The five BRICS countries agreed to expand the organization and accept the membership of six countries, three of which are Arab, namely: Saudi Arabia, the Emirates, and Egypt, to increase the scope of its influence away from Western requirements, but this expansion may make the differences within the organization deeper and more complex, and its ability to make decisions as an influential bloc weaker.
This year’s BRICS summit, 2023, was held in the South African capital for three days, starting Tuesday, August 22, and was chaired by South African President Cyril Ramaphosa, as his country assumes leadership of the group this year. The Chinese President, Xi Jinping, the Brazilian President, Lula da Silva, and the Indian Prime Minister, Narendra Modi, actually joined the meeting, while the Russian President, Vladimir Putin, participated from his office in Moscow via audio-visual communication, after he had decided to avoid flying to South Africa due to the issuance of a warrant for his arrest by the Prosecutor of the International Court on charges of committing war crimes in Ukraine. A number of leaders or foreign ministers of friendly countries of the group, or countries that have applied for membership, also participated on the sidelines of the summit.
This is the fifteenth meeting of BRICS leaders, but none of the previous meetings has received as much global attention as the Johannesburg summit. News of the BRICS summit and speculation about its results topped the news bulletins of most international television stations, and took precedence over other international issues in political programs. Major Western and non-Western newspapers also carried extensive reports and opinion articles with different orientations about the role, location, and future of the group.
The meeting of BRICS leaders this time came against the backdrop of the intensification of the war in Ukraine, which has become, in one of its forms, an indirect confrontation between Russia and NATO. Against the backdrop of the escalating political-economic rivalry between the United States and China, whether due to the dispute over Taiwan and the South China Sea, or the Chinese challenge to American technical and economic hegemony. For a number of major countries in the world, especially China and Russia, the international climate has become more similar to the years of the Cold War than to any other era in the history of modern international relations and the major world powers.
For this, and for other similar reasons, it was not surprising that most of the discussion related to the fifteenth BRICS summit revolved around whether the meeting of the five leaders would end in an agreement to expand the group’s membership, and about which of the twenty-three countries that expressed their desire to join the group would be accepted, in addition to how and the steps by which BRICS will move from an economic group to a geopolitical bloc, competing with the Euro-Atlantic bloc, and what this transition means for each of the five countries that make up the group. What is clear, regardless of the exaggerations that have marred the opinions and expectations of many observers of the BRICS process, is that the group’s immediate future will be governed and shaped by the way the leaders of the five BRICS countries will deal with these files and what emanates from them.
Essentially an economic organization
BRIC was born from an idea, or prophecy, launched by Jim O’Neill, a former economic official at the famous American investment bank, Goldman Sachs, in 2001. O’Neill, who was trying to read the major trends that the global economy would take, was the first to propose the term BRIC, referring to the first letters of the English names of Brazil, Russia, India, and China, to describe a group of emerging economies that seemed to be growing at a pace that would make them outperform the economies of major Western countries. O’Neill’s prophecy not only caught the attention of the leaders and economists of the four countries, but also became a subject of study and discussion worldwide, both academically and politically.
However, the Quartet did not begin to form an economic group until after the economic-financial crisis hit the world in 2008, when Russia called for the group’s first summit to be held in 2009. Russia’s relations with the United States and other Western powers had begun to deteriorate over the previous few years due to differences in or the clash of policies in Ukraine and Georgia, the steady expansion of NATO’s borders, the deployment of anti-missile bases in Eastern Europe, and the refusal of Western powers to effectively contribute to the modernization of the Russian economy and industry. During the end of the 1990s and the beginning of the 21st century, a steady rise in oil prices helped Russia strengthen its financial position. Despite the brunt of the global financial-economic crisis in 2008, which was essentially a Euro-American crisis, the Russian economy was only slightly affected. It is certain that the lightning war launched by Russia against Georgia in 2008 was a clear indication of the Russian tendency to distance itself from the West, and Moscow’s search for a more understanding, sympathetic and close political-economic family.
China, on the other hand, without which the first group meeting could not have been held, is still in the middle of its tremendous economic boom, which has moved it from the level of underdeveloped countries to an economic and financial giant in less than two decades. Because the Western financial-economic crisis hit the Chinese economy indirectly, given the large role that export rates play in the Chinese economic structure, Beijing began searching for partners and markets alternative to Western markets, especially in the Global South.
As for Brazil and India, they saw joining the group as another means to enhance their role in the global economic balance, and to strengthen their economic and technical relations with other powers that agreed with them to be liberated from the West’s hegemony over the economy and the movement of money in the world. The following year, 2010, because the four countries felt the need to extend their hand to the African continent, South Africa was invited to join the group, which thus became BRICS, although South Africa’s economy is considered relatively small when compared to the economies of the other four countries.
