Brazil
Source: www.e-ir.info

Despite frequent skepticism, the BRICS have come a long way. From a loose label given by investment bankers to four emerging economies in 2001 (Brazil, Russia, India and China), to a semi-formal group (adding South Africa in 2010). True, the differences between these five states have often hindered them from acting in concert; but they have still deepened their relationship with regular meetings at all levels (from leaders' summits to scientific cooperation), and jointly-run institutions (such as a multilateral development bank, the NDB). This year a variety of countries, from Argentina to Iran, applied to join. But what does Russia get out of it – especially now?

Economic ties between its members have certainly increased, but still remain modest; so the explanation is often attributed to geopolitical clout. Bobo Lo, for example, argued in 2015 that "what is most important to the Kremlin is the imagery of BRICS summitry." This is because , first, "[it reaffirms] – to the leadership, the Russian public, and a wider international audience – that Russia naturally belongs to the global elite"; and, second, it "[conveys] that Russia is part of the dynamic group of ascendant powers, in contrast to a decaying and discredited West." This is a common thread in the literature, with Alexander Sergunin terming this a "soft power" strategy, and André Gerrits a "brand-strengthening" one. This certainly was observable as this last June's BRICS Summit, which a major Indian outlet remarked "was the first meeting of such a grouping including Russian President Vladimir Putin since the invasion of Ukraine – giving the message that Russia is not isolated" – a framing echoed by the Wall Street Journal, among others.

Such a view endorses one side of a scholarly and policy debate – that Russia's overall behavior is motivated more by status-assertion than security-maximizing. The latter refers to a more rationalist and materially-grounded conception of safeguarding territorial integrity, and the survival of the Russian polity itself. This is not an abstract distinction, and has direct policy implications, as Olivier Schmitt argues: security motivations can be assuaged through "cooperation mechanisms . . . from exchanges of information to arms control agreements"; meanwhile, "status concerns are relational and often satisfied at the expense of other actors."

This point is all the more relevant now, as policymakers still struggle to decide how best to handle relations with Russia as its war on Ukraine impacts the entire world. In this sense, Russia's continued and firm commitment to the BRICS project reinforces the status-seeking thesis, and can help states calibrate their approach to this area accordingly. Yet, however useful this distinction might be, stopping one's analysis here leaves too many potentially crucial factors on the table. A fundamental point cited by Lo above, "the Russian public," hints at a world of further possibility—but it is left undeveloped.

This is all the more relevant because, if status-asserting abroad is Russia's chief aim with the BRICS, then its success is highly debatable. The aforementioned Summit might have signalled Russia's relative non-isolation, but its outcome document still did not explicitly mention the US nor its sanctions regime, as Vladimir Putin and Xi Jinping's speeches had days before; which can be read as a sign that other members pushed to water it down. Regarding sanctions, even Chinese and Indian banks, as well as the China-led Asian Infrastructure Investment Bank and the BRICS' own NDB, have suspended lending to Russia. Similarly, the BRICS' reserve-pooling mechanism, the Contingency Reserve Agreement, has not come to Russia's aid. It is true that, in March, India, China and South Africa abstained on a UN General Assembly resolution condemning Russia's invasion of Ukraine, with only Brazil voting in favor. But this is still less support than Russia saw from them in 2014, when all the other BRICS abstained from UN votes condemning its annexation of Crimea, and used much more direct and more supportive language on the matter. Even China, the BRICS member with the least equivocal (but still less than full-throated) rhetoric toward Russia, has still shown a willingness to express "questions and concerns" to Putin about the conflict, as he admitted.


Thus, rather than gaining status, Russia's own peculiar decisions (such as invading Ukraine) are tied to its decreasing reputational dividends even among this relatively friendly group. Must it be so? Rachel Salzman's 2019 book BRICS and the Disruption of Global Order adds to the discussion by historicizing it – that is, Russia's BRICS strategy has significantly varied over time. Salzman argues that Russia used the group first as a "bridge" to the West, then, more recently, as a "bulwark" against it. The "bridge" phase was a part of the country's relative turn to the West during Dmitri Medvedev's presidency (2008–12), "nested within a firm argument that Russia is an integral part of the Euro-Atlantic world." This began to change when Putin returned to the presidency, and even more so after 2014. Such a dimension helps to avoid the sort of essentialism that can affect both a rational security-maximizing and status-sensitive approach, if overly focused on external, geopolitical forces. However, Salzman claims that Putin's rationale for choosing more West-friendly Medvedev as president "remains unknown." This returns us to the importance of the domestic sphere in shaping status concerns in the first place.

Alexei Tsygankov's theory of Russian foreign policy, for one, is centered on the interplay between such foreign and domestic dynamics. It holds that the prism which is consistent across all Russian foreign policy regimes is the country's relationship to the West – identifying with it, defining itself against it – but always something related to it. For example, Tsygankov presents the Mikhail Gorbachev (1985–91) and Medvedev (2008–12) governments, as well as Boris Yeltsin's first term (1991–96), as periods of relative rapprochement with the West, due to domestic political conjunctures whereby those favoring that approach prevailed in government. In the latter case, Tsygankov argues that the Medvedev pivot was a reaction to the global financial crisis' impact on the Russian economy, discrediting the ruling orthodoxy and requiring an olive branch to the West. This trans-historical through-line vindicates and reinforces Salzman's evolutionary argument, and can serve to harmonize the aforementioned status vs security dichotomy – that is, the dominant logic varies over time, depending on the Russian political situation as well as external factors.

Jeanne L. Wilson, in 2019 article on the Russia-China relationship concludes, for example, that "the relationship with China contributes to Russia's self-identified status as a great power, which functions as a pillar of regime legitimacy for the Putin government." But Wilson's more fundamental insight is that "the regime's commitment to project Russia as a great power to its citizens can often take precedence over tangible foreign policy goals." Indeed, relying on Russian scholars, media outlets and polls (the latter showing, for example, that 82% of Russians believe preserving their country's great power status should be a priority), she argues:

The Kremlin's claim that Russia is a great power, irrespective of international recognition, or a more traditional display of conventional power capabilities, suggests that the projection of great power status to the Russian citizenry is in many ways more important than international recognition.

