BRICS Summit: Forging a new economic path as South challenges North.

Written by – Elijah J. Magnier 

Johannesburg recently took centre stage, hosting the 15th annual summit of BRICS leaders – Brazil, Russia, India, China and South Africa. A landmark moment emerged from the gathering when the formation of “BRICS PLUS” was announced, expanding the group to include six new members: Iran, Saudi Arabia, the United Arab Emirates, Egypt, Argentina and Ethiopia. This expanded list is due to assume full membership status in January 2024. While the eyes of the world were on the summit, its appeal lay not in its novelty but in its potential to reshape the dynamics of international trade and reduce dependence on the US dollar. 

 A rich tapestry of diverse goals, convergences and overlapping interests is woven within the BRICS consortium. Many nations have turned to this platform to broaden their economic horizons, escape isolation and free themselves from the shackles of US unilateralism and dollar hegemony. This push has been fuelled by the proliferation of US sanctions and the weaponisation of its currency, a tactic that has been used with increasing frequency. This trend has been exacerbated by Russia’s defiance of the West in the ongoing Ukraine crisis. The summit has set the stage for a new economic order as countries explore ways to circumvent the power of US unilateralism and currency dominance. The BRICS summit holds promise, even as it acknowledges a difficult road ahead, as the road ahead remains fraught with challenges. 

Born out of a Russian initiative in 2006, the BRICS consortium has steadily matured and gained momentum. The first summit in 2009 brought together Russia, China, Brazil, India and South Africa, which joined in 2011, changing the acronym from BRIC to BRICS. The agenda for the BRICS Summit in 2023 is wide-ranging, covering issues such as trade and investment facilitation, sustainable development and innovation, global governance reform, skills development, strengthening local economies, developing an alternative currency to dilute dependence on the dollar, promoting transactions in local currencies where possible, and the prospect of expanding membership in the future. Security issues have taken a back seat, reflecting the divergent agendas of BRICS member states, which have focused on topics other than openly challenging Western powers in the Ukraine conflict. 

The ambitions encapsulated in the BRICS narrative resonate strongly with many nations worldwide, particularly those on the verge of economic rejuvenation or the cusp of growth. The African continent, Latin America and Asia are emerging as key players in this evolving landscape. The Middle East also features prominently in the BRICS discourse, with 22 emerging economies declaring their intention to join the consortium and several already taking their place in its ranks. Expected entrants, including Kuwait, Bahrain, Algeria and Turkey, are poised to join this economic platform in subsequent phases at the 2024 gathering in Russia.  

These dynamics underscore that BRICS and BRICS+, representing an impressive global energy reserve, do not intend to exclude or antagonise the United States. The primary objective of China, Brazil, India and South Africa is not to alienate or directly challenge America on non-economic fronts. However, the relentless imposition of US sanctions on BRICS members, notably Russia (subject to over 6,500 Western sanctions) and China (subject to nearly 600 US sanctions), has sparked a global search for alternative markets that can circumvent the dollar’s dominance. Nations must explore alternatives to escape the risk of isolation and sanctions from US monetary control. The US penchant for imposing sanctions – a strategy heavily used since the era of Barack Obama and intensified during the presidency of Donald Trump and the subsequent addition of President Joe Biden – has pushed nations worldwide to seek alternatives. This push is driven by a desire to circumvent the dollar’s stranglehold on their economic interactions. Governments seek to immunise themselves from US sanctions and avoid isolation when they conflict with the global economy and progress.

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The BRICS, representing a staggering 42% of the world’s population (3.24 billion people), welcomes new members to gradually move away from dollar hegemony by facilitating transactions in local currencies. The underlying hope is that the United States will respond with a softer policy, abandoning its over-reliance on sanctions as a punitive tool and destructive weapon against populations and adopting a more lenient approach. This effort is driven by the common goal of stimulating global economic growth while sparing countries the punitive burden of sanctions, as seen in countries such as Venezuela, Cuba, Iran, Russia, Venezuela and Syria. Other nations will eventually find more courage to limit US influence and bullying when the fear of sanctions is finally removed. 

The World Bank and IMF believe that about a third of the global economy will be in recession this year. However, India and China have dynamic economies, and the emerging BRICS economies are not expected to be as affected by these predictions, especially with the addition of new nations such as Saudi Arabia and the Emirates.

