What is BRICS?

photorandy2023

11 months ago

This is a new series of articles where I explain what various terms, catch phrases, and other confusing topics, as well as many secret government projects and agencies, are and do. If there are any subjects you’re interested in learning about, please include them in the comment section.

BRICS is an intergovernmental organization comprising nine countries – Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates. BRICS was originally identified to highlight investment opportunities. The grouping evolved into a geopolitical bloc, with their governments meeting annually at formal summits and coordinating multilateral policies since 2009. Relations among BRICS are conducted mainly based on non-interference, equality, and mutual benefit. The BRICS countries operate as an organization that seeks to further economic cooperation amongst member nations and increase their economic and political standing in the world.

The founding countries of Brazil, Russia, India, and China held the first leaders summit in Russia in 2009 under the name BRIC. Following a renaming of the organization, South Africa attended its first summit as a member in 2011 after joining the group in 2010. Iran, Egypt, Ethiopia, and the United Arab Emirates attended their first summit as member states at the 2024 summit in Russia. Saudi Arabia has not responded to an invitation to join BRICS, and is still considering joining.

Currently, the group is dominated by China, which has about 70% of the organization total GDP. Combined, the BRICS members encompass about 30% of the world’s land surface and 45% of world population. South Africa has the largest economy in Africa whereas Brazil, India, and China are among the world’s ten largest countries by population, area, and gross domestic product (GDP, nominal and PPP). All five initial member states are members of the G20, with a combined nominal GDP of US$28 trillion (about 27% of the gross world product), a total GDP (PPP) of around US$65 trillion (35% of global GDP PPP), and an estimated US$5.2 trillion in combined foreign reserves (as of 2024).

To some in the West, the BRICS countries are considered the alternative to Western dominated institutions led by nations of the G7 bloc comprising some of the leading developing economies. Together they have implemented competing initiatives such as the New Development Bank, the BRICS Contingent Reserve Arrangement, the BRICS pay, the BRICS Joint Statistical Publication and the BRICS basket reserve currency.

BRICS has received both praise and criticism from numerous commentators.

Key Takeaways

BRICS is an acronym for Brazil, Russia, India, China, and South Africa.
Economist Jim O’Neill created the term BRIC in 2001 (for Brazil, Russia, India, and China) with the belief that these economies would dominate global growth by 2050.
The BRICS nations offered a source of foreign expansion for firms and strong returns for institutional investors.
The organization seeks to deepen economic cooperation between the member countries and stand in contrast to the Western sphere of power.
Saudi Arabia, Iran, Ethiopia, the United Arab Emirates, and Egypt joined BRICS in 2024.

History

Founding

The term BRIC was originally developed in the context of foreign investment strategies. It was introduced in the 2001 publication, Building Better Global Economic BRICs by Jim O’Neill, then head of global economics research at Goldman Sachs and later Chairman of Goldman Sachs Asset Management.

The foreign ministers of the initial four BRIC General states (Brazil, Russia, India, and China) met in New York City in September 2006 at the margins of the General Debate of the UN Assembly, beginning a series of high-level meetings. A full-scale diplomatic meeting was held in Yekaterinburg, Russia, on 16 June 2009.

The BRIC grouping’s 1st formal summit, also held in Yekaterinburg, commenced on 16 June 2009, with Luiz Inácio Lula da Silva, Dmitry Medvedev, Manmohan Singh, and Hu Jintao, the respective leaders of Brazil, Russia, India, and China, all attending. The summit’s focus was on improving the global economic situation and reforming financial institutions, and discussed how the four countries could better co-operate in the future. There was further discussion of ways that developing countries, such as 3/4 of the BRIC members, could become more involved in global affairs.

In the aftermath of the 2009 Yekaterinburg summit, the BRIC nations announced the need for a new global reserve currency, which would have to be “diverse, stable and predictable.” Although the statement that was released did not directly criticize the perceived “dominance” of the US dollar – something that Russia had criticized in the past – it did spark a fall in the value of the dollar against other major currencies.

2010 expansion

In 2010, South Africa began efforts to join the BRIC grouping, and the process for its formal admission began in August of that year. South Africa officially became a member nation on 24 December 2010, after being formally invited by China to join and was subsequently accepted by other BRIC countries. The group was renamed BRICS –with the “S” standing for South Africa– to reflect the group’s expanded membership. In April 2011, the President of South Africa, Jacob Zuma, attended the 2011 BRICS summit in Sanya, China as a full member.