While Wilson focuses only on one of the BRICS, it is not a stretch to apply this framework to Russia's relations to its other members, especially considering the aforementioned existing literature's emphasis on the scarce material as opposed to reputational gains it reaps therefrom. Such an argument deserves engagement, as it turns the usual terms of said literature on their head, and can greatly complement its analysis.

Acknowledging the crucial role of reputational concerns in Russia's foreign policy has been a significant step in the scholarship, but it can be taken further by historicizing the variations in this behavior, as well as incorporating the multiple layers and audiences that mold it. Doing so also allows scholars and practitioners to gain insights into the vast body of work on Russian politics and society – largely obscured by an overly geopolitical framing. This also has direct policy implications, such as regarding the current war. Conflict scholar Hein Goemans, for example, already makes a probing domestic-foreign connection by arguing that the often-proposed "off-ramp" for Putin to deescalate and potentially cease hostilities neglects audience costs that could involve his own assassination.

As to the BRICS, given that the group is not going away anytime soon (especially with the return of Lula to Brazil's presidency), and that Russia's reliance on the group will only increase as this war drags on, anyone wishing to understand this relationship, let alone engage with it, would benefit from this more expansive analytical starting point.

UAE
Source: trendsresearch.org

The idea of linking under one bloc the major emerging economies of Brazil, Russia, India, and China first emerged in 2001, when Goldman Sachs coined the acronym BRICs to describe the potential of the four countries to become a powerful economic bloc in the world economy.[1] In June 2009, Brazil, Russia, India, and China formally emerged as a global market force during the first BRIC summit held in Russia, with South Africa joining the bloc a year later.

In subsequent years, BRICS foreign ministers met to advance the bloc's policy goals. The momentum to expand the bloc arrived in June 2017, when China proposed more inclusiveness. In September 2017, China proceeded to invite other nations to join the bloc through a "BRICS Plus" cooperation model at the BRICS Summit in Xiamen, and donated reserve funds to the new bloc through the BRICS New Development Bank (NDB), which was formed in July 2014.[2]

The expansion of BRICS promises to substantially increase the bloc's wealth, which currently contributes to 24% of the world's total Gross Domestic Product (GDP) output – US$24.44 trillion in 2021 – while holding 16% of world trade and 29.3% of the world's total land surface.[3] The five new members expected to join the bloc in 2023 are Argentina, Egypt, Iran, Saudi Arabia, and Turkey.[4] BRICS Plus, a framework designed to include new countries in the BRICS dialogue with a view to promoting multilateralism and multiculturalism, also aims to integrate the Gulf region into its evolving global, regional and sub-regional economic structures. Consequently, members of the Gulf Cooperation Council (GCC) – Saudi Arabia, the United Arab Emirates (UAE), Kuwait, Oman, Bahrain and Qatar – have embarked on a new era of ties with the BRICS countries, shaped by a desire to buffer their economies in a conflict-prone world. This need to build alternative global economic, political, and security structures through a BRICS Plus-GCC partnership is expected to encourage collaboration in a host of sectors and promote geopolitical convergence.

Overview of BRICS–GCC relations

The GCC states enjoy a long history of engagement with BRICS countries since at least the global financial crisis of 2008. Before the crisis, the GCC states had benefitted from the prospect of better integration into global markets, aided by a surge in demand for their rich energy markets. Oil and gas windfalls led to budget surpluses that soared to 23% of regional GDP in 2006. Economic growth that had stagnated in previous years reached an estimated 7%, double the 3.5% average for 1990-2002, when the GCC region was relatively isolated from global markets except in the energy sector.[5]

In an effort to rebound from the global financial crisis, the GCC states sought to expand their markets beyond the developed world. The GCC tilt toward new markets in the Global South may have served as an engine for economic growth. High energy outputs enabled the GCC outreach to BRICS in this period, especially to China when it launched the One Belt One Road (OBOR) initiative in 2013. Combined with a Silk Road fund of US$40 billion and additional funding from the Asian Infrastructure Investment Bank, the OBOR initiative ensured the BRICS economies' energy dependency on the GCC.[6]

The emerging China-GCC market-oriented security partnership expanded to secure stability in the Indian Ocean and in the Gulf waterway, by promising better economic prospects and smoother maritime connectivity to the emerging economies of Africa and Latin America and the Caribbean (LAC). The need for energy security through an evolving China-GCC partnership, along with the growing presence of BRICS countries in local GCC markets, pointed to a mutual desire to widen spheres of influence across continents, and an appetite for larger projects, multilateralism, innovation, private sector growth, and wealth generation.[7]

Emerging landscape of BRICS Plus and GCC relations

China's drive to expand BRICS membership is geared to increase the country's global influence in partnership with "node" countries, such as the GCC states. With their strategic locations and valuable resources, these node countries are particularly important in promoting the bloc's multiple goals and are expected to considerably expand BRICS Plus markets and investment opportunities.[8]

Stability in the Gulf region and beyond is crucial for these node states in order to secure investments and ensure prosperity as they embark on ambitious development plans. Market stability is of particular concern to the GCC states given the financial crunch plaguing the economies of South Africa, Russia and Brazil. This may see BRICS Plus being more inclusive of the interests of the GCC countries, which aim to avoid international conflicts of major scale by maintaining relatively balanced ties with both the East and West.[9]

To this end, the GCC states heeded the call by Chinese President Xi Jinping to avoid 'go-it-alone trade policies' and to reject unilateralism on the global stage, especially in face of US tariff threats and trade wars with China as well as US pressures on Saudi Arabia and the UAE to reduce global energy prices. Despite these challenges, bilateral relations between the GCC states and China and other BRICS countries have remained steady and stable.

The GCC preference for investments and partnerships in Western markets may keep them from tilting completely toward BRICS Plus markets in the future, but such a tilt will be unavoidable as the bloc expands its economic and geopolitical influence across continents. Strong inter-BRICS and intra-BRICS Plus partnerships could emerge and encourage the formation of new alliances that revolve around a shared interest for wealth generation and political stability.