As the host nation, South Africa has ambitions beyond the BRICS summit. It wants to be part of the transformation of the African continent from a mere supplier of raw materials into a productive, industrialised entity. It also tries to solve its chronic energy and power shortages by forging energy deals with Russia. Nevertheless, security concerns took a back seat at the summit. South Africa chose to distance itself from the Ukraine crisis and avoid aligning itself with positions that could be construed as hostile to the United States. 

Russia’s trajectory within the BRICS framework is characterised by a search for new markets and a geopolitical strategy. It is positioning itself as a vital element and fair competitor of the global South, connecting with emerging markets, driving development efforts and distancing itself from Western influence, including the dollar and euro hegemony. Russia’s accelerated pursuit of this strategy is underscored by its conviction that ending its reliance on the SWIFT financial system and the US dollar can mitigate the impact of the sanctions imposed. Satisfaction is evident in the growing volume of trade with other BRICS countries, which is expected to exceed $300 billion this year – a remarkable 35.6 per cent increase from last year. In particular, Russia’s ambitious gas supply project with China through Mongolia can potentially boost trade volumes to unprecedented levels. This prospect will grow as the partnership expands to include Africa’s emerging economies.

Though allied to the US, India is expressing a sentiment echoed by its president, Narendra Modi. It seeks a balance in its exchanges within the BRICS, accommodating its relationship with America and the wider Western world. Similarly, China, with the world’s second-largest population, is joining India in its quest for multiple new markets hungry for labour and development opportunities. The envisaged path to this goal lies in the synergy of continents, economic integration, market opening through localised processes, exchange of goods and robust infrastructure development – an approach exemplified by China’s engagement across the African continent. China’s President Xi Jinping told his Iranian counterpart Ibrahim Raeisi, soon to be a full member of BRICS, that he was ready to fully cooperate with Tehran under the BRICS umbrella, a move expected to undermine 42 years of US sanctions against Iran. For Brazil, the summit serves as a platform to project its priorities.

The participation of former Brazilian president Dilma Rousseff, now president of the BRICS Development Bank, at the Johannesburg summit was a strong signal. Brazil’s main agenda is to exert influence within Latin America’s emerging markets. The aim is twofold: to reduce dependence on the dollar’s dominance and to create a common currency, thereby reducing the dollar’s influence and encouraging transactions in local currencies. In addition, Brazil’s vigorous pursuit of pluralism and openness to Asian and African markets is evidence of its intention to move beyond Western-American monopolies. The nation’s ambitions include increasing its trade volume with Africa far beyond 3.5 per cent.

However, it’s important to dispel the notion that the BRICS have a magic solution to dismantle US economic unilateralism and the dollar’s dominance. This dominance has been entrenched since the end of the Second World War and was particularly cemented in 1971 when the dollar was de-backed by gold. Recognising the limitations of dismantling decades of dollar-dominated control, the BRICS are poised to follow a path similar to that initiated by Russia. On a parallel track, China has successfully used its Asian bank to supplant the Western international bank, building a proprietary remittance system tailored to countries ensnared by American sanctions – the cases of Russia, Iran, Cuba, and Venezuela are examples. Moreover, China’s development ventures along the Silk Road and within Africa strengthen its position of influence across continents. 

The road ahead is long and complex – an undeniable reality. The BRICS cannot immediately dismantle half a century of dollar dominance. Instead, they are focused on maintaining the course set by Russia and building on the foundations laid by China. This gradual evolution has both economic and political dimensions. In particular, this emerging economic alliance contrasts the confrontation with the Western G7 coalition. Rather than being an aggressive force, it serves as an alternative, signalling a diversification of global power dynamics.

A new era of competition is underway, forcing the industrial giants of the West to engage with emerging economies. The rapid evolution of a changing world challenges the dominant paradigm of a closed Euro-American enclave. The rich industrial nations must court the emerging economies and abandon isolation. The era ahead demands adaptation, as countries that reject Western hegemony and seek a more balanced political and economic future become formidable players. The newly formed economic alliance, distinct yet complementary to the Western G7, embodies this transformative shift – a symbol of the dynamism of the global landscape.