BRICS is expanding. The group now contains 11 large and powerful economies – Brazil, Russia, India, China, South Africa, Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE.
However,… what exactly is BRICS? What is its purpose? And why is it expanding? Let’s discuss these questions today!
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Vocabulary
- Emerging Economies (phrase) – Developing nations experiencing rapid growth and industrialization.
- BRICS refers to a group of emerging economies.
- Institution (n) – An established organization or system, typically with specific goals, rules, and functions.
- BRICS is not a formal institution like the World Bank or United Nations
- Multilateral Organization (n) – An international institution involving multiple countries that collaborate and make decisions collectively.
- BRICS is not a multilateral organisation either.
- Expansion (n) – The act of becoming larger, more extensive, or broader in scope.
- The expansion of BRICS has added 6 more nations to the group.
- Convention (n) – A formal meeting where individuals or groups gather to discuss and address specific issues or topics.
- Argentina, Saudi Arabia, Iran, UAE, Ethiopia, and Egypt were added at the most recent BRICS convention.
- Global Order (n) – The system or arrangement of power, governance, and international relations among nations on a global scale.
- The group wants to rival the existing global order.
- Sanction (n) – Official measures or penalties imposed as a means of pressure or punishment for specific actions or policies.
- Some of the members, like Iran and Russia, are under international sanctions.
- Alliance (n) – A formal agreement or partnership between two or more parties, often nations, for mutual support or cooperation
- Some experts wonder whether BRICS could actually turn into an alliance in the future!
The BRICS Group
BRICS, an informal club of economically powerful countries, is growing. At the most recent convention in South Africa, 6 new members were invited to join – Argentina, Saudi Arabia, UAE, Iran, Egypt and Ethiopia.
Along with original members, Brazil, Russia, India, China, and South Africa, these new countries are poised to reshape and rival the exisiting global order!
Some experts have described BRICS as an alternative to the US and European led global organisations. Over the next decades, the group will be economically stronger than the traditional big economies. They will be home to almost half of the world’s population and control large amounts of oil.
But what exactly is BRICS? Is it an organisation, an allegiance, a bloc? How did it start? Why is it expanding? Why do countries want to join?
Let’s discuss these questions over the rest of this episode!
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What is BRICS?
One of the first questions anyone ever has about BRICS is… what exactly is BRICS?
Well let’s start at the beginning.
Beginning of BRICS
In 2001, an economist for Goldman Sachs first used the term BRIC to describe a group of economies that he believed would come to dominate the global economy by the year 2050.
These economies were Brazil, Russia, India, and China. In 2010, South Africa was added – hence the acronym BRICS.
For years, this was accepted as financial and economic wisdom. The BRICS were certain to become major powers in the future.
The five countries, Brazil, Russia, India, China, and South Africa were some of the fastest growing emerging economies for decades. They all benefited from large and young populations, low labour costs, and a lot of natural resources.
Development of BRICS
Back in 2001, a Goldman Sach’s economist called O’Neill noted that a group of developing economies were growing much faster than the traditional powerful economies. These were the BRIC nations – Brazil, Russia, India, and China.
Importantly, and perhaps surprisingly to some of you, BRIC was not originally an organised group. Goldman Sachs never suggested that BRIC would become a political union or even a trade association. It was simply a selection of economically growing countries.
Instead, the group of BRIC countries was used as an investment fund offered by Goldman Sachs.
In 2003, another set of Goldman Sachs economists published a further report. They claimed that by 2050, the BRIC countries would be economically more powerful than the Group of 6 countries which had traditionally been the world’s most powerful economies.
They predicted that by the middle of the 21st century, the global economy would look remarkable different from the one dominated by North America, Europe, and Japan.
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BRICS as an Organisation
Despite the “groups” origin in a Goldman Sachs investment report, BRICS has become a kind of informal club.
It is not an official multilateral organisation. It is not the same as the UN, the EU, or even an organisation like the World Bank or the Organisation of the Petroleum Exporting Countries.
It has no headquarters. There is no formal structure or organisation. It doesn’t have an office.
It has been called an alliance or a bloc. However, it isn’t either.
This is because all of those words have official definitions in the world of international politics, and the group has no military cooperation, ideological similarity, or even a free trade deal.
The members don’t even agree on the majority of issues. China and India, for example, have serious rivalries and active border disputes. India, Brazil, and South Africa also have aspirations to become permanent members of the UN Security Council, but don’t have the support of Russia and China.
But the members do meet.
The members, and the heads of state, meet annually at an event called the BRICS convention. At this convention, the members discuss and negotiate, trying to form better economic relationships, ties, and connections.
The first convention was held in 2009 and the 15th has just finished.
BRICS sees itself as an alternative to the western global order. BRICS has been viewed by its members as a way of increasing their international influence and expanding their economic powers. The group contains over 40% of the global population, including the two largest countries – China and India.
In fact, the idea of a group separate from the US-led global order has proved to be appealing to many other nations around the world. South Africa joined the group over a decade ago, after meeting in India along with Brazil, Russia, and China.
