The BRICS group of emerging market countries, originally composed of Brazil, Russia, India, China and South Africa, has transformed from an attractive investment bank into a powerful multilateral political economic entity.
As of January 1, 2024, the group has expanded to include Iran, the UAE, Ethiopia and Egypt, Bloomberg reported. Saudi Arabia has also been invited to join, although it is still studying the offer.
Argentina was invited but declined under current President Javier Milei, who said: “Our geopolitical alliance is with the United States and Israel. We will not ally with the communists.” Further expansion is expected, according to the agency, with Malaysia and Thailand expressing interest.
Expansion engines
The expansion was driven – according to Bloomberg – primarily by China, the world’s leading industrial power, which seeks to enhance its global influence by courting countries traditionally allied with the United States.
South Africa and Russia supported the initiative, while India and Brazil were initially reluctant due to concerns about China’s dominance and potential isolation from the West, however, the two countries eventually agreed to the expansion.
For new members, BRICS offers access to financing from wealthier members and a political space independent of Washington’s influence, Bloomberg reported.
“The bloc represents a framework for South-South cooperation that Thailand has long wanted to be part of,” Thai Foreign Minister Maris Sangyamponsa said.
Economic and political repercussions
The inclusion of major fossil fuel producers in the BRICS group aims to challenge the dollar’s dominance in oil and gas trade by encouraging de-dollarization.
However, Bloomberg Economics analysts see the expansion as “more about politics than economics,” with the expanded BRICS alliance positioned as a counterweight to the G7 (the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom).
Beijing’s strategy – according to Bloomberg – seeks to pull the countries of the southern hemisphere into its economic orbit, challenging American hegemony. Russian President Vladimir Putin, who is isolated over his war in Ukraine, also supports reducing Washington’s global influence.
BRICS has achieved significant financial achievements, including a $100 billion foreign exchange reserve pool and the establishment of the New Development Bank (NDB), which has approved nearly $33 billion in loans since 2015.
In contrast, the World Bank committed $72.8 billion in financial loans in 2023.
While trade between the original BRICS members rose by 56% to $422 billion between 2017 and 2022, driven by complementary economic needs, especially China’s demand for natural resources from Brazil and Russia.