In May 2022, a BRICS Plus virtual conference, attended by the UAE, was held to mark a new expansion phase for the bloc in science, technology, innovation, technical and vocational training, and micro and small and medium enterprises. In June, the 14th BRICS Summit hosted a High-Level Dialogue on Global Development to reform the world system and embrace multilateralism and inclusiveness. A subsequent meeting of the financial ministers and central bank governors of BRICS countries issued a joint statement highlighting consensus to deepen financial cooperation at the macro-economic policy level through international partnerships.[10]

The GCC countries' energy resources and petrochemical markets could fuel the economic engine to expand BRICS, which by mid-2022 represented 40% of the world population.[11] Even in a world reeling from the Covid-19 pandemic, total GCC oil production recovered to pre-pandemic levels, promising to meet world energy demands. The Gulf Petrochemical and Chemicals Association reported US$60-63 billion in chemical revenue in 2021, representing a growth of 15-20% over 2020 – though still 25-30% lower than the pre-pandemic annual average of US$80 billion since 2011.[12] The GCC volume of goods in industrial trade also saw strong growth forecasts in 2020, especially in energy-intensive manufacturing industries, despite the pandemic and strong competition from other countries endeavoring to build similar trade and industrial links.[13]

The past years have seen GCC states steadily increase their engagements in BRICS events and initiatives. In 2021, Qatar participated in a BRICS meeting to explore issue-based international cooperation.[14] Kuwait's drive to expand its ports and railroad facilities was aimed at connecting to wider markets that BRICS Plus and OBOR represent. Oman, Qatar, Kuwait and Bahrain also sought to maintain ties with both the East and West by investing in partnerships in both geographic blocs. In so doing, they were inadvertently heeding calls from the BRICS International Forum President Purnima Anand for the bloc to access markets through a gradual embrace of new members, new faces, and new resources, based on the complementarities of their respective economies through the natural process of forming a multipolar world.[15]

BRICS Plus regulations, meanwhile, are evolving and could ultimately give node countries significant say in how the bloc expands. While almost all countries in the bloc are battling financial problems as well as the cost of the pandemic, the admission of new members including Saudi Arabia could create a new power bloc that unites in questioning the existing global system dominated by the West while offering "alternatives to Western-dominated constructs."[16]

BRICS Plus-GCC economic and social partnerships

The GCC economies are projected to expand by 5.9% or even 7.5% in 2022, with the UAE's economy forecast to increase by 4.7% and Saudi Arabia's by 7%.[17] In 2021, Saudi Arabia – a member of the intergovernmental forum of the Group of Twenty (G20) – had a real GDP of US$692.3 billion while the UAE's GDP reached US$640 billion.[18]

This growth spurt has led to ambitious social and political programs to help integrate the GCC region into global markets, including the BRICS Plus economies. According to Goldman Sachs, even prior to its expansion, the BRICS economies were expected to compete with the economies of the richest countries in the world by 2050.[19] This forecast offered a strong incentive for GCC investments in the bloc.

With the projected oil revenue growth through OPEC Plus – which consists of members of the Organization of Petroleum Exporting Countries (OPEC) and major non-OPEC oil exporting countries – the GCC could mobilize additional financial resources to introduce projects that can help the Gulf region integrate into BRICS Plus private-sector markets. The GCC is meanwhile embarking on privatization programs of its own, to gradually shift jobs away from the public sector to better protect against future energy market price volatilities.[20]

Aiming to build efficient mechanisms to support trade and financial cooperation, the GCC is also building collaborative dialogue through the Shanghai Cooperation Organization, another economic and security initiative led by Russia and China since 2001, in which Qatar and Saudi Arabia are dialogue partners. Bahrain, Kuwait and the UAE also applied to upgrade their status to dialogue partner and were recently accepted.[21]

The Gulf region's potential for integration into the Asian and the Global South markets remains huge. Not surprisingly, as early as 2019, Brazil welcomed a BRICS-style bloc with the Gulf, expressing interest in developing new market opportunities in the region.[22]

In 2021, NDB admitted the UAE as a member. NDB was established as a platform for fostering cooperation in infrastructure and sustainable development. By mid-year, NDB had launched 80 projects worth US$30 billion in sectors such as transport, water resource management, clean energy, and digital and social infrastructure.[23]

In a BRICS Plus meeting in May 2022, foreign ministers and representatives, including UAE State Minister Ahmed Al Sayegh, discussed BRICS expansion and giving priority to Saudi Arabia as a member of the G20.[24] Saudi Arabia, along with Turkey and Egypt, expressed interest in joining BRICS Plus as a means to expanding opportunities and platforms for trade and investments, and to address challenges such as technological gaps to advance their economies. This expansion of the BRICS grouping further aims to boost investment in energy markets, and potentially even replace the dollar with local currencies, at least for some transactions.

Even though the geographical trade costs for some members of BRICS Plus and the dominance of the Chinese Yuan could impede trade integration with the GCC, mutual investments and their impact on global markets will ensure cooperation between the two sides. The heavy influence of BRICS Plus and GCC countries over World Trade Organization policies and on international and regional affairs is also expected to advance the goals of the July 2014 Fortaleza Declaration of the 6th BRICS Summit, which stressed inclusive macroeconomic and social growth and sustainable solutions.[25]

Not surprisingly, BRICS Plus aims to craft new collaborative blocs. The Beijing Declaration of the 14th BRICS Summit focused on the emerging markets in the developing world, including the GCC region, with a view to achieving global financial strength in addition to promoting financial and policy reforms and institutional development.[26]

Shared economic decisions are hard to make in a bloc that is continually expanding to include more countries with diverse backgrounds and ideologies.[27] But the cautious approach that the GCC has taken in gradually embracing the BRICS Plus market potential speaks of a desire by the Gulf states to retain considerable say and influence in the bloc, backed by their wealth of experience in managing energy markets.

BRICS Plus may consequently empower the GCC countries to better navigate their interests, especially given their relations with the Group of Seven (G7) bloc, a grouping comprised of the world's most advanced economies that had a combined GDP of US$33.93 trillion in 2021.[28] Increasingly dissatisfied by the G7's efforts to lower energy prices for the developed world, a number of GCC countries, including Saudi Arabia and the UAE, have opted instead to ensure higher oil prices to boost their economies and have worked with the energy-intensive BRICS markets to ensure demand for GCC energy resources. This course of action enabled the two Gulf states to reject pressures by the United States to lower prices – although Washington tapped into US energy reserves to lower energy prices at home.