New Development Bank

In June 2012, the BRICS nations pledged $75 billion to boost the lending power of the International Monetary Fund (IMF). However, the proposed loan was conditional on IMF voting reforms. In March 2013, during the fifth BRICS summit in Durban, the member countries agreed to create a global financial institution to cooperate with the western-dominated IMF and World Bank. They planned to set up this New Development Bank by 2014.

At the BRICS leaders meeting in St Petersburg in September 2013, China committed $41 billion towards the pool; Brazil, India, and Russia $18 billion each; and South Africa $5 billion. China, which held the world’s largest foreign exchange reserves and contributed the bulk of the currency pool, wanted a more significant managing role. China also wanted to be the location of the reserve. In October 2013, Russia’s Finance Minister Anton Siluanov said that creating a $100 billion in funds designated to steady currency markets would be taken in early 2014. The Brazilian finance minister, Guido Mantega, confirmed that the fund would be created by March 2014. However, by April 2014, the currency reserve pool and development bank had yet to be set up, and the date was rescheduled to 2015.

In July 2014, during the sixth BRICS summit in Fortaleza, the BRICS members signed a document to create the US$100 billion New Development Bank (formerly known as the “BRICS Development Bank”) and a reserve currency pool worth over another US$100 billion. Documents on cooperation between BRICS export credit agencies and an agreement of cooperation on innovation were also signed. The Fortaleza summit was followed by a BRICS meeting with the Union of South American Nations presidents in Brasilia.

Other initiatives

Since 2011, the National Institutes of Statistics of the BRICS group of countries (IBGE, Rosstat, the National Bureau of Statistics of China, the Central Statistics Office (India) and Statistics South Africa) produce an annual joint statistical publication to put statistical production in perspective, compare adopted methodologies and statistical results. The publication serves as a single data platform for the mutual benefit of participating countries.

Since 2012, the BRICS group of countries has been planning an optical fiber submarine communications cable system to carry telecommunications between the BRICS countries, known as the BRICS Cable. Part of the motivation for the project was the spying of the U.S. National Security Agency on all telecommunications that flowed in and out of United States territory. As of 2023, construction of the proposed cable network had not started.

In August 2019, the communications ministers of the BRICS countries signed a letter of intent to cooperate in the Information and Communication Technology sector. This agreement was signed in the fifth edition of the meeting of communication ministers of countries member of the group held in Brasília, Brazil.

The New Development Bank plans on giving out $15 billion to member states to help their struggling economies. Member countries are hoping for a smooth comeback and a continuation of economic trade pre-COVID-19. The 2020 BRICS summit was held virtually in St. Petersburg, Russia, and discussed how to handle the COVID-19 pandemic and how to fix the multilateral system via reforms. During the 13th BRICS summit, in 2021, Indian Prime Minister Narendra Modi called for a transparent investigation into the origins of COVID-19 under the World Health Organization with the full cooperation of “all countries”, and Chinese leader Xi Jinping spoke directly afterwards, calling on BRICS countries to “oppose politicisation” of the process.

In May 2023, South Africa announced that they would be giving diplomatic immunity to Vladimir Putin and other Russian officials so that they could attend the 15th BRICS Summit despite the ICC arrest warrant for Putin. In July 2023, the Russian president announced that he will not personally attend the BRICS summit in Johannesburg on 22–24 August despite good relations with the South African government. Russian news channels noted that Putin will remotely participate online in all BRICS leaders’ sessions, including its Business Forum, and also deliver his remarks virtually.

2024 expansion

In August 2023, at the 15th BRICS Summit, South African President Cyril Ramaphosa announced that 6 emerging market group countries (Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates) had been invited to join the bloc. Full membership was scheduled to take effect on 1 January 2024. However, the Argentine general election in November 2023 led to a change in president to Javier Milei, who had committed to withdraw the country’s membership application. On 30 November 2023, incoming Foreign Minister of Argentina Diana Mondino confirmed that Argentina would not join the BRICS. On 29 December 2023 the Government of Argentina sent a letter to all BRICS leaders to officially announce its withdrawal from the application process.

Saudi Arabia did not join BRICS at the start of 2024 as had been planned, and they announced in mid-January that they were still considering the matter. As of April 2024, the matter is still under consideration. The organizers touted the expansion as part of a plan to build a competing multipolar world order that uses Global South countries to challenge and compete against the western-dominated world order. China Daily used the expansion to claim that more developing countries were interested in joining BRICS.