In 2015, the next important step in the BRICS process came when the establishment of the Emergency Monetary System and Development Bank was announced, with significant support from China, which has forty percent of the votes in both organizations. It was no secret that the two institutions were intended to provide alternatives to both the International Monetary Fund and the World Bank, which are seen as tools for continued American hegemony over the global monetary system. In the same year, China launched its own interbank transfer system, based on its national currency, the yuan, for the purpose of paying with the yuan as an exchange and cash transfer currency competing with the dollar.
However, the discussion about turning the BRICS group into a balancing bloc for the Western bloc, whether on the financial, economic, or political levels, did not begin until after the outbreak of the Ukrainian war in 2022.
The complexities of confronting Western hegemony
On the first day of the Johannesburg Summit, the Russian President said in his intervention: Abandoning the dollar as a global currency is irreversible. The sanctions imposed by the United States and other NATO countries on Russia, in the months following the outbreak of war in Ukraine, forced Moscow to deal in the yuan with China, which has become the largest market for Russian energy sources. Moscow has also dealt in the yuan, albeit partially, in other limited oil deals with India, encouraged by a significant reduction in the price of Russian oil. In other cases, such as with Turkey, which is not a member of BRICS, Russian-Turkish deals have been completed in local currencies.
It is not difficult to conclude that an effective confrontation of the dominance of the dollar (and the euro, to a lesser extent), whether by the BRICS countries or any other group of countries, is not possible without agreeing on a single, competitive currency. There is a shy trend, which is still slow, towards dealing in local currencies in trade exchange operations between countries that have close or necessary economic and trade relations, especially those facing economic crises and whose economy suffers from a decline in foreign investments and an urgent need for the dollar. But the problem is that the shift to trade in local currencies remains of limited impact due to the instability of the currencies of non-Western second-tier countries, and most of the currencies of other southern countries. That is, the most effective solution to confronting Western monetary hegemony remains agreement on a unified currency between countries that form a tangible bloc, demographically and economically-financially, such as the BRICS group, which includes forty percent of the world’s population.
One of the solutions that has been discussed is certainly the possibility of a BRICS agreement on the yuan as a unified currency, and the second is the launch of a new unified currency among the countries of the group, similar to the European agreement on the euro in 1999. But there is no evidence that the bank transfer system based on the yuan, which China launched in 2015, played no significant role in strengthening the yuan’s international standing. The weakness of the yuan’s position as a global transfer and payment currency, and what is sometimes described as the lack of sufficient transparency in China’s monetary policies, stand as a major obstacle to the yuan occupying an advanced position as a global transfer and payment currency, despite China’s growing economic size. In contrast, agreeing on a single euro-like currency requires agreement on the general policies of member states and on the monetary policy of their central banks; which seems very difficult and complicated. The BRICS countries differ greatly in their political systems. They are not neighboring countries like the European Union countries, and they are not united by common cultural heritages.
But there are certainly political reasons as well. It is difficult for India and China to overcome the geopolitical problems between them. India, which represents the second demographic and economic size in the group, is also a member of the Quad security group, which includes the United States, Japan, and Australia, which is no secret that is intended to besiege China geopolitically. Russia, on the other hand, the country most eager to support the BRICS and assert its role, fears the expansion of Chinese influence in Central Asia. It does not seem that India, South Africa, or Brazil, which has close economic ties to the Euro-American bloc, wants to wage a confrontation against the West.
On the first day of the Johannesburg summit, the Brazilian president was clear when he said: BRICS’ goal is to reorganize the countries of the South, not to compete with the United States or the G7. Although de Silva called for an agreement on a monetary union for trade between the BRICS countries, he emphasized that his proposal did not mean rejecting the dollar, but merely facilitating trade between the group’s countries. As for the Indian Prime Minister, he delivered a speech on the second day of the summit, avoiding referring in any way to developing economic and monetary relations between the countries of the group, or confrontation with the West. In addition to all this, there does not appear to be a willingness on the part of the United States or the European Union to back down even slightly in the desperate defense of the dominant position enjoyed by the dollar (and the euro) in the international arena.
Importantly, although speculation about a unified currency for the group began more than two years ago, the Johannesburg summit ended on August 24 without even a hint of this matter.
As for the issue of expanding the scope of BRICS membership, which was raised for the first time in 2017, it was no less ambiguous. First: Because the group did not originally agree on any rules or standards governing the issue of membership. South Africa did not join the four founders until after the four countries agreed to invite it to join the group. It is also known that South Africa and Brazil did not want to further expand the group’s membership. But what is clear is that the desire to join the BRICS framework, for various reasons, prompted twenty-three countries to request membership. The Johannesburg summit had barely concluded its work when the host South African delegation announced that the group’s leaders had agreed to accept the membership of six other countries: Saudi Arabia, the Emirates, Iran, Egypt, Ethiopia, and Argentina.
