South Africa is hosting what could turn out to be a historic meeting of the BRICS (Brazil, Russia, India, China, and South Africa) this August, where the leading emerging markets will invite new members to join an expanded "BRICS+" club that can challenge the established hegemony of the leading developed countries that have ruled the world since the industrial revolution three hundred years ago.

The BRICS are already collectively bigger than the developed world and accounted for 31.5 % of the world's gross domestic product (GDP) in 2023 in PPP terms against 30.7% for the G7. Adding new members will only increase the body’s clout. 

The compound average growth rate (CAGR) of share of BRICS GDP in world’s GDP from 1982 to 2022 rose at 2.75% per year, while that of G7 fell by -1.26% per year. The ball is clearly in the BRICS court.  

While BRICS accounts for 42% of the world’s population, its members have less than 15% of the voting rights in the World Bank and the IMF, according to the Pretoria-based Institute for Security Studies.

Nineteen countries have shown interest in joining the BRICS group of nations ahead of its annual summit in South Africa.

The meeting will be held in Cape Town on June 2-3, during which Brazil, Russia, India, China and South Africa will discuss the expansion of its membership, among other things.

Anil Sooklal, South Africa's ambassador to the group, said that "13 countries have formally asked to join and another six have asked informally. We are getting applications to join every day." China, as the world's second-largest economy, proposed the expansion of the group when it was BRICS's chair last year.

Russia has been holding regular negotiations with its partners in the BRICS group about possible expansion, Russian Foreign Ministry Spokeswoman Maria Zakharova said on April 27, following a decision to work out appropriate guiding principles, standards, criteria and procedures set at the fourteenth BRICS summit in Beijing.

"The entire range of issues associated with this is being discussed at BRICS sherpa and sous-sherpa meetings, and, of course, this requires a thorough analysis and delicate internal work by the five countries to reach a consensus," the Russian diplomat said. Though the issue is being discussed on a regular basis, it is too early to reveal any details about the approval process, she added.

Brazil wants an expansion and one based on nominations by existing members. Brazilian President Luiz Inácio Lula da Silva has already put Argentina’s name forward to balance what Brazil sees as a possible Asian bias emerging, Bloomberg reports.  

India is against the nomination system and would prefer a system more akin to the EU accession where candidates have to meet strict criteria before being admitted.

Growing family

In the middle of June 2009, the four fastest growing countries in the world came together for the inaugural BRIC summit. Leaders from Brazil, Russia, India and China met in the Russian city of Yekaterinburg to create a formal organisation where they could pool their resources and co-ordinate their relations with the old world powers. The first formal meeting of the BRIC foreign ministers took place in Yekaterinburg in 2008, but this meeting was attended by presidents and prime ministers, and significantly upped the ante.

Originally coined as a marketing term by Goldman Sachs’ legendary head of research Jim O’Neill to sell stocks, the 2009 meeting marked the group’s first foray into politics as it attempted to create an organisation that had never existed before.

South Africa joined in December 2010, bringing Africa into the fold, although O’Neill says it is too small compared to the others to really qualify. However, from its inception the BRICS leaders began the process of integrating the countries around them into a loose trading and investment confederation, although for most of the last decade trade with the West has been far more important for the BRICS than trade with their neighbours.

In April the Kremlin released a new aggressive foreign policy concept that eschews cooperation and replaces it with pursuing Russia’s national interest in the face of Western “aggression” as the key to international relations. Specifically the concept sees closer ties between the Middle East, Central Asia, China and ASEAN in terms of infrastructure, energy and trade as a key Eurasian goal as Russia attempts to build a non-aligned alliance.

Now what has been a loose club is changing and attempting to establish something with greater, and more co-ordinated, political heft. The war in Ukraine has polarised the world, as Western diplomats have been touring the world and attempting to persuade, cajole or threaten the EMs into supporting Western sanctions on Russia. As bne IntelliNews has reported, many countries continue to have deep economic, political and military ties with Russia and are not interested in hurting these interests for what they see as a European problem that doesn't concern them. The unintended consequence has been for many EMs to turn to the BRICS as a counterweight to US-led pressure on them.

The proposed enlargement has raised concerns among current members, who fear their influence could be diluted, especially if China's close allies are admitted. China's gross domestic product (GDP) is more than twice the size of all four other BRICS members combined.

The BRICS countries are working to find consensus on the issue of expanding the alliance, Brazilian Foreign Minister Mauro Vieira said in an interview with Spain’s El Mundo published on April 25.

"Currently, a discussion is underway within BRICS on its expansion but we are looking for consensus," the top Brazilian diplomat said. "But if we agree on expanding the union, then of course Argentina will be Brazil’s candidate," he added.

The foreign ministers from the five member states have confirmed their attendance for the discussions in June. Several heads of state are expected to travel to the summit too, including possibly President Vladimir Putin.

