The 15th summit of BRICS (Brazil-Russia-India-China-South Africa) was held in Johannesburg, South Africa, from 22 to 24 August 2023. Apart from the top leadership of the five member states, 69 other countries were invited to attend, making the latest summit one of the largest. BRICS received over 40 applications from states worldwide showing interest in joining the platform, making it a central discussion on the agenda. However, the economic bloc accepted only a few and announced the expansion of BRICS by including six more countries. These countries include Saudi Arabia, the United Arab Emirates (UAE), Egypt, Iran, Ethiopia, and Argentina. Some consider the expansion of BRICS as a challenge to the West or G7. However, it can be categorised as more of a competition for other similar platforms, further accelerating the transition to a multipolar world.
The idea of BRIC was taken from Goldman Sachs’ analyst Jim O’Neill’s publication in 2001. The bloc was initially formed containing Brazil, Russia, China, and India in 2009. Later, in 2010, the bloc approved the inclusion of South Africa, following which it turned into BRICS.
Similarly, the Group of Seven (G7) countries came into its preliminary form after the collapse of the Bretton Wood System in 1971. Therefore, the most influential economies of that time decided to create a global financial system. In 1975, a group of six countries, including the United States, France, Italy, Japan, the United Kingdom, and West Germany, was formed to address economic issues resulting from the OPEC oil embargo, such as inflation and recession. Canada joined the group the following year, and discussions were inevitably influenced by the Cold War. The European Union (EU) has been actively involved in the G7 since 1981 as a “non-enumerated” member.
BRICS aims to “organise” the Global South. It has no ambitions to “challenge” any other bloc or country.
Over the years, BRICS economies have grown miraculously. Its contribution to the Global Gross Domestic Product (GDP) has recently risen, outperforming the G7 countries. Moreover, the BRICS countries have also collectively surpassed G7 in Purchasing Power Parity (PPP). Since the economic growth of the BRICS countries is overtaking the other states across the world, there has been a debate primarily in the West considering BRICS as anti-West or a rival to G7. Meanwhile, existing bloc politics in international relations adds to the competition. Therefore, the question stands relevant concerning the quest for hegemony between the two economic blocs.
BRICS is purely an economic bloc motivated to bring peace, security, and development. In the words of Brazilian President Luiz Inacio Lula da Silva, BRICS aims to “organise” the Global South. It has no ambitions to “challenge” any other bloc or country. Even before the bloc’s formation, the BRICS countries were growing immensely. From 1990 to 2010, China and India grew by an average of 10% and 7.65% respectively. The average annual part of the bloc’s countries in the global economic growth also reached 30% in 2010.
The recent expansion of the BRICS with six more countries will likely strengthen the multipolar world order rather than pushing it against the G7. Countries like Saudi Arabia, Iran, and UAE also endorse the advent of a multipolar world. For instance, regarding the recently proposed India-Middle East-Europe Economic Corridor (IMEEC), some Western leaders called it against the Chinese Belt and Road Initiative (BRI). However, Saudi Arabia and other Gulf countries refrained from projecting the initiative against existing connectivity projects. In addition, some G7 countries, such as Germany, indicate support for multipolarity in international relations rather than a post-Cold War unipolar world order.
Similarly, BRICS already has its financing mechanism in the form of the New Development Bank (NDB) since 2014, which can provide easy loans to developing economies for sustainable development and infrastructure projects. The bank, backed by the five BRICS economies, is supported by the new entrants in the bloc. The capital from recent entrants, such as Saudi Arabia, Iran, UAE, etc., will further fortify the group. Therefore, the continuous evolution of BRICS is poised to increase the global influence of the platform, solidifying its position as a formidable player in international politics. BRICS also developed a “liquidity mechanism”, which is also known as a “Contingent Reserve Arrangement” (CRA), to support members struggling with payments.
On the other hand, since the culmination of World War I, the dollar has placed itself as an international currency for trade. This has not only strengthened American hegemony but also increased its influence over the Global Value Chain (GVC). The global supply chain has been disrupted due to the sanctions on Russia after the Russo-Ukraine war. To counter the scenario, other powers seek different ways, such as adopting strategic autonomy and de-dollarising the trade. Like many other states, BRICS countries also indicated replacing the dollar with the yuan in March 2023. Strengthening BRICS will allow the platform to implement de-dollarisation, expanding trade in local currencies.
BRICS is also a flexible organisation as compared to the others of its kind. Although it has faced some internal hurdles during its expansion in the form of opposition from India and Brazil, the bloc is still open for new members. There are no strict criteria yet to join the BRICS other than the approval from the member states. However, G7 has no such mechanism and flexibility in adding more members.
G7, which has a history of over 50 years, is likely declining in its reputation in the developing world as well as economically. The group launched the Partnership for Global Infrastructure and Investment (PGII) in London in June 2022 to counter Chinese BRI but still needed to figure out how to fund the initiative. The bloc countries also promised to raise $200 billion yearly till 2027 for the developing world under the PGII. However, the grant could not yet reach its destination. Lastly, the challenging IMF adjustments are also painful for the developing world, therefore leaping more towards initiatives like NDB or BRICS.
In the same period in which BRICS countries grew immensely, attracting the eyes of the developing world, the economy of G7 countries shrank. Its global share has been reduced to half since the day G7 emerged. Its contribution to global GDP declined from 60% in the 1990s to 30% in 2023.
The expansion of the BRICS has been a clear sign of the growing influence of the developing world. Similarly, it indicates an increase in the bid for the emerging new multipolar world order. To summarise what has been stated so far, BRICS has emerged as a dynamic and flexible economic bloc reshaping the global economic landscape. Its growth, recent expansion, and commitment to multilateralism in the Global South signal a shift towards a more multipolar world order. However, G7 will likely face challenges maintaining its influence and fulfilling its promises to the developing world.