On 24 October 2024, an additional 13 countries, namely Algeria, Belarus, Bolivia, Cuba, Indonesia, Kazakhstan, Malaysia, Nigeria, Thailand, Turkey, Uganda, Uzbekistan and Vietnam, were invited to participate as partner countries. No membership invitations were extended.

Other Key Developments

The growth of the New Development Bank, an institution established in 2015 to provide emerging markets and developing countries with funding for infrastructure and sustainable development projects.
The establishment of the BRICS Parliamentary Forum, which is designed to “strengthen and promote contacts at the leadership level of chambers, committees and groups of parliamentarians.” This body is responsible for inter-parliamentary exchanges and consultations along with the development of new mechanisms for inter-parliamentary cooperation.

The BRICS thesis of a non-Western global order became conventional market wisdom in the aughts. But there were always skeptics, including some who claimed the term was Goldman marketing hype for its BRICS-focused investment fund.

Goldman Sachs’ BRIC Thesis

In 2001, Goldman Sach’s O’Neill noted that while global gross domestic product (GDP) was set to rise 1.7% in 2002, BRIC nations were forecasted to grow more quickly than the Group of Seven (G7). The G7 are the world’s seven most advanced global economies: Canada, France, Germany, Italy, Japan, the United Kingdom, and the U.S.

In the paper “Building Better Economic BRICs,” O’Neill outlined his view of the potential of the BRIC nations.

In 2003, O’Neill’s Goldman colleagues Dominic Wilson and Roopa Purushothaman followed up with their report “Dreaming with BRICs: The Path to 2050.”

The two authors claimed that by 2050, the BRIC cluster could grow to a size larger than the G6 (France, Germany, Italy, Japan, the U.S, and the U.K.), and the world’s largest economies would therefore look drastically different in four decades. That is, the largest global economic powers no longer would be the richest according to income per capita.

In 2007, Goldman published another report, “BRICs and Beyond,” that focused on BRIC’s growth potential, the environmental impact of these growing economies, and the sustainability of their rise.

The report also outlined a Next 11, a term for 11 emerging economies, in relationship to the BRIC nations, as well as the ascendancy of new global markets.

Closure of Goldman’s BRICS Fund

Growth in the BRICS economies slowed down after the global financial crisis of 2007-2008 and the oil price collapse that began in 2014.

By 2015, the BRICS acronym no longer looked like an attractive investment venue, and funds aimed at these economies either shut down or merged with other investment vehicles.

Goldman Sachs merged its BRICS investment fund, which was focused on generating returns from these economies, with its broader Emerging Markets Equity Fund. The fund lost 88% of its assets from a 2010 peak.

In a filing with the Securities and Exchange Commission (SEC), Goldman Sachs stated that it did not expect “significant asset growth in the foreseeable future” in the BRICS fund. Per a Bloomberg report, the fund lost 21% in five years.

How Many Members Are in BRICS?

The BRICS nations are Brazil, Russia, India, China, South Africa, Ethiopia, Iran, Saudi Arabia, Egypt, and the United Arab Emirates.

What Is BRICS and Its Purpose?

BRICS was created by Goldman Sachs as an analytical grouping of emerging market countries that experienced strong economic growth and were poised to dominate the world economy by 2050. These countries now operate as an informal organization that seeks to further economic ties with each other.

Is BRICS a Threat to the US Dollar?

BRICS could threaten the dollar globally by replacing it with another currency or creating its own. However, replacing a currency that is as stable and backed as the U.S. dollar is no small task, as it would need to be equally valued as the dollar. That currency would need to be backed by a very strong economy that rivals or outperforms the U.S.

The Bottom Line

BRICS refers to certain emerging market countries—Brazil, Russia, India, China, and South Africa (and the list of countries joining the bloc is growing)—that seek to establish deeper ties between member nations and cooperate on economic expansion, including trade. The countries act as a counterbalance to traditional Western influence. They seek to depend on each other to build a growing influence in the world.

Summits

The grouping has held annual summits since 2009, with member countries taking turns to host. Before South Africa’s admission, two BRIC summits were held, in 2009 and 2010. The first five-member BRICS summit was held in 2011 in China. The first nine-member BRICS summit was held in 2024 in Russia. The 2020, 2021, and 2022 summits were held via video-conference due to the COVID-19 pandemic.