South Africa’s Sooklal has confirmed that Putin has been invited and says he is expecting him to come, but a question mark was raised over Putin’s attendance after the International Criminal Court (ICC) issued a warrant for the Russian president's arrest on March 16 for the illegal deportation of at least 100 Ukrainian children.

Confusion now reigns over Putin’s attendance after South African President Cyril Ramaphosa said at the weekend that his government was going to pull out of the ICC to allow Putin to come, but then walked those comments back less than 24 hours later, as the decision is deemed to be unconstitutional. The Kremlin has requested clarification from Pretoria on the situation.

The decision to add South Africa marked a change of direction. O’Neill’s original configuration of BRIC was predicated simply on the fact that all four of those countries were very large, developing, had large populations and great economic potential. South Africa doesn't fit all of those criteria but it is one of the leading economies in Africa, and the African continent as a whole does qualify.

More than a dozen countries have applied for membership and it seems like that some of them will be accepted on the basis of their geography, rather than O’Neill’s criteria.

Relations between the Middle East and the US have decayed rapidly since the so-called shale revolution saw the US go from a net oil importer to a net exporter. The Kingdom of Saudi Arabia (KSA) and United Arab Emirates (UAE) are both former close US allies, but have both seen relations with Washington sour, and now hoping to move closer to the other leading EMs. As leading countries in the Middle East their accession would bring a new and important EM geography into the alliance – and one that controls vital supplies of the world’s oil together with Russia. Iran, another Russian ally, has also applied for membership, as has Bahrain.

Brazilian President Luiz Inácio Lula da Silva is hoping to bolster South America’s clout in the origination and has proposed Argentina become a member too, while Nicaragua and Venezuela are also both close to Russia.

Amongst the other candidates are Algeria, Egypt, Turkey and Indonesia – all Russian allies and customers of its commodities. Two nations from East Africa and one from West Africa have also shown interest, although Sooklal did not identify them.

Algeria, Argentina and Iran have already formally filed requests to join BRICS, while Saudi Arabia, Turkey and Egypt have signalled their interest, but yet to make a formal request.

Tellingly, expanding the club is not the only topic of discussion on the agenda: the BRICS members are going to talk about payments too. As bne IntelliNews has reported, part of the changes that come with the rise of the BRICS is a drive to dump the dollar and trade in national currencies. Both Russia and China have already largely moved over using the yuan to settle international trade deals and the share of the dollar in sovereign reserves has already notably fallen. A large group of EMs co-ordinating a change out of the dollar could accelerate that process, as well help sanction-proof their economies from Western pressure.

"What was discussed during a visit to Buenos Aires and then in Montevideo and in a conversation with Paraguayan President [Mario Abdo Benitez], as well as with other countries, such as India and China, involved a payment system in national currencies and not a common currency,” Brazilian Foreign Minister Vieira told El Mundo.

"We would like to make bilateral payments in trade using corresponding currencies, bypassing strong currencies, thus avoiding burdensome transfer expenses," the Brazilian foreign minister concluded.

To make a multilateral payment system work will require a multilateral bank to guarantee the payments. But that has already been set up, the New Development Bank (aka the BRICS Bank), which will also be discussed at the confab.

Who will join?

Who will join BRICS? It is still not clear. South Africa’s BRICS’ sherpa Sooklal says that there are 19 names in the hat already and 13 have formally requested membership, but their names have not been released; only a handful of countries have already openly declared their desire to join: Algeria, Argentina, Iran and UAE. Other candidates that have tentatively said they would like to join include: Egypt, Indonesia, Turkey, Senegal, Afghanistan, Kazakhstan, Nigeria and the Kingdom of Saudi Arabia (KSA), but they have yet to make a formal request.

The BRICS members themselves have yet to decide on a mechanism to allow new members in and one of the key questions will be if the decision is political or economic; O’Neill’s original criteria was purely economic – big counties, with big populations and lots of economic potential. By these criteria South Africa should not be a BRIC, but clearly Africa’s potential is huge and adding an African member to the original BRIC group makes lots of sense.

Putin clearly wants to build a non-aligned alliance of emerging countries so looking at the UN voting on the Ukraine issue is one indicator of who Russia would like to see join. There have been five UN votes and one of the panels on the map below shows the cumulative score of those countries who either voted against the motion (scoring -1) or abstained (0) in the five votes. Only a handful of countries voted against the motion in all five votes (scoring a maximum of -5).

Russia voted against the motion in all five votes (scoring -5, dark blue) as did its allies of Belarus, North Korea and Syria. India and South Africa abstained from all the votes (0, yellow) and China voted against the motions twice (-2). Noticeably Brazil voted for the motion three times and abstained from the other two, highlighting the fact that Brazilian President Luiz Inácio Lula da Silva may want to see BRICS expanded but he also doesn’t want to burn his bridges with the west.