Additionally, BRICS Plus is expected to play an important role in e-commerce development, expansion of internet access to users across the Gulf and Asian markets, expansion of online training opportunities, greater connectivity and market penetration potential, and cross-border exchanges leading to wider market integration.[29] To this end, an innovation center in China was launched to serve as a bridge for expanded cooperation in these areas among BRICS Plus members.[30]

Finally, a BRICS Plus-GCC partnership is expected to build social capital as a tool for accelerated economic growth. A main driver of BRICS expansion, China is shifting its export-driven economy to one that relies on domestic consumption. The GCC countries are also keen to improve domestic consumption patterns and boost privatization to increase GDP – goals that India, South Africa and Brazil aspire to achieve as well in order to reduce poverty and ensure social progress, which are key factors of a nation's economic prosperity and stability.[31]

BRICS Plus-GCC geopolitics

In 2022, the High-level BRICS Dialogue on Global Development engaged 13 emerging markets to work on building alternative economic and geo-strategic models to the G7 bloc, and to reject US-led unilateral policies. This process of offering alternatives to the G7 bloc, however, was challenging because of growing rifts between the Western countries led by the United States and China and Russia.

The growing rifts between these major powers is expected to challenge US-Russia relations as well as US-GCC ties. Following the outbreak of the war between Russia and Ukraine in February 2022, for example, BRICS members and GCC countries were concerned about US efforts to encourage them to take sides, despite GCC attempts to mediate an end to the conflict. The US-China trade tensions will accelerate the expansion of BRICS Plus and may well deepen the rifts between Washington and its GCC partners, which bring considerable wealth into the new bloc.[32] The gradual fragmentation of the existing global order and bipolar governance structures that rest on balanced ties between the US and Russia, and the US and China, could also weaken the G20 and accelerate the robustness of BRICS Plus.

BRICS Plus dynamics involve other potential conflictual scenarios, too, as a result of Iran's attempts to integrate its sanctioned economy into the bloc. While observing the US-led sanctions regime against Iran, despite Iran actively integrating its economic and investment interests with Asian countries, the GCC has opted to remain neutral in conflicts between the major powers over the outcome of the Iranian nuclear program. Despite the Iranian nuclear crisis, the UAE and Saudi Arabia have focused on facilitating trade and investment opportunities with Asia, thereby offering better prospects for a speedier integration with the BRICS Plus economies.

Meanwhile, India is seeking to promote a joint BRICS-Gulf security dialogue. Improved prospects for trade and security cooperation could pave the way for stronger networks between BRICS Plus and the GCC. The BRICS Contingent Reserve Arrangement, a framework for the provision of liquidity and precautionary instruments during crises, along with other modes of investments, could buffer the BRICS Plus-GCC economies in the face of global tensions. Furthermore, the BRICS-GCC security dialogue could expand nuclear cooperation between them and better address the challenge of the Iranian nuclear program, mindful that three of the BRICS countries are nuclear states capable of deterring potential Iranian nuclear threats.

Ultimately, the GCC states aim to ensure the stability of the global economy amidst international tensions and conflicts.[33] The July 2022 summit of the North Atlantic Treaty Organization – during which Russia's war in Ukraine was condemned – was an opportunity for the GCC countries to engage Moscow in a so-called Global South security dialogue that BRICS Plus aims to promote. In addition, GCC engagement with the Global South through other forums including the Organization of Islamic Cooperation, the United Nations, and the Asian Development Bank promises to increase the body's influence over BRICS Plus security forums.[34]

While a full convergence of foreign policy goals is unlikely to happen in the BRICS Plus-GCC partnership, both sides appear keen to avoid taking political positions on major issues that might escalate tensions between them. By opting to remain neutral – at least in their public policy declarations on major issues involving the conflicts between the US and China and the US and Russia – the GCC also aims to deescalate international security tensions when it can, in a manner that better contributes to peace.

Conclusion

Although the potential for growth in the BRICS Plus-GCC partnership is too early to assess in terms of actual numbers and figures, the member states representing both sides already enjoy strong bilateral economic ties. Areas of divergence and convergence between BRICS Plus and GCC abound, but ensuring impressive economic growth is at the heart of their partnership, and hence the UAE's desire to work with NDB and Saudi Arabia's membership drive in BRICS Plus.

The idea of a strong BRICS Plus-GCC partnership is rapidly evolving and remains relevant, despite the fact that the BRICS Plus bloc has yet to articulate clear policy guidelines moving forward and consolidate its governance structures. But while the emerging markets of the Global South vary in strength when it comes to integrating into the BRICS Plus economies, the stronger energy-driven economies of the GCC states means they will remain steady partners for the bloc and be able to shape its governance frameworks. Consequently, new transnational trade, governance, political and security structures will emerge, and while not yet deeply studied, may contribute to new and emerging orders in the Gulf region, dominated by a collective desire for market stability, security, and reduced Western economic influence in the region.

Whether a new BRICS Plus-GCC partnership leads to improved global economic prospects is an open debate. But this post-Washington Consensus initiative aims to push aside harsh financial prescriptions for the developing world – espoused by the West through international institutions based in the West such as the World Bank and the International Monetary Fund – by embracing diverse alliances to pool the financial resources of the mighty countries of the Global South.[35] The Washington Consensus, a concept that first emerged in the 1980s to safeguard capitalism and thereby ensure a level of Western control over global economic markets, is therefore challenged if BRICS Plus-GCC ties avoid the pitfalls of the West's capitalist-driven strict policy prescriptions that failed to contain the macroeconomic turbulence and debt crisis of the developing world.[36]



References

[1] Jim O'Neill, "Building Better Global Economic BRICs," Global Economics Paper No: 66, Goldman Sachs, November 30, 2001, https://www.goldmansachs.com/insights/archive/arch....

