations of the emerging economies. Multipolarity implied questioning the unipolar tendencies of the US in Iraq and Afghanistan campaigns or alleged regime changes. Opposing “neo-interventionism”, “coloured revolutions” and information dominance became the main focus of this multipolar campaign. Russia and China are the main architects of this trend, and it suited Brazil and India’s interests for a while.
More than doubling the BRICS membership at Johannesburg is said to challenge existing economic blocks like the G7, although many of them are members of the G20. The subtle shadowboxing that the BRICS countries can exercise needs to be seen in the next round of their showdown with the West.
(Srikanth Kondapalli is the Dean of School of International Studies, JNU.)