Application and expansion process

While there is currently no formal application process to join BRICS, any hopeful government must receive the unanimous backing of all member states to receive an invitation. It was not until the early 2020s that discussions regarding allowing new states to join the club were widely held. Leaders and senior diplomats from the participating members began to discuss the prospect of adding additional members to the organization at that point.

In August 2023, at the 15th BRICS Summit, South African President Cyril Ramaphosa announced that Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates had been invited to join the organization on 1 January 2024.

On 30 December 2023, the new government of Argentina, which formally applied for BRICS membership under Alberto Fernández‘s government in 2022, officially declined the offer to join the bloc due to the new government’s different foreign policy.

On 1 January 2024, Egypt, United Arab Emirates, Ethiopia and Iran officially joined the bloc.

On 2 September 2024, Turkey officially applied to join the bloc. At the same time, Turkey has been a NATO member since 18 February 1952 and is also a European Union candidate country. Turkey’s EU membership process started on 3 October 2005 but was frozen on 13 March 2019. In September 2022, Turkish President Recep Tayyip Erdoğan announced that his country would apply for membership in the Shanghai Cooperation Organisation. On 11 July 2024, President Recep Tayyip Erdoğan stated in a statement to the U.S. Newsweek magazine that they did not consider Turkey’s membership in NATO as an alternative to the Shanghai Cooperation Organisation and BRICS.

Algeria previously applied for membership in 2023, but later rejected it in September 2024, making Algeria the second country after Argentina to decline and stop its application.

Following the 2024 BRICS summit, Brazil blocked Venezuela’s application to the bloc, largely due to the disputed 2024 Venezuelan elections and the Venezuelan crisis. The country in response recalled its ambassador from Brazil.

Since new members joined the acronym used has informally been BRICS+ or BRICS Plus.

Potential candidates for future membership

Main article: Member states of BRICS § Countries that have applied for membership

Financial architecture

The New Development Bank (NDB) is based in Shanghai.

The New Development Bank (NDB) and Contingent Reserve Arrangement (CRA) were signed into treaty at the 2014 BRICS summit in Brazil.

Equal distribution of shares among the founding shareholders of the NDB

Share of G7 and BRICS GDP (PPP) in the world

Currently, the group is dominated by China, which has the largest share of the group’s GDP, accounting to about 70% of the organization total.

The financial architecture of BRICS is made of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA). These components were signed into a treaty in 2014 and became active in 2015.

New Development Bank

The New Development Bank (NDB), formally referred to as the BRICS Development Bank, is a multilateral development bank operated by the five BRICS states. The bank’s primary focus of lending is infrastructure projects with authorized lending of up to $34 billion annually. South Africa hosts the African headquarters of the bank. The bank has a starting capital of $50 billion, with wealth increased to $100 billion over time. Brazil, Russia, India, China, and South Africa initially contributed $10 billion each to bring the total to $50 billion. As of 2020, it had 53 projects underway worth around $15 billion.

In 2021, Bangladesh, Egypt, the United Arab Emirates and Uruguay joined the NDB.

BRICS Contingent Reserve Arrangement

The BRICS Contingent Reserve Arrangement (CRA) is a framework for protecting against global liquidity pressures. This includes currency issues where members’ national currencies are being adversely affected by global financial pressures. Emerging economies that experienced rapid economic liberalization went through increased economic volatility, bringing an uncertain macroeconomic environment. The CRA competes with the International Monetary Fund (IMF). Along with the New Development Bank, it is an example of increasing South-South cooperation. It was established in 2015 by the BRICS countries. The legal basis is formed by the Treaty for the Establishment of a BRICS Contingent Reserve Arrangement, signed in Fortaleza in July 2014. With its inaugural meetings of the BRICS CRA Governing Council and Standing Committee, held on 4 September 2015, in Ankara, Turkey It entered into force upon ratification by all BRICS states, announced at the 7th BRICS summit in July 2015.

BRICS payment system

At the 2015 BRICS summit in Russia, ministers from the BRICS states initiated consultations for a payment system that would be an alternative to the SWIFT system. The stated goal was to initially move to settlements in national currencies. The Central Bank of Russia highlighted the main benefits as backup and redundancy in case there were disruptions to the SWIFT system.

China also launched its alternative to SWIFT: the Cross-Border Interbank Payment System, which enables financial institutions worldwide to send and receive information about financial transactions. India also has its alternative Structured Financial Messaging System (SFMS), as do Russia SPFS and Brazil Pix.