[2] Nian Peng, "Great Power Conflict Fuels BRICS Expansion Push," The Diplomat, July 13, 2022, https://thediplomat.com/2022/07/great-power-confli....

[3] Aaron O'Neill, "Gross Domestic Product (GDP) of the BRICS Countries from 2000 to 2027," Statista, July 27, 2022, http://bitly.ws/wkDU; "Evolution of BRICS," BRICS India 2021, https://brics2021.gov.in/about-brics.

[4] Andrej Pavicevic, "BRICS Expansion: Five New Members in 2023?" Impakter, July 18, 2022, https://impakter.com/brics-expansion-five-new-memb....

[5] "The GCC Dream: Between the BRICs and the Developed World," Goldman Sachs, April 2007, https://www.goldmansachs.com/insights/archive/arch....

[6] For more on GCC-BRICS relations, see Tim Niblock, Degang Sun, and Alejandra Galindo, eds., The Arab States of the Gulf and BRICS: New Strategic Partnerships in Politics and Economics (Berlin: Gerlach Press, 2016).

[7] Ibid.

[8] Peng, "Great Power Conflict Fuels BRICS Expansion Push."

[9] Ronak Gopaldas, "More BRICS in the Wall?" Institute for Security Studies, August 8, 2022, https://issafrica.org/iss-today/more-brics-in-the-....

[10] "BRICS Countries Vow to Deepen Financial Cooperation," Times of Oman, June 7, 2022, https://timesofoman.com/article/117648-brics-count....

[11] Shahid Hussain, "Can BRICS Plus Offer Better Platform to Developing Nations?" Korea Times, July 4, 2022, https://www.koreatimes.co.kr/www/opinion/2022/10/1....

[12] "GCC Dangerous Goods Logistics Market 2022-2027," Research and Markets, April 18, 2022, https://www.yahoo.com/now/gcc-dangerous-goods-logi....

[13] The Economist, The GCC in 2020: Outlook for the Gulf and the Global Economy, Economist Intelligence Unit, March 2009, https://graphics.eiu.com/marketing/pdf/Gulf2020.pd....

[14] Qatar Ministry of Foreign Affairs, "Qatar's Ambassador Participates in a Meeting of Representatives of the BRICS Member States," April 18, 2021, http://bitly.ws/wkF6.

[15] "Head of the BRICS Forum: Three More Countries Expressed Their Intention to Become Members of the Association," Top War, July 14, 2022, https://en.topwar.ru/199018-glava-foruma-briks-esc....

[16] Gopaldas, "More BRICS in the Wall?"

[17] The World Bank, "GCC Economies to Expand by 5.9% in 2022," May 23, 2022, https://www.worldbank.org/en/news/press-release/20...; Raul Redondo, "Saudi Arabia's GDP Will Rise at Highest Rate in 10 Years in 2022, Says S&P," Atalayar, September 19, 2022, https://atalayar.com/en/content/saudi-arabias-gdp-....

[18] Global Data, "Real GDP of Saudi Arabia (2010-2021, $ Billion)," June 2022, https://www.globaldata.com/data-insights/macroecon...; World Economics, "United Arab Emirates's Gross Domestic Product (GDP)," https://www.worldeconomics.com/Country-Size/united....

[19] "Saudi Arabia Interested in Joining BRICS Group, South Africa President Says," Middle East Monitor, October 19, 2022, https://www.middleeastmonitor.com/20221019-saudi-a....

[20] The World Bank, "GCC Returns to Growth Amid High Oil Prices and Strong Responses to COVID-19 but Large Wage Bills Threaten Its Economies," December 2, 2021, http://bitly.ws/wkGw.

[21] Zongyuan Zoe Liu, "China Is Quietly Trying to Dethrone the Dollar," Foreign Policy, September 21, 2022, https://foreignpolicy.com/2022/09/21/china-yuan-us....

[22] Sam Bridge, "Brazil 'Open' to Brics-Style Bloc with Gulf States," Arabian Business, August 5, 2019, https://www.arabianbusiness.com/politics-economics....

[23] "BRICS Development Bank Admits UAE, Bangladesh, Uruguay as New Members," The Economic Times, September 2, 2021, https://economictimes.indiatimes.com/news/internat....

[24] "Foreign Ministers Hold BRICS Plus Expansion Discussions," Silk Road Briefing, May 23, 2022, https://www.silkroadbriefing.com/news/2022/05/23/f...; UAE Ministry of Foreign Affairs & International Cooperation, "UAE Participated in Virtual BRICS Plus Conference with Foreign Ministers," May 23, 2022, https://www.mofaic.gov.ae/en/mediahub/news/2022/5/....

[25] "The 6th BRICS Summit: Fortaleza Declaration," University of Toronto – BRICS Information Center, July 15, 2014, http://www.brics.utoronto.ca/docs/140715-leaders.h....

[26] "China Has Urged the West to Read the New 14th BRICS Summit Declaration Carefully. This Is What It Says," Silk Road Briefing, June 28, 2023, http://bitly.ws/wkHq.

[27] Mohammed Nuruzzaman, "Why BRICS Is No Threat to the Post-War Liberal Order," Journal of International Studies 57, no. 1 (2022): pp. 51-66, https://journals.sagepub.com/doi/pdf/10.1177/00208....

[28] Nation Master, "Group of 7 Countries (G7): Statistical Profile," https://www.nationmaster.com/country-info/groups/G...(G7).

[29] United Nations Industrial Development Organization (UNIDO) and Shanghai Academy of Social Sciences (SASS), BRICS Plus E-Commerce Development Report In 2018, https://www.unido.org/sites/default/files/files/20....

[30] "Innovation Center in E China Becomes Bridgehead for BRICS Cooperation," Xinhua, September 10, 2022, https://english.news.cn/20220910/5e55c80f036f4ad19....

[31] See Mark Esposito, Amit Kapoor, and Deepti Mathur, "What Is the State of the BRICS Economies?" World Economic Forum, April 19, 2016, https://www.weforum.org/agenda/2016/04/what-is-the....

[32] Gopaldas, "More BRICS in the Wall?"

