The term BRIC was first coined by economist Jim O’Neill in 2001 to describe four emerging economies – Brazil, Russia, India, and China- that were poised to become dominant players in the global economy. However, it wasn’t until 2009 that the BRIC bloc was officially formalized, with the inaugural summit taking place that year. In 2010, South Africa was invited to join, leading to the creation of the BRICS group as it is known today.
As a group of high-growth emerging economies, even before its recent expansion, the group accounted for an impressive 26% of global GDP and represented 40.8% of the world’s population. These numbers highlight the economic significance of the bloc, yet BRICS aims to achieve far more than economic power. As stated by its members, BRICS seeks to establish a “more representative, fairer international order,” promoting a reformed multilateral system that challenges the traditional Western-dominated global governance model. However, it aspires to counterbalance Western influence in global affairs, both economically and politically. This objective is often interpreted as a move to eventually diminish, or even supersede, Western dominance in key global institutions like the International Monetary Fund (IMF), the World Bank, and the United Nations.
Additionally, the upcoming BRICS summit approaches in Kazan, Russia, this October 2024, anticipation is building around the introduction of a new currency and payment system. The BRICS group, comprising, Brazil, Russia, India, China, and South Africa, along with its new members Ethiopia, Egypt, Iran. Saudi Arabia, and the United Arab Emirates, is set to unveil a transformative economic initiative. Russia, having assumed the BRICS presidency on January 1, 2024, has orchestrated over 250 activities leading up to the summit.
The BRICS bloc, which expanded in 2011 with South Africa and recently welcomed five additional nations, is focused on redefining global monetary dynamics. In recent months, the BRICS nations have meticulously worked on reforming their economic strategies to challenge the dominance of the US dollar. Central to this effort is the development of a new payment system, tentatively known as the BRICS bridge, designed to reduce reliance on the Western SWIFT network. This system aims to facilitate transactions among member countries using their respective currencies, with the New Development Bank (NDB) serving as a clearinghouse and integration tool.
Viktoria Panova, Chair of the expert council managing Russia’s BRICS presidency, has emphasized that the upcoming summit will prioritize the establishment of this unified payment system. This initiative is important as the BRICS group seeks to foster economic cooperation while preserving trade sovereignty. The BRICS Bridge represents a significant step towards de-dollarization, potentially empowering developing countries, particularly in the Global South, to shift away from the US dollar and use their own currencies in international trade. This shift is expected to enhance trade relations and economic independence among BRICS members.
Recent developments also include progress with the NDB, which was established in 2015 to offer an alternative to existing international financial institutuions. The bank’s membership has expanded to include Bangladesh, the UAE, Uruguay, and Egypt, reflecting its growing influence. However, questions remain about the NBD’s operational transparency and its role in supporting de-dollarization efforts. As the BRICS group continues to evolve, there is a notable increase in interest from other countries seeking membership. More than thirty nations have expressed a desire to join, understanding the bloc’s expanding influence and the need for a well-defined process for admitting new members.
The BRICS summit in October is poised to address these developments and outline future steps for the BRICS currency and payment system. The expected outcome is a more integrated financial network that could reshape global trade dynamics and strengthen economic ties among member nations.
Despite the promise of BRICS as a force for global change, the bloc faces significant internal and external challenges. Economically, the BRICS nations differ in terms of development levels, political systems, and economic priorities. While China is the world’s second-largest economy, countries like South Africa and Brazil are smaller players. These disparities could complicate efforts to create a unified front, especially when it comes to negotiating global economic reforms. Geopolitically, BRICS countries do not always align on key issues, for example, India and China have a history of border disputes and competing regional interests. Such differences could hinder the group’s ability to present a unified voice on global issues, which would be essential if BRICS aims to challenge existing power structures. Moreover, the recent inclusion of Iran and Saudi Arabia, two countries with historically fraught relations, add another layer of complexity to the bloc’s internal dynamics. In the long term, managing these tensions while pursuing a unified agenda could present significant challenges.
The expansion of BRICS marks a pivotal moment in global geopolitics and economies. The bloc’s ambition to create a fairer international order and challenge Western dominance is clear, but the path to achieving these goals is fraught with internal challenges and external pressure. As the BRICS group continues to evolve, its influence on global governance will be one of the most important stories to watch in the coming years. The question remains: can BRICS truly redefine the global order, or will its internal division and competing interests prevent it from realizing its full potential? Only time will tell.
