1. BRICS Expansion and Its Geopolitical Implications
The inclusion of Saudi Arabia, UAE, Iran, Egypt, and Ethiopia into BRICS represents not just an expansion but a strategic shift in global geopolitics. These nations, particularly Saudi Arabia and the UAE, are major players in the energy sector. Their addition bolsters BRICS' influence over global energy markets, especially as the group already includes Russia, one of the world’s largest energy exporters.
Saudi Arabia and the UAE also bring substantial financial clout to BRICS. Their sovereign wealth funds and capital resources could enhance the New Development Bank (NDB)'s capacity to fund infrastructure projects in developing countries, which would further boost the group’s economic influence. The expansion strengthens BRICS’ role as a platform for the Global South, increasing its ability to counterbalance Western-led initiatives like the G7.
Moreover, Iran’s inclusion is particularly significant in the context of global politics. It signals BRICS' defiance of U.S.-imposed sanctions on Iran and reinforces its push toward a multipolar global order that does not depend on Western approval. The expansion, particularly with nations from the Middle East, also represents a challenge to existing Western alliances such as NATO.
2. De-Dollarization and Financial Independence
A cornerstone of BRICS’ recent strategies has been the effort to reduce reliance on the U.S. dollar in international trade, known as de-dollarization. This has been driven by geopolitical tensions, especially after the U.S. imposed sanctions on Russia and other nations, limiting their access to the dollar-based financial system. BRICS sees this as a tool of Western dominance and is accelerating its push for financial independence through initiatives like BRICS Pay.
BRICS Pay, the group’s blockchain-based payment system, is intended to bypass the SWIFT system, allowing member nations to conduct trade in local currencies. This initiative is seen as a game-changer, particularly for countries like Russia and China, who are under significant pressure from U.S. economic policies. In 2023, trade between BRICS members surged, particularly between China and Russia, where over 80% of transactions are now conducted in rubles or yuan.
While BRICS has long discussed the possibility of a shared currency, these plans have not yet materialized due to practical difficulties, such as the economic disparities between member nations and differing fiscal policies. However, the BRICS Pay system is a significant first step towards greater financial autonomy from the Western-led financial architecture.
3. New Development Bank (NDB)
The New Development Bank (NDB), often referred to as the BRICS Bank, is approaching its 10th anniversary and remains a central institution in the group’s plans to reshape global financial structures. The NDB was created to fund infrastructure and sustainable development projects, primarily in BRICS member nations and other emerging markets.
The expansion of BRICS is likely to increase the NDB’s influence, as new member states will both contribute financial resources and become eligible for development loans. This is a critical move as it positions the NDB as a viable alternative to Western-dominated financial institutions such as the International Monetary Fund (IMF) and World Bank, which have been criticized by BRICS members for imposing harsh lending conditions and favoring Western interests.
With the inclusion of wealthy Gulf states like Saudi Arabia and the UAE, the NDB could see a significant increase in capital, enabling it to fund more projects and increase its global footprint. This expansion in the bank’s capital could also help further BRICS’ goal of providing financial aid and investment to developing nations without the geopolitical strings that are often attached to Western aid.
4. Reform of Global Governance
One of BRICS' core goals is the reform of global governance institutions. The group has consistently criticized multilateral institutions like the United Nations Security Council (UNSC) and the G7 for being unrepresentative of the developing world. The 2024 summit saw a renewed focus on reforming these institutions to give greater voice and representation to the Global South.
BRICS’ advocacy for reform focuses on increasing the participation of developing and least-developed countries, particularly from Africa, in global decision-making processes. This reflects the bloc's broader commitment to multipolarity, where global power is shared among several influential regions rather than being dominated by the Global North.
In line with this, BRICS has condemned unilateral sanctions, particularly those imposed by the U.S. and EU, as harmful to global trade and development. These sanctions, BRICS argues, disproportionately affect developing nations by disrupting trade and access to essential resources like energy and food. BRICS has positioned itself as a defender of international law, arguing for adherence to multilateral agreements, particularly within the framework of the United Nations.
5. Challenges and Internal Divisions
Despite its growing influence, BRICS faces several challenges that could hinder its ability to act as a cohesive force. Internal divisions between member states—particularly between India and China—remain a major issue. The two nations have a long history of border disputes and economic competition, which complicates their cooperation within the BRICS framework. Additionally, Russia’s strained relations with the West due to the ongoing conflict in Ukraine pose further difficulties, as other BRICS members like India and Brazil have adopted more neutral stances on the issue.
Moreover, the economic disparities between member nations—ranging from the highly industrialized economies of China and Russia to developing nations like South Africa and Ethiopia—mean that creating unified economic policies, such as the much-discussed BRICS currency, will be extremely challenging.
Conclusion
BRICS is at a critical juncture as it expands its membership and deepens its efforts to reshape global governance and financial systems. Its expansion, push for de-dollarization, and the strengthening of the NDB are all part of a broader strategy to challenge Western dominance and promote a more multipolar world order. However, internal challenges and the complexity of balancing the interests of its diverse members will test the bloc's cohesion and its ability to achieve these ambitious goals.
