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Expanding BRICS: Shaping a new global order

Aug 28,2023 - Last updated at Aug 28,2023

"Expanded BRICS" or E-BRICS is the new name for the BRICS coalition proposed by the article's author to replace the current name "BRICS”, which originally stood for the first letters of the founding countries' names. Initially consisting of four nations in 2009, South Africa was added later. The BRICS bloc has agreed to include six more countries from three continents, Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates, as official mem bers starting from January 1, 2024. This expansion aims to accelerate efforts to reform the global system, which it sees as contradictory.

By expanding its membership, the BRICS bloc gains additional economic weight, joining current members China, Brazil, Russia, India and South Africa. This expansion also aligns with its ambition to become a champion of the global South.

However, tensions may persist between members seeking to create a counterbalance to the West, such as China, Russia and now Iran, and those strengthening ties with the US and Europe, like Brazil and India. The expansion has been historically supported by Chinese President Xi Jinping, reflecting the bloc's unity and cooperation with developing nations.

The invited countries' interests mirror individual BRICS members' desires to bring allies into the fold. Brazil's president advocated for Argentina's inclusion, while Egypt has strong trade relations with Russia and India. Ethiopia's proximity to China reflects South Africa's aim to amplify Africa's voice globally.

The inclusion of oil powers Saudi Arabia and the UAE underscores their departure from US influence and their aspirations to become significant global players. Saudi Arabia's entry increases the potential for closer coordination with Russia in oil production, given their roles in OPEC+.

Russia and Iran share common ground in their struggle against US-led sanctions and diplomatic isolation. Their economic ties have deepened after Moscow's actions in Ukraine.

The establishment of a new world order is met with fierce opposition. Notably, UN Secretary-General António Guterres announced the expansion, highlighting the bloc's growing influence and their calls for long-term reforms of institutions like the UN Security Council, IMF, and World Bank.

Despite being home to 40 per cent of the world's population and a quarter of global GDP, internal divisions have hindered BRICS' ambitions to become a major player on the world stage.

The most significant achievement of the bloc has been the creation of the New Development Bank in Shanghai in 2015, which now faces challenges due to sanctions imposed on Russia, a founding contributor. The next step for "Expanded BRICS" is to explore creating a payment and trade settlement system using a new currency and/or issuing a common currency, likely in digital form, with the goal of reducing reliance on the US dollar gradually. Whether this endeavour will succeed remains to be seen.

 

Adli Kandah is an economic and financial consultant and adviser

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