BRICS: Hopes and challenges in 2024

By Omar Abdel-Razek

2024 will be marked by the expansion of the BRICS group to formally include Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates, in addition to its current members (Russia, Brazil, China, India, South Africa). Argentina was also due to join on January 1 but withdrew its plans just at the last minute.

It’s the largest-ever expansion of the bloc and the first since South Africa joined in 2010. The move augments the group's composition to 11 nations, collectively representing 43% of the world's population and 16% of global trade.

BRICS, an acronym for Brazil, Russia, India, China and South Africa, was coined first as BRIC, without South Africa, in 2001 by Jim O’Neil, and economist from Goldman Saches.

The latest evolving chapter elicits a mixture of optimism and apprehension. Optimism stems from the prospect of catalysing a paradigm shift in the economics of the emerging economies, traditionally relegated to a mere market for industrialized nations and burdened by foreign debts.

Fortifying Africa’s influence

The bloc's steadfast refusal to align with Western sanctions against Russia amid its conflict with Ukraine, opting instead to dialogue and continuing trade with Moscow, exemplifies the potential synergy between political cohesion and economic interests.

The inclusion of Egypt – one of the biggest economies in Africa, and Ethiopia, home to the African Union headquarters, fortifies the continent's influence within the bloc. This move challenges the symbolic representation of South Africa, the smallest economy in the group so far.

Argentina's presence could have similarly bolstered Latin America's standing within the bloc.

In today's interconnected world, the inseparability of politics and economics underscores the imperative for BRICS to progress towards a stage of "multilateralism" in international politics, championed by founding members Russia and China.

A pivotal aspect of this transformative journey is the creation of a parallel system for global development, exemplified by the success of the New Development Bank (NDB), which has approved $32.8 billion for high-impact projects.

Alternative payment system

NDB is seen as the answer for the neoliberal policies imposed on the “global south” by the International Monetary Fund (IMF) and Washington Consensus. Russia and China's proposal for an alternative international payment system challenges the dominance of the US dollar, potentially allowing BRICS members to conduct trade in their national currencies, providing a lifeline for African nations burdened by heavy foreign debts.

Egypt, on welcoming its inclusion, anticipates a reduction in foreign currency pressure through the group's aim of diminishing dollar transactions.

Ethiopia, among the fastest-growing economies in Africa, seeks similar benefits that may enable the country to resist persistent Western pressures on issues like ‘‘human rights.’’

It is believed this move enhances Ethiopia's global profile, fostering closer coordination with major world powers and diverting discourse beyond recent civil conflicts, thereby attracting more investment.

However, amid these optimistic prospects, challenges loom large. Historical initiatives for South-South cooperation have struggled to alter the prevailing world order dominated by the West. The first documented initiative is as old as decolonisation process itself.

In 1955, Bandung hosted the first Asian- African summit, an event President Sukarno of Indonesia described as "the first intercontinental conference of coloured peoples in the history of mankind."

However, the world order has not changed a lot and the western dominance through the international financial institutions and multinational companies continued.

Diversities and complexities

While BRICS may not pose an immediate threat to G7 or G20 blocs, because its primary goal lies in offering an alternative to the prevailing US dollar-centric trade system, the expansion itself “could be a challenge to US hegemony and the US would be scared of that” according to the South African economic analyst Marisa Lourenco.

Challenges within the bloc itself, ranging from the sheer size and economic might of members like China and India, who represent the second and fifth largest economies in the world respectively, to the debt-laden status of others like Ethiopia and Egypt present hurdles.

Political issues, such as the border tensions between China and India, the Nile's Renaissance Dam dispute between Egypt and Ethiopia, and the regional rivalry in the Gulf between Saudi Arabia and Iran, underscore the complexities faced by BRICS in its new expanded form.

The structure of BRICS is theoretically expansive enough to accommodate these diversities without impeding development projects. The bloc relies on annual summits as key decision-making forums devoid of bureaucracy or a centralised headquarters.

The practical realisation of broad cooperation without hindering individual strategies remains to be tested amid escalating global competition between the US and its allies on one side, and Russia and China on the other.

The author, Omar Abdel-Razek, is a Sociologist and Former Editor at BBC Arabic. He lives and works in London.