BRICS: Growing Influence on the Global Stage
Introduction
Formed in 2009, the BRICS nations namely Brazil, Russia, India, China, and South Africa have emerged as significant players, challenging the traditional dominance of Western powers. BRICS also represents a coalition of major emerging economies that collectively account for a substantial portion of the world and economic output on the contemporary global landscape.
Concept of BRICS coalition
The concept of the BRICS coalition was initially founded in 2001 by economist Jim O’Neill, who formulated the acronym the term “BRIC” to describe the emerging markets of Brazil, Russia, India, and China. These countries were identified as rapidly growing economies with the potential to impact global economic dynamics significantly. The formal grouping was established in 2009, and South Africa joined in 2010, expanding the acronym to BRICS. The formation of BRICS was driven by a shared desire to create a more balanced global economic order and to provide a platform for cooperation among emerging economies.
Over the past months, BRICS has seen substantial developments that underscore its growing influence on the global stage, from financial banking system (economically) to group expansion. As of August 24th, 2024, around 40 to 47 countries from various regions, including Africa, Asia, and South-America, have expressed their desire to join BRICS. This interest is fueled largely by the bloc’s potential to challenge the current global economic order, which is heavily dominated by Western institutions like the IMF and World Bank.
Moreover in 2023, the BRICS began to expand its membership as it looks to challenge a world order dominated by Western economies, with Saudi Arabian, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates joining and more than 40 countries worldwide expressing interest. Many of these countries are seeking to reduce their dependence on the US dollar, citing economic risks and potential sanctions when their policies diverge from those of the US. Meanwhile, BRICS is expanding its membership and developing alternative financial systems, which is a key factor attracting new members. These initiatives aim to create a more diverse and resilient global financial landscape, reducing reliance on a single currency. As these nations continue to grow and collaborate, their collective actions and policies have far-reaching implications for international trade, investment, and diplomacy. Therefore, with the above information it is important to highlight how BRICS has potential to reshape the global governance and economic paradigms.
BRICS’s evolution and its key achievement
Since its founding, BRICS has developed into a more formal and powerful alliance than a broad association of economies. Since they started in 2009, the annual BRICS summits have grown in importance as forums for debating and coordinating policies on a range of international concerns. BRICS has broadened its focus over time to encompass social, political, and economic cooperation in addition to economic cooperation. Key achievements include the creation of the Contingent Reserve Arrangement (CRA), which provides financial support during economic crises, and the New Development Bank (NDB), which was founded in 2014 with the goal of funding infrastructure and sustainable development projects in the BRICS and other emerging economies.
Together, the BRICS countries account for a sizeable amount of global economic production. Particularly China and India have had tremendous economic expansion, which has increased their clout on the international scene. Over 40% of the world's population resides in the BRICS countries, whose combined GDP makes up over 25% of the world's total GDP. BRICS are now able to participate more actively in international economic forums and talks thanks to their economic strength.
In additional, the BRICS nations are now significant participants in international investment and trade. Their reliance on conventional Western markets has decreased as a result of their expanded commerce with one another and other areas. Due to the goal to diversify trade alliances and complementing economic structures, there has been a notable increase in intra-BRICS trade. Furthermore, the BRICS countries are now significant providers of foreign direct investment (FDI), supporting economic integration and development both among themselves and with other developing nations.
On the other side, the New Development Bank (NDB), which was founded by the BRICS in 2014, is to raise capital for sustainable development and infrastructure projects in the BRICS and other emerging countries. An alternative to established financial organizations such as the World Bank and the International Monetary Fund (IMF) is the NDB. With more adaptable and inclusive financing choices, the NDB stands in for more established financial organizations like the World Bank and the International Monetary Fund (IMF). Since its establishment, the NDB has given approval to a number of projects with an emphasis on urban development, transportation, and renewable energy, which has increased the BRICS countries' economic clout internationally.
BRICS New Comers: What’s in it for them?
As of 2024, the BRICS bloc has gained significant attention from developing countries seeking to diversify away from reliance on the US dollar. These nations perceive their dependency on the dollar as a substantial risk to their economies, particularly in light of potential US economic downturns or sanctions when their policies don't align with those of the US. In parallel to its membership expansion, BRICS is advancing initiatives to create alternative financial systems, which are key elements driving many nations' willingness to join. One notable example is the BRICS New Development Bank, which has approved 98 infrastructure projects totaling $33 billion since its inception. This positions the bank as a credible alternative to western-dominated financial institutions. Furthermore, the group is working towards an intra-bank payment system aimed at reducing reliance on the dollar in cross-border transactions. This is seen as a crucial step toward de-dollarization.
Additionally, BRICS has launched the Contingent Reserve Arrangement (CRA), a $100 billion fund aimed at providing financial support to member countries facing economic stress. This move reinforces the bloc's commitment to creating a more resilient and self-sufficient financial system.
The allure of BRICS membership extends beyond economic benefits. Many nations are drawn to the bloc's commitment to multi-polarity and its challenge to the existing US-dominated global order. By joining BRICS, countries can assert their independence and promote their interests on the world stage.
As BRICS continues to expand its membership and advance its alternative financial systems, it is likely to play an increasingly significant role in shaping the global economic landscape. With its focus on multi-polarity, de-dollarization, and sustainable development, BRICS offers a compelling alternative to the existing global financial architecture. As more nations join the bloc, the world may witness a significant shift towards a more inclusive and equitable economic order.
