On the eve of the BRICS summit, which got underway in South Africa on Tuesday (August 22),  Russian Foreign Minister Sergey Lavrov wrote in an article for the local magazine Ubuntu that the meeting would begin the process of expansion of the bloc in order to create “a just world”. 

Many outsiders have scoffed at the idea of the BRICS bloc (Brazil, Russia, India, China and South Africa) becoming a potent political force in the world as its member countries have little in common, other than they are big and underdeveloped.

Jim O’Neill, the legendary Goldman Sachs analyst who coined the term in 2001, called the idea of a political bloc “ridiculous” in a recent interview with the Financial Times. BRIC as a political entity was founded in 2006 in an inaugural summit in Russia’s Yekaterinburg. O’Neill pointed out that his original criteria for being a “BRIC” included being a big country, have a big GDP and have a lot of people.

By this measure, he says that South Africa, which joined in 2010, should never have qualified, as it is dwarfed by its peers, but an expanded BRICS would make more sense if the Kingdom of Saudi Arabia (KSA) is included.

However, the one thing that does unite all the countries is they are developing fast and feel that the emerging world is under-represented in the global architecture, which remains dominated by the developed world, led by the United States.

In other words, they agree with Russian President Vladimir Putin’s complaints about the “unipolar” world run by Washington and want a “multipolar” world where they have their proper say in how the world is run, given the EMs now collectively are richer than the West (in PPP terms) and have more people.

The salient point here is that increasingly the EMs are not “emerging” anymore. Countries such as Russia and China have already emerged, albeit with a lot of work left to do before they can be called “mature”. 

In this context, this BRICS summit is extremely important as its members are just starting to work on how they will cooperate to counter the West. And “counter” is what they are going to do as the West has made it clear it is not willing to “cooperate”; the West feels it's entitled to rule the world rather than embrace the new world on equal terms.

Several things point to these rising tensions. US Secretary of State Antony Blinken's first policy speech naming Russia a “threat” and China a “rival”. French President Emmanuel Macron’s attempt to mediate in Ukraine, by suggesting not that the European Union embrace East and West but emerge as a “third superpower” – in other words, the EU joins the US as a co-hegemon.

What Putin has been arguing for (rhetorically at least) is a truly global community of cooperation and mutually beneficial trade and investment that is governed by something like the UN. The political models are also very different, which is another source of tension. Russia and China have rejected the so-called Washington consensus, where individual freedoms lie as a foundation, and are pushing a Moscow consensus alternative which emphasises the state over the individual, among other things.

However, Putin is the only one that has crystallised this rivalry to the point where he was prepared to go to war with the West and break off relations completely. Putin assumes that he can build a future by doing business with the non-aligned countries of the world. And while there is plenty of business to be done in the Global South, he has also reduced Russia’s growth potential as a result of sanctions and many economists believe the Russian economy will stagnate in the long-term as a result.

Building blocs

The desire of the emerging Global South to have a seat at the world’s top table and Russia’s clash with the West have catalysed some frenetic global diplomacy as Western and Russian diplomats are travelling the world trying to shore up support.

China is playing a major role in promoting the BRICS, as bne IntelliNews reported. Although it is Russia that is in direct conflict with the West, China openly challenged the US role as leader of the world with a three-day trip to Moscow in March, when Beijing openly backed Russia in its conflict with the West. China also released a 12-point peace plan for Ukraine on the anniversary of the start of the war, seeking to position itself as an impartial mediator in the dispute.

Together with Russia, China is actively promoting the idea of a BRICS bloc that can be extended to a BRICS+ group that can stand up to the existing US-led Western hegemony.

Africa has become an important part of this way and is relevant in a way that it was never before, as bne IntelliNews described in a deep dive titled “Russia in Africa”.

The confrontational nature of what the BRICS summit is intended to achieve has also been highlighted by the fact that both France and the US, amongst other Western powers, applied for accreditation to attend the BRICS summit and were refused.

Against that South Africa bent over backwards to allow Putin to attend in person, but an International Criminal Court (ICC) warrant for his arrest for kidnapping children from Ukraine meant that Pretoria would have been forced to arrest him if he did attend. In the end, he will join by video link.

None of the other countries in the Global South are prepared to follow Russia into open conflict with the West and would prefer to maintain their good relations with the West. South African President Cyril Ramaphosa was explicit the day before the summit started, saying Pretoria “will not choose sides in a fractured world.”

The Global South agrees with Putin that the West needs to be challenged but at the same time they concede they are still behind the West on many counts, so they want to continue to cooperate. The upshot is at the BRICS summit the Global South members need to work out how they can better work together to improve their collective bargaining position in future negotiations, as well as to make the basic decision on what sort of organisation BRICS wants to be: a trade club or a political challenger to the existing world order.

