By: Ramsha Kanwal
University of Chakwal (BSIR)

BRICS, an evolving alliance comprising 10 nations, has recently welcomed five new members—Saudi Arabia, Iran, United Arab Emirates, Egypt, and Ethiopia—who officially joined the bloc on January 1, 2024, thus challenging the Western hegemony. This expansion marks a significant stride towards diversifying the organization.
Initially formed in 2009 as the “BRIC” group by the four rapidly growing economies of Brazil, Russia, India, and China, the organization expanded to include South Africa in 2010, becoming “BRICS.” In 2023, during the 15th BRICS summit, Argentina, Egypt, Ethiopia, Saudi Arabia, Iran, and the United Arab Emirates received invitations to join the bloc. On the historic date of January 1, 2024, the aforementioned five nations officially became part of BRICS. Notably, the inclusion of oil-rich Saudi Arabia, Iran, and the United Arab Emirates, alongside Egypt and Ethiopia, adds substantial economic and geopolitical weight to the organization.
While Argentina initially expressed interest in joining the expansion, it ultimately withdrew after recent elections. The newly elected pro-American president, Javier Malay, declared Argentina’s non-participation. The nomenclature for the expanded group, possibly “BRICS+,” has yet to be officially announced. Anticipation is mounting as the 16th BRICS summit approaches, scheduled to take place in Russia’s Kazan region this October. There is a palpable sense of expectation, particularly with the prospect of 25 to 30 additional countries contemplating joining this influential alliance. Traditionally, decisions regarding such expansions are deliberated upon during the annual BRICS summit, where member nations rotate the presidency each year.
Russian President Vladimir Putin recently made a significant announcement regarding a forthcoming round of BRICS expansion. During a press interaction, he hinted at the initiation of this new phase during the upcoming summit in Kazan. Putin underscored the importance of evaluating the willingness of approximately 30 countries to align with the multi-dimensional agenda of BRICS. He expressed,
“Of course, we will consider the degree to which many other countries are prepared to join the BRICS in one form or another. To this end, we will commence working on the modalities of a new category of BRICS partner country.”
The expanded BRICS alliance collectively commands approximately 30% of the Earth’s landmass and is home to 45% of the global population. In the realm of purchasing power parity (PPP), the combined gross domestic product (GDP) of these member nations constituted 32% of the world’s GDP in 2023, surpassing the 30% held by the G7 countries. This economic shift positions BRICS as a formidable force challenging the West, particularly the G7—a coalition of advanced economies comprising Canada, Germany, France, Italy, Japan, the United Kingdom, and the United States. The evolving composition and aspirations of BRICS underscore its enduring commitment to challenging prevailing global power structures and promoting greater inclusivity in international relations.
While the United States currently stands as the sole superpower globally, excelling in finance, technology, and military capabilities, the formation and expansion of BRICS herald a new world order. BRICS serves as a unifying platform for the world’s fastest-growing economies, with six out of ten being the top oil producers globally. This expanded group provides a unique opportunity to wield influence over global energy dynamics and facilitates discussions on various developmental agendas, including economic expansion, trade, technology transfer, and advancements in space research.
A central tenet of the BRICS agenda is the promotion of sustainable development. Furthermore, the alliance actively advocates for South-South cooperation. In 2014, BRICS nations established the New Development Bank (NDB) as their own parallel institution. The primary objective of the NDB is to offer a platform for emerging and developing countries, outside Western institutions, to spearhead infrastructure and sustainable development projects. This multilateral new development bank focuses on fostering economic growth, social progress, and environmental sustainability on a global scale.
The BRICS group is dedicated to fostering free trade and investment while bolstering financial independence. A key initiative involves the establishment of a new or alternative currency for international trade, with origins traced back to the 14th BRICS summit. The primary objective is to introduce a common currency, tentatively named R5, derived from the first letter of the founding countries’ currencies (Brazil – Reals, Russia – Ruble, India – Rupee, and China – Renminbi). This strategic move is aimed at augmenting BRICS’ global influence and enabling it to compete with the prevailing dominance of the Western US Dollar.
The BRICS alliance envisions reshaping the existing world order, shifting the balance of power from North to South. The group perceives its currency as a viable alternative to the US Dollar, suggesting that a world “tired” of the Dollar could find respite in the BRICS currency. The potential launch of the BRICS currency raises concerns for the US, as evidenced by the alliance’s recent declaration that their currency serves as an antidote to the prevailing US Dollar hegemony.
If BRICS countries opt to discontinue using the US Dollar for international trade, it could significantly impact five key US financial sectors:
1. Banking Sector: Changes in currency preferences may disrupt traditional banking practices and financial transactions.
2. Technological Sector: The technological landscape may experience shifts in investments and partnerships, reflecting the changing dynamics of international trade.
3. International Trade and Investment: The global trade landscape could undergo transformations, impacting the flow of goods and services between BRICS countries and the rest of the world.
4. Consumer Goods and Retail: Currency adjustments may influence consumer purchasing power and alter the dynamics of international retail markets.
5. Traveling and Tourism Sector: The tourism industry may witness fluctuations as currency preferences affect travel expenses and international tourism patterns.
In pursuit of greater autonomy, BRICS nations have initiated trading in their national currencies. Notably, 80% of trade between Russia and China is settled in either Chinese Yuan or Russian Rubles. India, a recent addition to the BRICS alliance, has opted to use Indian Rupees instead of the US Dollar in trade with another newly added member, the United Arab Emirates.
The inclusion of major oil-producing countries such as the UAE, Saudi Arabia, Iran, Egypt, and Ethiopia within BRICS opens up new avenues for trade in local currencies. However, challenges may arise as the US Dollar maintains its dominance in global oil markets. Current statistics reveal that the Dollar is utilized in over 70% of all international trade, 90% of currency exchanges, and more than 90% of international oil trades. The shift towards local currencies in oil transactions may encounter hurdles due to the entrenched influence of the Dollar.
Creating a BRICS currency is deemed a formidable task by some experts due to its inherent challenges. The success of a new currency hinges on three pivotal factors: Expansion, Acceptance, and Trust. Launching a global currency for international trade is a protracted endeavor, as exemplified by the Euro, the central currency of Europe. In 1991, the Maastricht Treaty laid the foundation for the Euro, which was officially introduced in 1999. The meticulous preparation spanned a decade, and even after its launch, the Euro remained inconspicuous for three years before gaining widespread usage.
A significant impediment to the BRICS currency initiative lies in the strained relations between two key members, India and China. The launch of a BRICS currency is contingent on the amelioration of tensions between these two major emerging economies. Recent historical events, such as the 2020 clashes in the Galwan Valley resulting in the loss of 20 Indian soldiers, have exacerbated the discord between India and China. Notably, diplomatic relations have soured to the extent that China has refrained from sending an ambassador to India for the past 10 months. This acrimony poses a substantial obstacle to the realization of the BRICS currency.
The expansion of BRICS seems carrying profound implications for global economic dynamics. To challenge Western dominance, particularly that of the United States, and for Russia to fortify its economy while establishing an alternative to the dollar, harmonious cooperation between India and China is imperative. As the prominent players within BRICS, often referred to as “Asian Giants” by Western media, their amicable relations could catalyse benefits for all member countries, breaking the Western monopoly. The endeavours of BRICS, if guided by cohesive collaboration, hold promise for steering global economic dynamics in a new and impactful direction.

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