Launch of BRICS intrabank system: toward de-dollarization?
Russia and Iran have significantly advanced their economic collaboration by linking their national payment systems. This integration connects Iran’s SEPAM and Russia’s SPFS, allowing financial transactions to be processed using their respective currencies, the ruble and rial, bypassing the US dollar and the SWIFT network. This initiative is crucial as it helps both nations circumvent Western sanctions and builds greater economic independence.
The linked payment systems enable cross-border transactions, with over 60% of trade between the two countries now conducted in national currencies. This effort has boosted bilateral trade, which surged by 15% in the past year, reaching 4.6 billion US dollars. Both nations aim to double this trade volume to 8 billion dollars annually. The integration also allows the mutual acceptance of bank cards, facilitating easier trade and financial exchanges between businesses and individuals. Russia’s VTB Bank has launched services enabling money transfers between the two countries, further strengthening their economic ties. These measures are part of a broader strategy within BRICS to foster stronger economic alliances and reduce reliance on Western financial systems.
BRICS Membership and Expansion
In August 2024, several nations garnered attention as they engage in discussions or take steps toward joining the BRICS bloc. Azerbaijan has officially submitted its application to join the BRICS economic bloc, making a move shortly after a visit from Russian President Vladimir Putin. On August 20th, 2024, the Azerbaijan Foreign Ministry confirmed the application, which followed growing interest from Azerbaijan in expanding its global partnerships. Azerbaijan’s intent to join the BRICS was also highlighted during the Shanghai Cooperation Organization summit in July 2024, where the country signed a Joint Declaration on Strategic Partnership with China, further solidifying its aspirations.
China has also expressed strong backing for Malaysia’s potential membership in BRICS, emphasizing that the expansion of the bloc could promote a more equitable global system. Chinese Foreign Ministry Spokesperson Lin Jian highlighted the significance of welcoming new countries into BRICS, emphasizing its role on fostering fairness on the international stage. China supports the inclusion of additional partners in BRICS cooperation to help build a more just and balanced international order. Lin further explained that expanding BRICS aligns with global trends and serves the interests of all members. He noted that the expansion contributes to global multi-polarity and the democratization of international relations, pointing out the growing interest from developing nations to become part of the bloc.
Malaysia’s Prime Minister, Anvar Ibrahim, recently confirmed that his country has officially applied to join the BRICS, submitting its request to Russia, the bloc’s current chair. Malaysian Foreign Minister Mohamad Hasan, addressing the nation’s Senate, explained that Malaysia’s interest in BRICS stems from the economic strength of its member states. BRICS is an informal group that doesn’t require signing treaties. We see this bloc as a beneficial platform given that its members represent a population of over 2 billion people and have a GDP larger than ASEAN countries combined. Hasan said, according to Bernama news agency, Malaysia is eager to join as long as the doors to new membership remain open. Hasan also mentioned that ASEAN members will consider the implications of individual countries joining the BRICS if necessary.
In addition to Malaysia, Thailand has officially expressed its intent to join the BRICS, with the Thai Cabinet approving the application to strengthen its economy and enhance its global standing. This aligns with Thailand’s aim to diversify its foreign relations and reduce dependence on traditional Western allies. The bloc offers a South-South cooperative framework that Thailand has long aspired to join, stated Foreign Minister Maris Sangiampongsa. Similarly, Vietnam has surfaced as a potential Southeast Asian candidate for BRICS membership, having held discussions with Russian and Chinese officials about its intentions, although no official confirmation has been made yet.
Turkey is another country expressing a strong desire to join BRICS, driven by its strategic objectives to diversify its international partnerships and enhance economic collaboration. Turkish Foreign Minister Hakan Fidan confirmed this ambition during his visit to China in June 2024, marking the highest-level interaction with a BRICS nation since 2012. Turkey’s interest is seen as a part of a broader effort to explore new economic platforms amidst stalled EU accession negotiations and tensions with NATO over various diplomatic and military concerns. Russia has welcomed Turkey’s interest, indicating that the matter would be discussed at the upcoming BRICS summit.
The recent addition of major fossil fuel producers to the BRICS bloc is poised to influence global oil and gas markets by encouraging the adoption of alternative currencies, a trend referred to as de-dollarization. This shift could potentially undermine the US dollar’s long-standing dominance in the energy sector. Nevertheless, Bloomberg Economic analysts suggest that the main motivation behind BRICS expansion is more political than economic. The broader goal of the expanded group is to establish itself as a strong counterweight to the G7 nations, which include Canada, France, Italy, Germany, Japan, the UK, and the US. The push for a more multi-polar world is not exclusive to BRICS. Other international organizations, such as the Organization of the Petroleum Exporting Countries, the Shanghai Cooperation Organization, Mercosur, and the African Union, are also striving for a global order that is less dominated by the United States in the post-cold war era. These alliances are collectively working to create a geopolitical environment that represents a broader range of economic and political interest worldwide.
About the authors:
Dr. Kaze Armel, Xiangtan University, China-Africa Institute for Business and Law, Associate Research Fellow.
Kakuru Dassy, Xiangtan University, China-Africa Institute for Business and Law, PhD Student.