A new world order is well under way. The BRICS — the grouping that consists of Brazil, Russia, India, China and South Africa — has invited Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates to join in its first expansion in 13 long years. This certainly adds credence to the bloc’s claim to be the voice of developing countries, with several others eager to join.
Interesting choice
The alliance will be in a unique position in the oil sector when the new countries formally join on January 1, 2024. Russia, Saudi Arabia, the UAE and Iran are major producers while India and China are some of the biggest buyers.
In the lead up to the summit, there was much talk about a BRICS currency which will used to trade among members. This new currency was supposed to reduce the US dollar’s dominance. The Minister for External Affairs S Jaishankar had dismissed this in July, when he said there was “no idea” about such a currency.
Although a common currency may not be on the cards, could we see traction in de-dollarisation? Only time will tell as several members have pacts to trade using their own currencies with each other.
This edition of the BRICS summit in South Africa grabbed headlines around the world, with many seeing it as the first sign of the West’s fall from grace.
Political overtones
Chinese President Xi Jinping believes that the BRICS could take on the G7. However, there are some fundamental differences between the two. Firstly, the G7 is a political alliance of developed countries headed by the US. Having very similar viewpoints, there are few conflicts among them.
The BRICS has a mix various type of governments, from democracy to a one-party rule. China and India share an uneasy relationship. The two countries have fought wars and there has been a military stand-off at the LAC since April 2020. While Brazil, India and South Africa also enjoy good ties with the West, the G7 sees Russia as an old adversary and China as a rising threat. Russia and China have recently become close allies, much to India’s discomfort.
Saudi Arabia and the UAE are moving away from the West and Iran has a long history of being under Western sanctions. Iran also has a turbulent relationship with the Kingdoms.
Focusing on economic growth will help the expanded BRICS look past these inherent contradictions and face common challenges, from securing funds for development activities, skilling the young and fighting poverty and climate change.
To be successful, it needs to remain a platform for economic and trade cooperation. If they must take on the G7 politically, the BRICS experiment might fail as fissures might be too big a hurdle to overcome.