[33] "Algeria and Argentina… 'Two New Babies'? Towards 'BRICS Group' What is the Reason?" Al-Ain, August 27, 2022, https://al-ain.com/article/algeria-and-argentina-b....

[34] Mohamed Taifouri, "BRICS: The Ukraine War Is Fragmenting the Global Economy," Al-Eqtesad, July 31, 2022, https://www.aleqt.com/2022/07/31/article_2363476.h....

[35] Pavicevic, "BRICS Expansion: Five New Members in 2023?"

[36] For a list of policies designed through the Washington Consensus, see Douglas A. Irwin and Oliver Ward, "What Is the 'Washington Consensus?'" Peterson Institute for International Economics, September 8, 2021, https://www.piie.com/blogs/realtime-economic-issue....

Liechtenstein
Source: www.gisreportsonline.com

A new geopolitical order means BRICS countries will have to reassess the organization's mandate.

China and Russia's increasing adversarial relations with the West have made BRICS a riskier prospect for other member states. © Getty Images In a nutshell

• In its early days, BRICS appeared likely to benefit its members
• New tensions among China, India and Russia have stalled integration
• Membership could become less appealing for Brazil and South Africa

The idea of cooperation among the emerging economies of Brazil, Russia, India and China resulted in the formation of the BRIC bloc in 2001, with South Africa joining the group in 2010. BRICS emerged as a diplomatic and economic collaboration framework aiming to challenge Western influence in the global economic order. The group set up a development fund to finance infrastructure projects, a critical missing link in emerging economies. But now, with a geopolitical situation drastically different from that of the early 2000s, it is not obvious whether Brazil, Russia, India, China and South Africa will keep cooperating as a group. With no end in sight to the Kremlin's war in Ukraine, BRICS members now have to reconsider the relevance of the body's mandate.

An alternative to the West

The establishment of BRICS was hailed by member states and observers as the creation of a countervailing force to the Western development agenda. The expectation was that Russia and China would lead the organization by leveraging their advanced economies to the benefit of other members.

The BRICS member states have diverging interests, with some countries in open conflict with each other.

Western countries frequently express concern about how BRICS could affect Africa's trade with the European Union and the United States. Foreign diplomats from Western countries working in South Africa often raise the issue and argue that BRICS poses a threat to global trade given China's clear intention to gain more geopolitical clout by expanding its economic influence.

In terms of economic power and reach, Brazil and South Africa are junior members in the BRICS pact. The two countries will likely need to weigh the potential benefits of membership against the risks of siding with Russia and China on the global stage. Much has changed since the formation of the group. Tensions between India and China have grown considerably over the border conflict in Jammu and Kashmir. Russia's invasion of Ukraine has made Moscow a pariah in the West. And Beijing is facing political and economic turmoil resulting from its stringent restrictions against Covid-19.

Emerging rivalries

While China did not openly denounce Russia's invasion of Ukraine, relations between Moscow and Beijing have become rockier. The war has brought massive economic turbulence at a global scale, including rising inflation exacerbating social tensions across different regions, including China. Russia's prolonged expedition in Ukraine is worrying Chinese authorities. At the Shanghai Cooperation Organisation summit held in September this year, Xi Jinping quietly stood back as Russian President Vladimir Putin praised "the balanced position of our Chinese friends regarding the Ukrainian crisis." But the Chinese side made no statement to support this claim, hinting at growing frustration with the fighting in Ukraine.

Facts & figures

Now focused on the task of reining in citizens' discontent, President Xi could do without Russia's destabilizing expedition, which compounds his problems at home. Meanwhile, South Africa and Brazil find themselves caught in China's increasingly hostile systemic rivalry with the West. While at the time of BRICS's creation, it still appeared conceivable that China and the Western bloc would overcome their differences and collaborate closely, several developments have deepened the rift between the two, especially Beijing's aggressive military posturing in Asia.

Another issue is China's strategy of funding infrastructure in countries with governments unlikely to repay the loans. This "debt trap diplomacy" – aimed at appropriating national assets in recipient countries and eventually expanding China's strategic and military presence around the globe – is also causing concern.

BRICS heavyweight India has expressed its displeasure with China gaining control of the Hambantota port in Sri Lanka after Colombo could not repay Chinese loans received for construction. When a Chinese research vessel sought to dock there, New Delhi decried the presence of a "spy ship" in its backyard. India has come to view trade and economic relations with China as a security risk. This is pushing New Delhi to turn West, away from China and the BRICS pact. India would also like to present itself as an alternative to China for Western firms seeking safer places to expand their production. Meanwhile, African countries are also aware of the debt trap risk and talk of "economic colonialism" is increasingly becoming part of local policy dialogues.

The geopolitical climate is such that neither China, India or Russia can wholeheartedly commit to BRICS's success.

The BRICS member states have diverging interests, with some countries in open conflict with each other. China and India's regional conflict is weighing heavily on the organization, and meaningful economic cooperation involving the two powers is unthinkable at this stage. There is also little support for Russia to be had from New Delhi, with Prime Minister Narendra Modi declaring that "this is not the time for war." This places the future of BRICS in serious jeopardy.

Scenarios

China is looking for a stable market for its goods, and BRICS would hardly offer such demand. What Beijing wants is further access to Western markets and consumers, albeit on its own terms. This means that the Chinese regime most likely sees BRICS not as a framework to be strengthened but as a stepping stone to global economic dominance. China is not looking to create an alternative to the Western-dominated global trade regime; it rather seeks to upstage the West and control the existing global economic order.

Through BRICS, South Africa and Brazil were hoping to gain access to global markets and grow their economies, not take sides in proxy wars. The geopolitical climate is such that neither China, India or Russia can wholeheartedly commit to BRICS's success. This leaves Pretoria and Brasilia alone in wanting closer economic cooperation through the framework.

Both countries need these trade ties given their difficult economic situation at home. But now that the major geopolitical players within the organization are all pursuing an agenda of their own, the risks of belonging to this platform may ultimately outweigh the benefits.

