BRICS is an acronym for a coalition of five major emerging economies: Brazil, Russia, India, China, and South Africa. Formed in 2009, BRICS represents a significant portion of the world's population and global GDP. The bloc aims to challenge Western dominance in international affairs by promoting multilateralism, economic cooperation, and alternative financial institutions.
The recent expansion of BRICS, including the addition of six new members in 2024, marks a significant step towards broadening its influence across different regions and solidifying their role as a key player in global geopolitics and economics.
Expansion of BRICS
In 2024, BRICS expanded its membership, marking a shift in the global economic landscape. The bloc introduced six new countries: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. This expansion reflects the group's motivation to increase its influence in global affairs by adding key regional powers from different continents.
The inclusion of oil-rich nations like Saudi Arabia and the UAE points out BRICS' focus on securing energy resources from a variety of nations. The addition of Argentina and Ethiopia is also seen as a move to increase representation from Latin America and Africa, reflecting BRIC’s aim to enhance the bloc's credibility as a voice for the Global South. Iran's inclusion is particularly strategic, given its geopolitical significance in the Middle East and its role as a counterbalance to Western influence in the region.
Impact on Global Finance
De-dollarization
The expansion of BRICS could significantly increase efforts to reduce global reliance on the U.S. dollar, a process often referred to as "de-dollarization." With the inclusion of major economies like Saudi Arabia and the UAE, BRICS has now surrounded themselves with countries that control significant portions of global energy supplies. This strengthens the bloc's ability to encourage alternative currencies like the Chinese yuan in global trade, especially in energy transactions. For instance, China has been pushing for the yuan to be used more widely in oil trade, a move that could come to life with the expanded BRICS membership.
New Financial Institutions
BRICS has wanted to create alternatives to Western-dominated financial systems, and the expanded bloc is likely to reinforce this trend. The New Development Bank (NDB), established by BRICS in 2014, is positioned to play an increased role in providing funding to developing countries, offering an alternative to institutions like the International Monetary Fund (IMF) and the World Bank. The NDB could see an increase in capital and influence as new member countries contribute, thereby reducing the global South's dependence on Western financial institutions.
Trade Agreements
With its expanded membership, BRICS is likely to create new trade agreements and currency swaps among member nations, further challenging the dominance of the U.S. dollar. For example, a currency
swap agreement between China and Saudi Arabia could accommodate bilateral trade in yuan, reducing the need for dollar transactions. Such agreements could set a precedent for other BRICS nations, potentially leading to a shift in global trade patterns as more countries adopt alternative currencies.
Geopolitical Implications
Challenge to Western Dominance
The expanded BRICS bloc is expected to challenge the influence of Western-led coalitions like the G7. With the inclusion of new and powerful nations, BRICS can now apply greater influence on global economic and political issues. The bloc's diverse membership, spanning multiple continents, gives it the ability to present a united front against Western powers. This could lead to a more multipolar world, where Western powers no longer dominate global governance, and power is held by several countries, rather than just the one.
Global South Representation
BRICS' expansion enhances its role as a representative of the Global South. The inclusion of countries from Africa, Latin America, and the Middle East positions BRICS as a powerful advocate for reforms in international institutions like the United Nations. The bloc is likely to push for greater representation of developing countries in global governance, challenging the current system, which is often criticized for being biased towards Western interests.