The Latest BRICS’ Expansion (But Probably Not the Last)

On August 4th, 2023, the 15th annual BRICS summit concluded in Johannesburg, South Africa. The headline of the event was the group’s plan to expand its membership for only the second time in its two-decade history. With Russia’s embroilment in the Ukraine war and China’s increasingly strained relationship with the West, the decision to admit six new countries to the group could not have been more consequential. In a move hailed as “historic" by Xi Jinping, the leader of the world’s second-largest economy and the driving force behind BRICS’ expansion, the addition of six new members – most of whom are inching away from the West toward China –  heralds the beginning of a multipolar world.

For a long time, non-Western nations such as China, Russia, and India have perceived institutions like the G7, the IMF, and the World Bank as dominated by Western interests. Consequently, BRICS Membership has emerged as an increasingly appealing option for the Global South, with reports of 23 nations formally applying and an additional 40 expressing interest. This expansion represents the inauguration of an alternative to the liberal international order and its attendant institutions, one that would champion the interests of the developing world.

While there are no specific criteria for BRICS membership, it is hardly a mystery. The inclusion of Saudi Arabia and Iran, who recently normalized diplomatic relations in a historic China-brokered deal, reflects the growing anti-Western posture that BRICS is quickly acquiring. Joining alongside them are Argentina, Egypt, Ethiopia, and the U.A.E., nations who have also grown disillusioned with the Western-led global order. Argentina has since withdrawn its BRICS application as the newly elected, libertarian Milei government has realigned itself with the U.S. Ethiopia’s surprise inclusion reflects the nation’s recent fallout with the U.S., which revoked trade benefits over the government’s conduct in the Tigray War. Evidently, China is keen to exploit geoeconomic vacuums and draw countries out of Washington’s orbit.

Geoeconomic interests were the prime consideration behind the expansion. With Saudi Arabia and Iran joining the table, two of the world’s largest petroleum exporters have partnered up with India and China, two of the world’s largest importers of fossil fuel-based resources. Given the divide between the Global North and South on the climate agenda due to the complex logistics and high costs associated with a progressive and necessary green transition, it is a struggle for countries in the early stages of development to maintain a balance between energy security, rapid economic development, and climate action. And so, the revamped BRICS offers a potential platform for major resource exporters and importers to collaborate on initiatives that address the unique needs of developing nations, albeit at the expense of global efforts to combat climate change. 

However, there is also a noticeable pattern in BRICS expansion and geopolitical ambitions that go beyond economic pursuits. Notably, each member has refrained from an outright condemnation of Russia’s invasion of Ukraine, which in return provided energy at discounted prices. By the second half of 2022, China and India’s purchases of Russian energy resources accounted for 46.5% of Moscow’s total exports in the sector, a 21.5% increase from the year prior. Effectively isolated from global capital markets, nations in Latin America, Africa, and Asia observed the comprehensive sanctions regime imposed on Russia, fearing a similar fate might befall them one day. With the U.S. dollar as the world’s reserve currency, Washington can unilaterally exclude adversaries from international finance, as it did with Iran and Venezuela.

Consequently, the “de-dollarization” of the global economy has become a central theme in the BRICS agenda. Saudi Arabia, China, India, and Iran have already experimented with this concept, replacing the USD with the Chinese yuan and the Indian rupee in bilateral trade of resources like oil, historically traded in USD, as part of their commitment to the petrodollar economy. To take it a step further, Brazil’s President, Lula da Silva, even floated a potential BRICS currency akin to the Euro, but several members showed little interest, notably India, which is intent on bolstering the rupee. South Africa’s Finance Minister went as far as to say that the idea was not on the agenda. Moreover, there is skepticism over whether de-dollarization is an attainable objective to begin with. 

It is worth noting that not every member appears entirely on board with this re-envisioning of BRICS. India and Brazil maintain close ties with the West, their institutions, and particularly with the U.S. Neither nation is pleased with the blatantly anti-Western optics, which necessitates a delicate balancing act. India and China have frayed bilateral relations, and Russia’s presence remains a contentious issue. Internal discussions have indicated that Indian Prime Minister Narendra Modi fears the bloc becoming an anti-American group.

The good news for the Modi Government is that India has a significant policy opportunity within the BRICS+ bloc – expanding the rupee’s use in bilateral and multilateral trade agreements. Today, India benefits from an undervalued currency, making its exports more competitive abroad. Nonetheless, its imports come with a hefty price tag, so by trading in its domestic currency, India avoids the transaction costs associated with currency conversion and foreign exchange. Furthermore, if members purchase its goods and services in rupees, New Delhi can improve its trade balance with its BRICS counterparts, especially its substantial deficit with China. With the rupee’s increased circulation, India gains additional influence over the bloc’s trade and economic policies. However, if New Delhi’s fears regarding Beijing’s intentions hold true, then China will prefer to replace the U.S. dollar with the yuan, opening the door to a potential clash. 

However, BRICS members will inevitably have to grapple with the lack of a coherent agenda and avoid the risk of policy paralysis or a political impasse. Therefore, it is too early to say whether this expansion will deliver on its promises. Abstract goals such as representing “the voice of the Global South'' might make for splashy headlines, but they raise questions of feasibility. Additionally, China’s vision for the new world order likely differs from Iran’s or South Africa’s. What is certain, however, is that America’s unipolar moment is over, and the emergence of BRICS is a product of a changing balance of power that will define the coming decades.

Authors: Kavin Pillai and Neeraj Tom Savio

Managing Editor: Riley Graham

Web Editor: Matthew Mackenzie