Potential common currency and BRICS Bridge

BRICS countries committed to study the feasibility of a new common currency or similar, at the 2023 BRICS summit in South Africa. Fair and easier international trade, as well as a major reduction in costs of transactions, would be some of the reasons for the countries to forge a currency union.

BRICS Bridge—a successor to MBridge, and probably a merger with BRICS PAY—makes it possible for central banks to support cross-border transactions and payments with their own central bank digital currency (CBDC) based on an automatic cross-border Interbank payment system for settlement and clearance. It is designed to be independent of any single nation or central bank, and every central bank can opt out and has control of their CBDC exchange rate.

Reception

The five leaders of BRICS in Brasília, Brazil, in November 2019

Former Brazilian president Jair Bolsonaro welcoming the BRICS leaders

China

In 2012, Hu Jintao, the then General Secretary of the Chinese Communist Party and President of China, described the BRICS countries as defenders and promoters of developing countries and a force for world peace. Western analysts have highlighted potential divisions and weaknesses in the grouping, including significant economic instabilities, disagreements among the members over UN Security Council reform, and India and China’s disputes over territorial issues.

United States

On 9 April 2013, Isobel Coleman, director of the Civil Society, Markets, and Democracy Program at the American think tank Council on Foreign Relations, and later U.S. representative to the UN, claimed that the BRICS members share a lack of consensus. They uphold drastically different political systems, from vibrant liberal democracies in Brazil and South Africa to entrenched oligarchy in Russia, and their economies are poorly integrated and differ in size by orders of magnitude. She also claimed that the significant difference in GDP influences the reserves: China accounts for over 41% of the contribution, which in turn leads to its bigger political say within the association.

A multi-year study at Tufts University published in July 2023 found that the “common portrayal of BRICS as a China-dominated group primarily pursuing anti-U.S. agendas” was misplaced. The study asserted: “The BRICS countries connect around common development interests and a quest for a multipolar world order in which no single power dominates. Yet BRICS consolidation has turned the group into a potent negotiation force that now challenges Washington’s geopolitical and economic goals”.

After the August 2023 BRICS Summit, Con Coughlin—defense and foreign affairs editor at The Daily Telegraph—claimed “the challenge BRICS presents to the established world order seems destined to failure” and accused the organization of being used by China as a vehicle for expanding its global influence. Coughlin also noted the contradictions within the organization, such as the border dispute between China and India, and called for greater Western engagement with India as part of a new strategic alliance.

According to the Atlantic Council‘s Thomas Hill in December 2023, the de-dollarization efforts within BRICS, particularly in North Africa, present a significant challenge to US interests. The group aims to replace the dollar with the “R5” or “the renminbi, ruble, rupee, real, and rand”, or with other multilateral central bank digital currency (CBDC) as the new global currency. This shift could limit the US’s ability to run deficits and maintain low interest rates. Moreover, de-dollarization would undermine the effectiveness of US sanctions, relying on the SWIFT system, as BRICS seeks alternative financial systems, potentially making SWIFT obsolete. BBC assesses BRICS’ US dollar reliance decrease projects as “likely aren’t viable, because many member states’ economies cannot afford to wean themselves off of it.”

In November 2024 in a post on Truth Social United States president-elect Donald Trump threatened a 100% United States tariff on countries that pursued a BRICS currency or moved to favor another currency instead of the U.S. dollar.

India

In 2014, the Indian Marxist author Vijay Prashad raised the limitations of the BRICS as a political and economic “locomotive of the South” because they follow neoliberal policies. They have neither established new counter-balancing institutions nor come up with an alternative ideology. Furthermore, the BRICS project, argues Prashad, cannot challenge the primacy of the United States and NATO.

Global opinion

Russian President Vladimir Putin with Egyptian President Abdel Fattah el-Sisi during the 16th BRICS Summit in Kazan

According to a Gallup International poll conducted between October and December 2023, almost a third of people around the world had never heard of BRICS but Western countries were much more negative towards the alliance than elsewhere. The most negative attitudes were found in Sweden (45%), Spain (30%), the USA (30%), Portugal (29%), and Ukraine (29%) while the most positive net attitudes were in Russia (38%), Iran (37%), Nigeria (36%), Saudi Arabia (33%) and Malaysia (32%). In India, 36% had a positive view of BRICS while 29% had a negative view.