It’s not for nothing that the main debate at the meeting will be on who else to let in and what are the criteria for admitting new members.

On August 21, Nelson Kgwete, a spokesman for the agency, told TASS that leaders from over 40 countries would take part in the BRICS summit from August 22-24 and a decision may be made to expand this club from its original five members. Some 23 countries have submitted official applications for joining BRICS, according to the South African foreign ministry.

Who gets in and what the criteria will be to judge applicants remains the main item on the summit’s agenda. There is currently no consensus on how to admit new members, nor even what sort of organisation they are trying to build.

The frontrunners for membership are Argentina, Saudi Arabia and Indonesia. Iran’s application is also making headway, Iran’s deputy foreign minister for economic diplomacy, Mehdi Safari, said on August 1.

Iran is suffering from the same pariah status as Russia and even if it doesn’t become a full member of the BRICS, Tehran will continue to actively expand its relations with the group which have already begun, Iranian Foreign Minister Hossein Amir Abdollahian said on August 8.

Algeria is currently doubling its efforts to join the BRICS group of emerging markets as the North African country’s President Abdelmadjid Tebboune pushed for the move during a four-day visit to China in July. Morocco formally submitted an application to join in August, and Brazilian President Luiz Inácio Lula da Silva has been championing membership for Venezuela, another victim of US sanctions.

Yaroslav Lisovolik, a well-known Russian analyst and founder of BRICS + Analytics, says that the inclusion of Indonesia and the KSA are the most compelling, as of all the candidate regions of the Global South, only the Middle East and Southeast Asia are not represented in the BRICS core group.

Ramaphosa said on the eve of the summit that his country supports the expansion of the alliance. “An expanded BRICS will represent a diverse group of countries with different political systems that share a common desire for a more balanced world order,” he said. According to Ramaphosa, “the value of BRICS goes beyond the interests of its current members.”

But Ramaphosa added a common caveat, saying that his country “will not be embroiled in rivalry between world powers”, and adding that South Africa remains committed to a policy of non-alignment.

While all the BRICS members are open to expanding the group, very basic questions on how to go about this remain unanswered. India and China, in particular, have very different visions of what the bloc should look like.

The key question is: should BRICS be a club that protects only the economic interests of developing countries, or should it become a real political force that openly challenges the West?

China, which has openly supported BRICS expansion, along with Russia, wants the bloc to be political and to challenge the West directly. India, like South Africa, prefers the first option of mutual respect and improved commerce, and will work to avoid conflict with the West. Brazil has real qualms about an expansion, arguing that adding too many members would dilute the power and authority of the group.

Amongst the ideas being discussed include strengthening economic cooperation through the New Development Bank (NDB), TASS sources reported: countries admitted to membership of the development bank will be able to participate in various formats of the BRICS group without formally joining the group. Another concept involves the direct acceptance of new countries as permanent members of the association based on sponsorship by existing members.

And even if the political model is not adopted, the economic argument is compelling in its own right. In 2023 the BRICS countries will provide a greater contribution to global economic growth than the G7 countries – 32.1% versus 29.9%, reports Bloomberg. According to forecasts, by 2040 the BRICS countries will account for half of world industrial production – twice as much as the G7 countries. The global centre of gravity is already moving inexorably eastwards.

BRICS currency

The process of building an alternative to the Western hegemony amongst the members of the Global South is right at the start and it will face many practical problems. None highlights the challenges better than the problem of setting up an alternative currency to the dollar for international trade.

Russia and China want to de-dollarise their economies and have already gone a long way towards switching their mutual trade to national currencies. But the BRICS members have called for a new “BRICS currency” to be introduced similar to the euro.

The idea is popular with many countries, particularly those that have found themselves under US sanctions. Russia and China are already settling increasing amounts of their mutual trade in their own currencies. And the Iranian government has backed the creation of a gold-backed currency to compete with the US dollar, IRNA reported on July 9.

One of the unintended consequences of the SWIFT sanctions that were imposed only days after Russia’s invasion of Ukraine in February is the rest of the world has been unsettled by the realisation that the US can arbitrarily freeze their international reserves as so many countries have invested these reserves in US treasury bills that were considered to be the safest investment in the world. That is no longer true, and while the dollar remains the dominate currency for settling international trade deals, its share in sovereign international reserves has already started to fall.

However, the issue of introducing a single currency is not on the agenda of the upcoming summit. As bne IntelliNews reported, introducing a BRICS currency still faces many major hurdles and won’t appear anytime soon. What will happen at the summit is that many BRICS+ countries will agree in principle to the more active use of national currencies in trade settlements among themselves.