Looking at the map of UN voting and it is clear that Central Asia is also trying to sit on the fence. Kazakhstan voted once against the motion and abstained from all the others (-1). Kyrgyzstan, Tajikistan abstained from all the votes (0) and Uzbekistan voted for the motion once (1). Turkmenistan bizarrely voted for the motion three times (3).

These Eurasian countries are likely to get both Russia and China’s support if they were to apply as both Russia and China are keen to connect their markets via Eurasia and in addition both Kazakhstan and Uzbekistan are major producers of key commodities like oil, metals and grain that would further improve the BRICS stranglehold over the international commodities business.

The voting map shows that support for Russia in Latin America is weak as almost all the countries voted for the motion several times in addition to abstaining. None voted against the motion. However, like South Africa’s addition, several countries in South America would like to join for economic reasons with Venezuela, Argentina and Bolivia standing out.

Russia has the most support in Africa where Moscow has successfully built on the strong ties established during the Soviet-era and the lingering resentment from the colonial-era. As in Eurasia, many countries abstained in all the votes and few voted against the motion once or twice, with the Central African Republic, Ethiopia, Mali, Sudan and Zimbabwe standing out. Eritrea voted against the motion in every vote, in protest against sanctions imposed on its military junta by the US.

Uruguay can be added to the list as it is a candidate member for membership of the New Development Bank (aka the BRICS bank) that was set up to be the EM-owned equivalent of the International Monetary Fund (IMF). In addition to the five BRICS, KSA, Egypt and Bangladesh are already members of the NDB.

EMs confabs

A large expansion of the BRICS bloc would increase the group’s sway on the international stage. India was a rotating member of the UN Security Council shortly after the war in Ukraine started and, together with China, abstained from the vote to condemn Moscow for the invasion. However, the EMs would like to see the Security Council expanded to include new EM members. Currently there are three European countries (France, the UK and Russia) along with China and the US on the council, but none from either Africa or Latin America.

Russia has just taken over the chairmanship of the Security Council, and Russian Foreign Minister Sergei Lavrov immediately called for the body to expand to include representation of Asian, African and Latin American countries.

"The evident under-representation [in the UN Security Council] of Asian, African and Latin American countries should certainly be fixed," he said at a dramatic news conference last week to sum up the results of Russia’s first session as chairman.

"The multi-polar world is objectively being shaped. I don’t know what the final result and configuration will be," he added.

The BRICS organisation is being chaired by South Africa this year but there will be a G20 summit next year, where Russia will be the chair, that is likely to produce a buzz of activity similar to that which this BRICS summit has done. This year’s G20 summit was in Indonesia, which is another Russia ally. Putin was due to attend that event too, but pulled out at the last minute.

Russia will also host the second Russia-Africa summit in July in St Petersburg, where the majority of Africa’s 54 heads of state are expected to attend. The US has already been actively lobbying African governments not to attend the Russian event, and how many skip it will be a litmus test of the Kremlin’s support in Africa.

Russia also took over the chairmanship of the Eurasian Economic Union (EAEU) that was set up to co-ordinate between several of the CIS countries. However, as bne IntelliNews reported, since the war in Ukraine started the Kremlin is in the process of re-tasking the EAEU to also take in new members in Southeast Asia and the Middle East. That tallies with China’s plans, for which Eurasia is also a vital region for its (Belt and Road Initiative (BRI)

 

IMF global growth outlook
	2022	2023	2024
World Output	3.4	2.8	3
Advanced Economies	2.7	1.3	1.4
United States	2.1	1.6	1.1
Euro Area	3.5	0.8	1.4
Germany	1.8	-0.1	1.1
France	2.6	0.7	1.3
Italy	3.7	0.7	0.8
Spain	5.5	1.5	2
Japan	1.1	1.3	1
United Kingdom	4	-0.3	1
Canada	3.4	1.5	1.5
Other Advanced Economies	2.6	1.8	2.2
EM Economies	4	3.9	4.2
EM Asia	4.4	5.3	5.1
China	3	5.2	4.5
India	6.8	5.9	6.3
EM Europe	0.8	1.2	2.5
Russia	-2.1	0.7	1.3
LatAm	4	1.6	2.2
Brazil	2.9	0.9	1.5
Mexico	3.1	1.8	1.6
Middle East and Central Asia	5.3	2.9	3.5
Saudi Arabia	8.7	3.1	3.1
Sub-Saharan Africa	3.9	3.6	4.2
Nigeria	3.3	3.2	3
South Africa	2	0.1	1.8
EM and Middle-Income Economies	3.9	3.9	4
Low-Income Developing Countries	5	4.7	5.4
source: IMF WEO April 2023