BRICS Pro Tempore Presidency

The group at each summit elects one of the heads of state of the component countries to serve as President Pro Tempore of the BRICS. In 2019, the position was held by the president of Brazil.

The priorities of the Brazilian Pro Tempore Presidency for 2019 are the following: strengthening the cooperation in science, technology, and innovation, enhancement of the cooperation on digital economy, invigoration of cooperation on the fight against transnational crime —especially organized crime, money laundering, and drug trafficking, and rapprochement between the New Development Bank (NDB) and the BRICS Business Council.

The current BRICS President Pro Tempore is from Russia and their goals are: investing in BRICS countries to strengthen their economies, cooperating in the energy and environmental industries, helping with young children, and coming up with resolutions on migration and peacekeeping.^[186]

What Is the BRICS Group and Why Is It Expanding?

Introduction

The countries that comprise BRICS—which stands for Brazil, Russia, India, China, and South Africa, and now five new members—are an informal grouping of emerging economies hoping to increase their sway in the global order. Established in 2009, BRICS was founded on the premise that international institutions were overly dominated by Western powers and had ceased to serve developing countries. The bloc has sought to coordinate its members’ economic and diplomatic policies, found new financial institutions, and reduce dependence on the U.S. dollar.

However, BRICS has struggled with internal divisions on a range of issues, including relations with the United States and Russia’s invasion of Ukraine. Meanwhile, its growing membership is both expanding its clout and introducing new tensions. Although some analysts warn that the bloc could undermine the Western-led international order, skeptics say its ambitions to create its own currency and develop a workable alternative to existing institutions face potentially insurmountable challenges.

Why does BRICS matter?

The coalition is not a formal organization, but rather a loose bloc of non-Western economies that coordinate economic and diplomatic efforts around a shared goal. BRICS countries seek to build an alternative to what they see as the dominance of the Western viewpoint in major multilateral groupings, such as the World Bank, the Group of Seven (G7), and the UN Security Council.

The group’s 2024 expansion comes with a range of geopolitical implications. It represents growing economic and demographic heft: the ten BRICS countries now comprise more than a quarter of the global economy and almost half of the world’s population. The group is poised to exert influence over the wars in the Gaza Strip and Ukraine, the shape of the global economic system, the competition between China and the West, and efforts to transition to clean energy.

Growing membership also brings new challenges, however, including increasing pushback from Western counties and divisions within the bloc. Experts say that how BRICS members navigate those tensions will determine whether the group can become a more unified voice on the global stage.

What are its origins?

The term was originally coined by Goldman Sachs economist Jim O’Neill in a 2001 resea rch paper in which he argued that the growth of what was then the “BRIC” countries (Brazil, Russia, India, and China) was poised to challenge the dominant G7 wealthy economies.

Russia was the first to call a convening of the four countries, a decision analysts say was driven by Russian President Vladimir Putin’s growing desire to create a counterweight to the West. Russia hosted the first official BRIC summit in 2009, and South Africa joined a year later by invitation from China, forming the five-country grouping that would persist for more than a decade.

The next wave of expansion came at the 2023 BRICS summit, with invitations extended to six newcomers: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE). All accepted except Argentina, after its newly elected President Javier Milei pledged to turn the country in a pro-West direction, saying that it would not “ally w ith communists.” Saudi Arabia has reportedly accepted the membership, but has delayed officially joining without giving detailed further explanation.

What does BRICS do?

The BRICS heads of state convene annually, with each country taking a one-year chairmanship to set priorities and host a summit. The bloc relies on consensus-based decision-making and is largely informal: it has no defining charter, secretariat, or common funds.

A few thematic areas underscore its priorities:

Advocate for greater representation in global organizations. BRICS seeks to establish a united front of emerging economy perspectives in multilateral institutions. The group aims both to push for reform of existing institutions, such as expanding the UN Security Council, and to form negotiating blocs within those institutions. For instance, many BRICS countries opposed the UN condemnation of Russia’s war in Ukraine and have sought common positions on the Iran nuclear program and conflicts in Afghanistan, Gaza, Libya, and Syria.

Coordinate economic policy. The 2008 global recession hit the BRICS countries hard, leading the group to emphasize economic coordination on issues such as tariff policy, export restrictions of critical resources, and investment. The bloc’s annual foreign direct investment (FDI) inflows more than quadrupled from 2001 to 2021, though they have slowed in recent years.

