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BRICS (acronym for Brazil, Russia, India, China and South Africa) is an intergovernmental economical organization that aims to bring together the leading emerging economies of the globe. Jim O'Neill, a Goldman Sachs American economist, was the first, in 2001, to theorize the idea of a group of BRICS countries. It became reality in 2006, when the organization was officially founded by Brazil, Russia, India and China, under the name of BRIC, that later became BRICS when South Africa joined in 2010. The scope was (and still is) the establishment of a player in the global market that could compete with the western world and its predominant economic position, mostly the US. This is reached through the creation of a network of cooperation, trade and financial agreements. Statista reports the BRICS being “increasingly considered the leading geopolitical challenge to the G7”.

The community is growing

Recently, the acronym has officially become BRICS+, including United Arabs Emirates, Iran, Egypt and Ethiopia, which were officially admitted into the organization at the very beginning of 2024. Saudi Arabia, an almost official member, has yet to conclude the process. Still, the number of countries has almost doubled in a single year. This expansion represents a great opportunity for new member countries in terms of investments and fundings from former members and, more in general, the possibility to have a stable and wider trading network. China and Russia, on the other hand, were the drivers and major supporters of the expansion.

Another country which is clearly interested in joining the economic network is Turkey, as demonstrated by the fact that Erdogan’s government has already submitted a formal application. The reasons behind the choice are both economic and political. On one side, Turkey is a key trade partner of both China and Russia, with Russia being its first energy provider, and China a very appealing country for energy, green technologies, telecommunication and infrastructural purposes. Since 2022, the Turkish government has also adopted the so called “far countries strategy”, according to which China, Brazil and South Africa, among others, are going to become increasingly important in the country’s trading scheme, with the willingness to increase the trading volume with those geographically distant countries.

From a geopolitical perspective, Erdogan is not bringing the country closer to the European Union, but quite the contrary. Europe does not approve the authoritarian backsliding taking place in the region and hampering the admission process. This BRICS application could also be used as a strategy to “force” the Union a greater openness towards the country, but still Erdogan seems to be truly becoming politically more aligned to BRICS countries.

Still, not everybody is aligned with the organization, and if some leaders show a strong interest in it, some others prefer to remain independent from it. It happened with Argentina in 2023, that declined the offer after being asked to become a BRICS member together with Saudi Arabia, UAE, Iran, Egypt and Ethiopia. More recently, Kazakhstan refused to join the group and created some tensions. The country that has reacted the most to the refusal is Russia, which seems to have specifically blocked imports of some food products from the country.

What about de-dollarization?

The possibility that the enlargement and increase in power of the BRICS will lead to a de-dollarization is a distant but perceived danger, especially by the United States. But what does de-dollarization mean? Since Bretton-Woods agreements in 1944, the dollar has been the dominant international currency for trade, mainly in the two globally leading trade sectors: oil and gas. Still, the establishment of BRICS new financial institutions (as the New Development Bank and the Contingent Reserve Arrangement) and an increase in the volume of oil and gas traded by BRICS countries, as we expect to happen with Saudi Arabia as new member, may lead to a decrease in dollar power and the rise of an alternative currency, most likely the Chinese yen. Still, big changes would have to take place in order to replace the dollar.

BRICS in numbers

In 2023, Statista estimates that over 40% of the world’s population lives in BRICS countries (3.25 billion people), predominantly in India and China. Forecasts suggest, between 2000 and 2026, an expected growth of 625 million people.

In terms of BRICS GDP (gross domestic product), its total amount shifted from under 4.000 billion of U.S dollars in 2000, to about 25.000 billion in 2023. China has become the second-largest economy in the world, second only to the US, growing at a significantly faster rate compared to the other BRICS; it may outpace the US in 5 years. Today, India is the only member country that seems to be able to reach (if not exceed) the Chinese GDP.

Overall, BRICS are becoming an increasingly important player on the international scene, and the need for more and more countries to move towards a hub alternative to the US is clear. This raises the question whether what was born as an organization for economic purposes will not move increasingly towards a political alliance in the foreseeable future.

Sources:

- https://www.statista.com/topics/1393/bric-countries/

- https://www.politico.eu/article/russia-bans-vegetables-from-kazakhstan-after-country-refuses-to-join-brics/

- https://www.bnnbloomberg.ca/business/company-news/2024/10/20/what-to-know-about-the-brics-group-of-countries-rivaling-the-g7/#:~:text=The%20BRICS%20group%20expanded%20in,decision%20on%20whether%20to%20join.

- https://blogs.lse.ac.uk/europpblog/2024/09/20/why-does-turkey-want-to-join-brics-and-what-will-the-trade-offs-be/

Image: Timon Studler, via Unsplash