United Kingdom
Source: internationalbanker.com

O ne of the clearest trends the world witnessed in 2022 was the accelerating eastward shift in global economic power. Much of this migration was initially achieved through the continued strengthening of the Shanghai Cooperation Organisation (SCO). With significant progress being made by the BRICS group of five major emerging economies—Brazil, Russia, India, China and South Africa—in terms of joint policy coordination and with several other economies showing clear signs of interest in joining the increasingly influential bloc, 2023 looks set to be the BRICS bloc's most impactful year within the global economic and geopolitical landscape.

China is the clear economic powerhouse of the BRICS nations. Nominally the world's second-largest economy—and the overall global economic leader when accounting for purchasing-power parity—China's expansion and rapidly growing economic influence throughout the world will prove hugely significant for global economic development in 2023. Given its ostensibly unshakeable alliance with neighbouring BRICS member Russia, moreover, the two nations are already leading the way in offering the world a major counterbalance to Western political unions, such as the G7 (Group of Seven). And with India, Brazil and South Africa all having deep diplomatic and economic ties with either China, Russia or both, the BRICS collective is now becoming increasingly aligned across a number of important issues.

Indeed, research has shown that in the decade following South Africa's formal acceptance into the bloc in 2010, which turned BRIC into BRICS, the five nations managed to coordinate policies across some 70 key issues. Some of its biggest achievements include the establishment of the New Development Bank (NDB), which is now financing key infrastructure projects across the world, as well as the creation of the BRICS Contingent Reserve Arrangement (CRA), a mechanism for providing support through additional liquidity and other means to BRICS countries during times of economic crisis. But as the world has become increasingly polarised over the last year or so, the bloc has stepped up efforts to advance its economic interests, which in turn is helping to cultivate robust alternative financial systems that are now rapidly expanding in their global appeal.

One of the most significant objectives the BRICS nations appear to be working to achieve is a shift away from reliance on the US dollar. Even before the outbreak of war in Ukraine, which seems to have expedited de-dollarisation initiatives across much of the non-Western world, Russia and China had embarked on clear policies of local-currency promotion, invariably at the dollar's expense, as their relationships with the United States continued to deteriorate. By the first quarter of 2020, for instance, the dollar's share of bilateral trade between the two countries fell below 50 percent for the first time on record, having been almost 90 percent just five years earlier.

"Such de-dollarization initiatives are happening largely under the radar of contemporary scholarship," noted Zongyuan Zoe Liu and Mihaela Papa of Tufts University, Massachusetts, in their research paper "Can BRICS De-dollarize the Global Financial System?" published online by Cambridge University Press on February 24, 2022, the same day that the war between Russia and Ukraine broke out. "Leaders of these initiatives are reform-oriented rising powers, including strategic adversaries of the United States, that have expressed discontent with the existing US-led dollar-based global financial system."

The 14th BRICS Summit on June 23-24 also saw the five nations—their combined population exceeding 40 percent of the world's total—deliver a new 75-point declaration under the theme "Foster High-quality BRICS Partnership, Usher in a New Era for Global Development". One of the stated key points was developing a common BRICS payment system (BRICS Pay) for retail payments and transactions among member countries. This only adds to the earlier work done by China and Russia to launch cross-border payment systems as alternatives to the US-led SWIFT (Society for Worldwide Interbank Financial Telecommunication) system.

Aside from China and Russia, other BRICS founding nations will likely step up their efforts to promote the bloc in 2023. Under the leadership of returning President Luiz Inácio Lula da Silva, Brazil is expected to leverage its status as a BRICS founding member to advance its own development and the economic progress of the wider Latin American region. "A Lula win, in conjunction with South Africa and India, should help the BRICS move back to its original role of being a counterweight to excessive US domination and therefore promoting South-South development," Dr. Ralph Newmark, director of the Institute of Latin American Studies (ILAS) at La Trobe University in Melbourne, Australia, recently told the South China Morning Post.

Lula has also expressed interest in leveraging the BRICS contingent's expanding global influence to bring a decisive end to the war in Ukraine. Celso Luiz Nunes Amorim, the foreign minister during Lula's 2003-2010 presidency and a key Brazilian figure in the initial founding of the BRICS group alongside Russia, India and China, told Reuters in October that President Lula had the disposition and track record to contribute to peace talks. "He has the conditions to take part in a negotiating effort, which needs to be led by the European Union and [the] United States but with the participation of China, obviously. Brazil can also be an important country, whose voice resonates in the developing world," Amorim said. "The BRICS as a group could help."

But perhaps the most significant recent development from the BRICS bloc is the confirmation that the five member states are now seriously exploring the potential introduction of a BRICS reserve currency. According to Pavel Knyazev, deputy director of the Russian Foreign Ministry's Foreign Policy Planning Department, the currency will be created to serve the BRICS nations' economic interests better and will be based on a basket of their respective domestic currencies—the Chinese yuan, the Russian ruble, the Indian rupee, the Brazilian real and the South African rand. "The possibility and prospects of setting up a common single currency based on a basket of currencies of the BRICS countries [are] being discussed," Knyazev said in early October, adding that member states are "actively studying mechanisms" to exchange financial information for a robust alternative global payment system.

This progress means that reports published in recent months of several countries applying to join the BRICS countries should come as no surprise. Indeed, Russian Foreign Minister Sergey Lavrov acknowledged that at least another dozen countries are interested in joining the bloc. "Interest in this global association is very, very high and continues to grow. It's not just Algeria, Argentina, and Iran. In fact, there are more than a dozen such countries," Lavrov said on November 8, adding that the group was in the midst of establishing formal entry requirements. "Since the applications are already being submitted officially, of course, we expect that working out the criteria and principles for admitting new members to BRICS will not take too long."

So, which countries are these new candidates clamouring to join the bloc? In addition to formal applications having been received from Algeria, Argentina and Iran, it is widely believed that Saudi Arabia, Türkiye, Egypt, Afghanistan and Indonesia have also either applied already or are due to do so imminently. And additional media reports suggest that Kazakhstan, Nicaragua, Nigeria, Senegal, Thailand and the United Arab Emirates (UAE) have also expressed interest in joining the BRICS union.