The five current BRICS members represent over 23% of the world’s GDP but have long argued that they are underrepresented in global institutions like the International Monetary Fund.
Purpose of BRICS
So what exactly is the purpose of BRICS?
First, and foremost, it is economics. This is the driving force behind the group.
Right now, the only formal BRICS institution is the New Development Bank, a global institution with billions of dollars created to finance global development around the world.
But there are a few other loose purposes. BRICS members often criticise global institutions like NATO and the UN. They push for changes and reforms in global institutions, like establishing the New Development Bank as an alternative to existing financial institutions.
Moreover, the countries tend support each other, or at least not criticise each other, in controversial situations.
Expansion of BRICS
BRICS had 4 original members. South Africa joined in 2010. And more members are joining.
In fact, according to BRICS, 40 different countries had or have applied to join the BRICS group. 6 countries have been admitted – who are they?
Who is going to join?
- Argentina: Argentina has a population of over 45 million, a mixed economy, and is rich in natural resources, including minerals and agricultural products. The country has faced economic challenges in recent decades, including inflation and debt crises. Its inclusion in BRICS could enhance its global economic influence and help it escape from crises.
- Egypt: Egypt is the most populous country in the Arab world, with over 100 million people. Egypt’s economy is diverse, with sectors like tourism, agriculture, and manufacturing. The country is strategically located due to the Suez Canal, a vital trade route connecting Europe and Asia.
- Ethiopia: Ethiopia is the second-most populous country in Africa with a population exceeding 120 million. Ethiopia’s economy has been growing rapidly, driven by agriculture, manufacturing, and construction. The country is also home to the African Union headquarters, reflecting its role in regional diplomacy and governance.
- Iran: Iran, officially the Islamic Republic of Iran, possesses significant oil and natural gas reserves, which have played a crucial role in its economy. The country has faced international sanctions due to its nuclear program and has sought economic partnerships, especially with countries like China and Russia, to mitigate the impact of sanctions.
- Saudi Arabia: Saudi Arabia is a Middle Eastern country known for its vast oil reserves, making it one of the world’s largest oil producers. It has a population of around 35 million. While the Saudi economy heavily relies on oil exports, the government has been working on diversifying the economy through its Vision 2030 initiative, which aims to reduce dependence on oil revenue and promote sectors like tourism and technology.
- United Arab Emirates (UAE): The UAE is a federation of seven emirates in the Middle East, with Dubai and Abu Dhabi being the most prominent. It has a population of approximately 9 million, the economy is highly developed and diversified, with a focus on finance, tourism, and real estate, and is known as a global business and travel hub.
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Why are they expanding?
So, BRICS is expanding its membership and there are several reasons driving this move.
First and foremost, this expansion is seen as an opportunity to strengthen the influence and relevance of the BRICS group on the global stage.
China and Russia have been strong advocates for this expansion. The inclusion of Iran, in particular, aligns with their interests and bolsters the anti-US feeling within the group.
Moreover, the addition of Saudi Arabia and the UAE brings significant economic power to BRICS, especially in the context of the global oil market. These countries, along with Argentina, are also members of the G20.
Another driving factor behind BRICS’ expansion is the desire to reduce reliance on the US dollar-based global payment and financial system. BRICS members have agreed to increase the use of their local currencies in trade and investment transactions among themselves.
Problems of Expansion?
The expansion of BRICS brings several potential problems and challenges.
The group will now encompass countries with diverse economic, political, and strategic interests. Managing these differing priorities within the bloc could lead to tensions.
The inclusion of Iran, with its strained relations with the West, could lead to BRICS taking anti-Western positions in international forums. This might harm cooperation with Western nations and potentially isolate BRICS.
Economic disparities among BRICS members pose another challenge. China, for instance, has a dominant economy within the group, while others like Ethiopia and South Africa are smaller and less developed.
As BRICS expands, coordinating policies become more complex. Cooperation among eleven countries with varying interests and priorities is a challenge.
Some BRICS members have regional interests and alliances that may not align with the broader objectives of the group. Balancing these regional commitments with BRICS’ collective goals can be complex.
Lastly, some BRICS members, like Iran, are subject to Western sanctions. BRICS’ support for these members could strain relations with Western countries and have economic implications.
Overall, the expansion of BRICS introduces both opportunities and challenges. While it enhances the group’s geopolitical and economic influence, it also requires careful management of internal differences, coordination of policies, and the ability to navigate a changing global landscape.
Final Thought
BRICS has doubled in size this month. This expansion, motivated by economics and geopolitics, has the potential to reshape the world.
The group now contains massive economies, large oil producers, nearly half of the world’s population, and a large collection of countries who feel let down and left out by the traditional powerful global institutions.
What does the future hold? Perhaps we will see BRICS countries form closer economic relationships and use their platform to rival the west.
However, it also presents challenges. Within BRICS, the countries are not necessarily the best of friends: China and Russia, China and India, Saudi Arabia and Iran – these are just a few examples of traditional rivals.
What do you think? What do you think the future of BRICS will be?
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