Reduce reliance on the U.S. dollar. Increasingly disgruntled over the domination of the dollar in global transactions, which exposes them to Western sanctions, BRICS leaders have long advocated for de-dollarization in favor of increased trade in local currencies or even a potential common BRICS currency.

Create an alternative finance system. The group’s New Development Bank (NDB) and Contingent Reserve Arrangement (CRA) are meant to mimic the World Bank and International Monetary Fund (IMF), respectively. BRICS members hope that alternative lending institutions can invigorate South-South cooperation and reduce dependence on traditional funding sources.

How effective have the BRICS financial institutions been?

The NDB and the CRA were designed as an alternative to the so-called Bretton Woods arrangement, the mainstream global financial system founded by leading industrial countries in the aftermath of World War II. Many countries of the Global South believe those institutions, especially the World Bank and the IMF, are failing to meet the needs of poorer nations, especially in areas such as climate financing.

“This system was created by rich countries to benefit rich countries,” UN Secretary-General António Guterres has argued. “Practically no African country was sitting at the table of the Bretton Woods Agreement.”

The two institutions operate in different ways. The CRA, a common fund among the BRICS central banks that offers support during a currency crisis, is limited to BRICS countries, while in 2021 the NDB opened to private projects in other emerging-market countries.

The NDB offers loans, guarantees, and other financial mechanisms to support private projects that contribute to sustainable development and building out infrastructure. It is intended to offer more flexibility, greater equality among shareholders, and easier access to funds than the World Bank, which must share its attention across 190 members. Its lending focuses on clean energy, transportation, sanitation, and social development, and it has sought to devote 40 percent of its projects to tackling climate change. To date, the bank has approved more than $32 billion for ninety-six projects since operations began in 2016.

However, those efforts face roadblocks. The NDB is more than five times [PDF] smaller than the World Bank, and experts doubt it could completely replace it. Others contend that its ambitions to redesign the global financial system have fallen short as it maintains many of the practices of its competitors. It has also faced criticism for vague commitments on environmental and social impact standards.

Can a BRICS currency replace the dollar?

The BRICS countries have sought to reduce the primacy of the U.S. dollar in international trade for more than a decade, primarily by increasing the use of their own currencies for trading, especially China’s renminbi. There is also a push to introduce a new, BRICS-wide currency, of which Brazil’s President Luiz Inácio Lula da Silva is a major proponent. Other monetary proposals laid out at the 2023 summit included founding a new cryptocurrency or using a combined basket of BRICS currencies.

Skeptics say those ambitions are far from reach, however. A BRICS currency would require major political compromises, including a banking union, a fiscal union, and general macroeconomic convergence. The dollar, long the world’s principal reserve currency, is still used in more than 80 percent of global trade, and many experts doubt that a new BRICS reserve currency would be stable or reliable enough to be widely trusted for global transactions.

What has divided BRICS members?

According to experts, in addition to those challenges implementing their economic vision, the BRICS countries also face increasing internal tensions and rivalry among members. China and India have seen tensions rise over their decades-old border dispute as well as their growing competition for economic and geopolitical leadership of the Global South. The group has already had problems in making decisions; at a foreign ministers’ meeting in New York in September, leaders sought to propose a model for streamlining new additions to the UN Security Council, but the group could not muster an agreement.

Russia’s invasion of Ukraine has also deepened fissures. It sparked widespread condemnation, Western-led sanctions, and diplomatic pressure to stop trading with Russia, disconcerting its BRICS allies. An International Criminal Court (ICC) warrant for Putin’s arrest over war crimes allegedly committed by Russian forces in Ukraine complicated the 2023 BRICS forum, forcing Putin to stay home or risk arrest by ICC member South Africa. Most BRICS members have sought a middle ground, while other members have largely ignored Western sanctions. Some analysts argue the sanctions on oil and other necessities are in fact pushing the BRICS countries closer together.

Meanwhile, economic and political instability in member countries has also shaken confidence in BRICS efforts. In the past decade, Brazil and South Africa have faced collapsing state capacity, yearslong recessions, chronic corruption, and crumbling infrastructure. China’s economic slump also threatens the group’s dynamism. Other major dividing lines include tensions between democracies and autocracies and long-standing rivalries such as those between Saudi Arabia and Iran and between Egypt and Ethiopia.

Why the expansion?

