South African President Cyril Ramaphosa stated that Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates have been invited to join BRICS as part of the first phase of expansion, and the new membership will be effective from January 1, 2024.
We will analyze the reasons behind BRICS’ choice to include these Arab countries and its decision to reject Algeria’s invitation to join. According to the International Monetary Fund, Algeria has the largest economy in the Maghreb and the fourth-largest in Africa for the year 2022, reaching $193.6 billion.
Algeria was not invited to BRICS because of its weak influence of the dollar and American hegemony compared to the countries that were invited to join BRICS. We will analyze this using economic data.
The main purpose of BRICS is to weaken American trade dependencies on the dollar and its spheres of influence. It also aims to destabilize the value of the dollar through various means, including offering alternatives to Arab countries that are financed by American banks with similar or higher monetary interests. This involves withdrawing their investments and attracting them to the BRICS Bank (NDB).
What is the scale of Saudi and Emirati investments in the global financial system, international banks, companies, and stock exchanges? Additionally, what is the extent of their transactions in dollars with America, i.e., exports and imports?
Saudi Arabia is the largest Arab country exporting to the United States, accounting for 38.9 percent of Arab exports to Washington, followed by the UAE with 10.5 percent, primarily supported by oil exports. The impact of these two countries on the US and global economy, which is based on the dollar, has drawn the attention of BRICS, which aims to diminish the dollar’s strengths.
As for Egypt and Ethiopia, they are considered the future of a rising Africa, and BRICS aims to counter American influence in these countries. This influence is represented by investments in the dollar currency and the substitution of the dollar with local currencies for paying transportation-related fees in these nations. This strategy is intended to reduce the dominance of the US dollar.
The Suez Canal is one of the most crucial waterways globally, with revenues of about $5.840 billion in the fiscal year 2020/2021. Approximately 8% to 12% of the world’s trade volume passes through this canal.
Egypt ranks third in the Arab world in terms of its trade relations with the United States of America, amounting to $5.7 billion (8.9 percent of Arab trade turnover). It is followed by Iraq with $4.7 billion (7.3 percent), and Qatar ranks fifth with $3.1 billion (4.8 percent) in dollars.
Economists believe that Russia has erected financial barriers this year to counter American influence. It has achieved this by entering into strategic agreements with Algeria to curtail America’s economic ambitions there. A similar approach has been taken by China, which has invested significantly in Algeria, making it the leading foreign investor in the country.
In my opinion, Algeria’s exclusion from BRICS was not primarily based on Algeria’s economic criteria alone. For instance, Indonesia, though economically stronger compared to Ethiopia and Egypt, was not invited. BRICS’ expansion relied on geopolitical considerations worldwide and the dollar’s influence on the global economy. Countries with substantial value deposits in global banks were invited, and the weight of these countries was also assessed in terms of their trade volume with America. This is significant for the overall US economy, specifically in strengthening the value of the dollar.
BRICS’ goal is to weaken the US economy and reduce the dominance of the dollar in the global economy. The organization’s objectives are evident through its anticipated outcomes, which involve establishing a new multipolar world order and ending US hegemony over the global economy, which is currently unipolar.
Adel Abdel Rahim is a researcher in geopolitics
