The BRICS alliance just announced its enlargement to include Ethiopia, Argentina, Egypt, Iran, Saudi Arabia, and the UAE this morning.
The alliance (Brazil, Russia, India, China, South Africa), was founded in 2010 in order to create an economic discussion that was alternative to the G7, in which none of the emerging economies was included.
From Theory to Enlargement, BRICS is on the Defense
The Johannesburg BRICS summit took place over the last three days. Russian President Vladimir Putin participated through video while his Chinese counterpart Xi Jinping, although in South Africa only attended the official dinner on Wednesday.
Chinese Commerce Minister, Wang Wentao, gave a speech in which he assured his BRICS allies that China does not seek hegemony.
“Hegemonism is not in China’s DNA”, he said, insisting that Bejing it is not eager for a “bloc confrontation“, but rather, enlargement [which] is a way to face “turbulent times”.
On behalf of Xi, the Minister did not spare the United States in the speech: “Whoever develops first becomes their target of containment. Whoever is catching up becomes its target of obstruction”.
Although Brazil’s President Luiz Inàcio Lula da Silva said that it is not BRICS’s intention to compete with G7 or G20, analysts say that emerging economies are looking for an alternative way to advance their interests. Many candidates continue to line up for inclusion, including Algeria.
While South Africa and Russia have been eager to enlarge the alliance immediately as they are now under heavy sanctions, Brazil and India are not in a hurry. India has expressed worry about foreign relations and repercussions.
President Narendra Modi has stressed that “there have to be ground rules on how it [enlargement] should happen and who can join”.
During the recent Africa-Russia summit, leaders of emerging economies expressed their concerns about Western retaliation while some were outraged by sanctions imposed by the West.
Expanding Economies and Populations
The current economies in BRICS are worth trillions in GDP, with China dominating the field with its impressive $19.37 trillion GDP (currently around 10% of the United States’, although that figure is expected to change in the following years). The new entries, Ethiopia, Argentina, Egypt, Iran, Saudi Arabia, and the UAE, are not any less impressive, and will be joining on January 1st 2024.
Heading the new entries is Saudi Arabia, with its $1.06 trillion GDP, comparing to the smallest economy in the G7, Canada, with its $2.089 trillion in GDP. In total, the enlargement would include countries with 30% of the world’s GDP, and 40% of the world’s population lives in current BRICS countries.
The idea that the economies were going to become dominant in the world by 2050 was initially proposed in 2001 by a Goldman Sachs study on a theoretical “BRIC”, and the political organisation came out of a 1990’s Russian foreign policy idea to create a triangle with China and India, the other two world superpowers on the other side of the Iron Curtain during the Cold War.
And now, with tightening sanctions and emerging counties striving to sell their natural resources on the international market, it seems that the Ukraine war has pulled a “Rubber Curtain” on the world, making free trade more difficult in a historical transition to a different economic system worldwide.