The push to grow membership is another fault line in the bloc. China and Russia have favored expansion, while Brazil and India were more hesitant, concerned it would dilute their own influence. India’s growing rivalry with China further fueled the desire not to prop up China’s power with a larger group in Beijing’s orbit.

The addition of Egypt and Ethiopia will amplify voices from the African continent. Egypt also had close commercial ties with China and India, and political ties with Russia; as a new BRICS member, Egypt seeks to attract more investment and improve its battered economy. China has long courted Ethiopia, the third-biggest economy in sub-Saharan Africa, with billions of dollars of investment to make the country a hub of its Belt and Road Initiative.

The addition of Saudi Arabia and the UAE would bring in the two biggest economies in the Arab world and the second and eighth top oil producers globally. They also play mediation roles in other regions, with Saudi Arabia leading ongoing peace talks for Sudan’s civil war and the war in Ukraine, the UAE hosting India-Pakistan stability talks, and both countries considering normalizing relations with Israel for the first time in decades. However, some experts warn that the rivalry between Saudi Arabia and the UAE, in which they have at times supported opposing sides of conflicts, could carry into BRICS. Others say both countries are hoping that BRICS membership will help them focus on economic development.

The new members bring questions, however, over relations with the West. Iran and Russia are staunch adversaries of U.S. influence, while China sees itself as locked in economic and geopolitical competition with the United States. As Iran’s former President Ibrahim Raisi told his Chinese counterpart Xi Jinping, “Iran’s membership in the bloc is opposition to American unilateralism.” Still, Brazil, India, South Africa have had warmer relations with the United States, and likewise Saudi Arabia and the UAE are its major security partners.

How have Western countries responded?

Western countries have largely downplayed the group’s growth. White House National Security Advisor Jake Sullivan said that Washington doesn’t see BRICS as a geopolitical rival, while Treasury Secretary Janet Yellen has largely dismissed efforts to move away from the dollar. Similarly, German Foreign Minister Annalena Baerbock has downplayed growing ties between BRICS members. Other political analyses claim the BRICS countries’ ambitions are exaggerated, and its members’ domestic headwinds are troubling enough to hamper any real threat to Western economic health.

Still, some European policymakers have cautioned that the anti-West sentiment is growing more confrontational. They see the expansion as the result of a lackluster Western response to low-income countries’ needs. They say Western countries need to begin reforming financial institutions in earnest.

“The accusation that the West is arrogant toward the needs of the Global South is serious. It cannot be answered by offering ‘value-based partnerships’ and a ‘rules-based’ multilateralism when the interest of the BRICS is focused on changing those rules in global finance, trade, and other standard-setting procedures,” writes Günther Maihold, senior fellow at the German Institute for International and Security Affairs.

Other analysts say the BRICS de-dollarization efforts could eventually undermine the strength of the dollar and thus the health of the U.S. economy. “Ignoring BRICS as a major policy force—something the U.S. has been prone to do in the past—is no longer an option,” argued Tufts University scholars in 2023.

What’s next for BRICS?

Russia holds the rotating BRICS presidency this year and has set out to use its time as chair to focus on establishing a more “fair world order” and steering the pivot to local currencies and payment systems at its October summit in Kazan. The Russia-led BRICS meeting comes as the Kremlin presses on with its third year of war in Ukraine; analysts expect Putin will use the chairmanship to attempt to show Russia has not been isolated by Western pressure.

Despite Russia’s desire to take the bloc in a more strongly anti-West direction, experts say members such as Brazil and India, with closer U.S. ties, will put up resistance. “Nobody in this bloc is willing to put themselves in the position that Russia is currently in, as an open adversary of the West and the United States, risking armed confrontation,” Boris Bondarev, former Russian diplomat to the United Nations, told the Washington Post in 2023.

Other 2024 priorities include integrating new members and establishing a new category of BRICS partner countries that will likely fall short of a full membership.

Meanwhile, BRICS is already looking ahead to further growth. Current members have indicated they seek to bring in more members and partner countries to gain access to other regional trade blocs. The group opening its doors is attracting BRICS hopefuls: more than forty countries have expressed interest in joining, and at least twenty reportedly applied to join after the 2023 summit expansion.

Resources

en.wikipedia.org, ” BRICS”. By wikipedia Editors; cfr.org, “What Is the BRICS Group and Why Is It Expanding?” By Mariel Ferragamo; investopedia.com, “BRICS: Acronym for Brazil, Russia, India, China, and South Africa.” By James Chen;