Of this diverse mix of nations, it is Saudi Arabia that, if approved, will perhaps represent the most profound addition to the BRICS, particularly given the precarious global geopolitical climate at present. Ties between the Kingdom and the US deteriorated markedly in 2022, with US President Joe Biden's request for OPEC (Organization of the Petroleum Exporting Countries) to expand oil production not only falling on deaf ears but seemingly inspiring the global oil cartel to take the opposite route and cut output by a mammoth two million barrels per day.

With Washington perceiving such drastic measures as Saudi Arabia siding with Moscow and thus threatening appropriate retaliation, the further souring of relations will only push Saudi Arabia towards the embrace of BRICS and Eastern economies in general. With China having already stepped up its overall investment in Saudi Arabia—the biggest recipient of China's Belt and Road Initiative (BRI) infrastructure investment in 2021—the Gulf nation's concerted shift away from the West and towards the East will surely see some or all of the BRICS nations benefit as a consequence.

Saudi Arabia's state-owned oil company, Saudi Aramco, also confirmed in May 2021 that China's energy security would be its highest priority for the next 50 years, while China is currently Saudi Arabia's biggest trading partner, with more than $50 billion worth of exports last year—18 percent of the Kingdom's total. And with Chinese President Xi Jinping arriving in Riyadh to a decidedly warm welcome in early December, bilateral trade and cooperation will only strengthen further in 2023. "Now it is the height of the bilateral relations between the two since their establishment of diplomatic relations in 1992," Shaojin Chai, an assistant professor at the University of Sharjah in the United Arab Emirates, recently told CNN. "They become closer as both sides need each other in many areas: energy transition, economic diversification, defense capacity building for KSA and climate change, to name just a few…the diversification of security risk entails KSA including rising China in its hedge."

Among the myriad of strategic and economic partnership deals and agreements signed during Xi's visit, however, it was his confirmation to Arab leaders that China intends to buy oil and gas in yuan that is sure to be the most seismic political move to have happened during the Summit, as Beijing seeks to broaden global use of its currency, whilst concurrently loosening the international hegemony that the US dollar still commands.

What's more, early November saw gas-rich Algeria formally apply to join the BRICS coalition, further emphasizing the potential magnitude of the bloc's energy interests. "Algeria would definitely like to join BRICS. The question is whether we will be accepted, because there are certain obligations. We need to bring some of our legislative acts to a common standard," the governor of the country's capital, Algiers, Mohamed Abdenour Rabehi, told Sputnik in early December.

Greece
Source: moderndiplomacy.eu

The issue of the creation of a BRICS reserve currency has taken on particular significance in recent months after President Putin declared that the creation of such a currency was in the process of discussion. This was followed by a series of statements coming from Russia's legislative branch on the expediency of creating a new reserve currency — most recently from the Federation Assembly speaker Valentina Matvienko. While the debate on the possibility of creating such a reserve currency is only starting in Russia and more broadly across the global economy, the implications of such a move on the part of the BRICS could have transformational consequences for the global financial system.

Initially, the proposal to create a new reserve currency based on a basket of currencies of BRICS countries was formulated by the Valdai Club back in 2018 — the idea was to create an SDR-type currency basket composed of BRICS countries' national currencies as well as potentially some of the other currencies of BRICS+ circle economies. The choice of BRICS national currencies was due to the fact that these were the among the most liquid currencies across emerging markets. The name for the new reserve currency — R5 or R5+ — was based on the first letters of the BRICS currencies all of which begin with the letter R (real, ruble, rupee, renminbi, rand).

The recent debates concerning the prospects for the creation of a new reserve currency focused more on the risks, fragilities and outright impossibility of the R5 project. Less attention has been accorded to estimating the benefits (including in terms of hard figures) to BRICS economies and EM more generally. There has also been scant attention with respect to the actual modalities of launching the BRICS reserve currency.

What is clear at this stage is that the BRICS reserve currency will not be created to replace the national reserve currencies of the BRICS economies — rather it will complement these national currencies and will serve to improve the possibilities for more EM currencies to attain reserve status. Accordingly, the attainment of high trading shares among the BRICS economies is a desirable but not altogether an indispensable condition for launching the new reserve currency. In fact, the new BRICS currency does not have to service all trade transactions among BRICS economies in the very near term. Initially, the new BRICS currency could perform the role of an accounting unit to facilitate transactions in national currencies. In the longer run, the R5 BRICS currency could start to perform the role of settlements/payments as well as the store of value/reserves for the central banks of emerging market economies.

Within the composition of the R5 currency basket the share of the Chinese renminbi may be initially set at a relatively high level in order to take advantage of the already advanced reserve status of the Chinese currency. This share may be reduced progressively in stages later on along with the inclusion of new EM national currencies. Outside of the BRICS economies some of the potential candidates that with time could be included into the R5+ currency basket may feature the Singaporean dollar or the UAE's dirham.

One of the potential risks associated with the use of EM currencies in reserves is their high volatility. The basket mechanism of the BRICS reserve currency will allow for reducing some of this volatility via averaging out the exchange rate dynamics of currencies that follow different market trends — if the currencies of Russia, South Africa and Brazil follow the commodity cycle, the opposite is true with respect to commodity importers such as India and China.

Importantly, the scope for employing the new reserve currency in the world economy is sizeable given the tremendous potential for de-dollarization. The new BRICS reserve currency can act in concert with the stronger role performed by BRICS national currencies to take on a greater share of the total pie of currency transactions in the world economy. This greater role can be gradually extended from servicing foreign trade transactions to investment flows across the developing world. In line with the original R5 concept developed by Valdai Club in 2018 one of the possible venues for boosting the use of national currencies and the BRICS reserve currency could be the creation of a platform for regional development banks in which BRICS economies are members. Such a platform could develop a portfolio of common/integration projects that may be financed in national currencies.

In the end, the launching of a new reserve currency if successful will impart a transformational effect on the international financial system. The Central Banks in the global economy are experiencing a notable shortage of reserve currencies in managing their reserve holdings. In this respect, the emergence of additional reserve currencies from among the EM economies will serve to expand the possibilities for diversifying reserve holdings and reducing the vulnerabilities associated with the dependence on a narrow range of currencies. The R5 project can thus become one of the most important contributions of emerging markets to building a more secure international financial system.