This is of course a big step towards expanding the scope of the group, especially as the six countries add new economic diversities to the existing five BRICS countries. The basis on which the decision was made to accept membership of any of the six countries, and not to accept the other seventeen countries that expressed their desire to join the group, is not clear, but what is certain is that the motives of the six countries behind seeking BRICS membership varied greatly. Egypt and Argentina, for example, are on the verge of bankruptcy, and are apparently looking for BRICS support for their collapsed economy, or for facilities from the BRICS Development Bank. As for Saudi Arabia and the Emirates, they must seek to strengthen their economic relations with emerging industrial markets, whose rates of energy consumption are considered the fastest in the world. Iran, which has been subjected to heavy sanctions by the Western bloc, wants alternative relations with Western countries, both commercially and technologically. As for Ethiopia, its motives must be both economic and geopolitical, especially in light of the cooling in its Western relations over the past few years.
To what extent can it be said that the Johannesburg summit succeeded in shaping the future of the BRICS group, and put the group’s countries on the path to remaining an effective bloc on the world’s economic and political map?
A future fraught with challenges and promises
In the world of the twenty-first century, there is no doubt about the close connection between economic, monetary and geopolitical. The more economic and trade convergence between the BRICS countries increases, and the more the group steps towards monetary consensus, the more its political weight increases and the more it can confront Western hegemony in global affairs. This is certainly what the five countries on which BRICS is based realize, regardless of the pace of the group’s expansion over the next few years. This is also what was implied in the call to form the group in 2009, at least for a number of the founding countries. But what is clear is that the progress achieved by BRICS in the past fifteen years remains modest.
During last July, the dollar’s share of payments across the world was estimated at up to 46 percent, followed by the euro, the Japanese yen, and the Chinese yuan. This means that the dollar maintains its dominant position in the international arena, the limited position that the yuan has gained (despite China being the second largest economy in the world), and the marginality of economic exchange deals in local currencies between the BRICS countries and other countries of the world. The hegemony of the dollar (and the euro), and the hegemony of the Western bloc, in the economic-financial and political arenas stems from historical structural foundations in the balance of power, the world system and relations between its countries, dating back to the nineteenth century, and to the Western bloc’s control over international trade, economic and monetary institutions and control of reference standards. Laws relating to the movement of trade, economic exchange and monetary payments. In order to break free from this hegemony, a broad economic and monetary consensus must develop, including and embracing a significant number of countries in the world, especially those that play a major role in the global economy or retain significant wealth, supported by a solid political will.
It is clear that the BRICS problem so far relates to both aspects: the slow development of the economic-monetary consensus, and the absence of a unanimous political will to achieve this consensus. Given the wide differences in the situations of the six countries that were announced to join the group, it is expected that the expansion of BRICS will lead to a further slowness of the consensus process and a greater conflict of political wills.
At the end of the Johannesburg summit, the BRICS group issued a long final statement, which after the introduction included six main headings: Partnership for nurturing cultural pluralism, building an environment of peace and development, partnership for accelerated growth, partnership for sustainable development, deepening exchange between peoples, and development. Institutional (for BRICS). It is clear that the final statement, to which the largest contribution to its formulation appears to have come from South Africa, was written in a new triangular language. There is an emphasis on a pluralistic perception of the world, the need for a more equitable distribution of resources and wealth, a humane model of development that is more aware of the environment and the peculiarities of nations, and a commitment to international conventions and the role of the United Nations. But at the same time, the statement emphasized democratic values, state sovereignty, and non-aggression. In some ways, the text of the BRICS statement appears to contain a critique of both the Western bloc-led world order, the Chinese regime, and Russia’s policies of war and aggression.
But this should not underestimate the extent of the achievements that BRICS has achieved so far, nor the promises it holds in terms of its impact on the relations between its members and on the international scene. During the past year, and to confront heavy Western sanctions, Russia resorted to the markets of China, India and Brazil, not only to sell oil, but also to raise the rates of exchange of goods and products. Although the capital of the Development Bank launched by BRICS is still modest, the joining of countries such as Saudi Arabia, the Emirates, and Iran could constitute a real addition to the bank and its ability to extend a helping hand to the faltering economies of member states, or help members and countries that are friends of BRICS to confront crises, without being subject to conditions. The unfairness usually imposed by international financial institutions, which are controlled by Western powers.
Despite the difficulty and complexities surrounding the single currency project, the BRICS group could become a field for strengthening bilateral relations between members, economically and technically, whether by using one of the main exchange currencies or local currencies. There is no doubt that the widespread use of local currencies in trade and payments between countries, even if it does not lead to agreement on a unified currency competing with the dollar and the euro, will constitute a tangible step in the process of liberation from, and confrontation of, Western monetary-economic hegemony.
However, it is certain that there is still a long way to go before BRICS becomes a reliable economic-political bloc in the global arena.