Shaky Foundations for the BRICS Expansion Push

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Shaky Foundations for the BRICS Expansion Push

China and Russia are keen to expand BRICS into a coalition to counter the U.S. Brazil and India, however, are reluctant.

Shaky Foundations for the BRICS Expansion Push
Credit: Depositphotos

The 15th summit of the BRICS group (composed of Brazil, Russia, India, China and South Africa), will take place in Johannesburg, South Africa, from August 22-24 2023. It can be seen as one of the most important meetings of the group so far, as well as a sign of hope in the midst of a complex and hectic international scenario. Even so, one cannot rule out the fact that the current turmoil in international politics has direct consequences for all the countries in the group, which are expressed in varied ways of intra- and extra-BRICS competition.

In addition to the growing rivalry between China and India over border disputes and a military standoff on the so-called Line of Actual Control, as well as India’s concerns about China’s projection in its immediate surroundings, the BRICS are also dealing with the consequences and economic repercussions of the Russian invasion of Ukraine. The Russian president will not be able to attend the summit of the group for the first time, due to the possibility of being arrested since South Africa is party to the International Criminal Court. The ICC has issued a warrant for President Vladimir Putin’s arrest, due to allegations of war crimes in Ukraine.

BRICS’ economic arm, the New Development Bank (NDB), is also facing complications from the Russia-Ukraine war. As of March 2022, Russia has had all trading within the NDB frozen, representing a total exposure of $1.8 billion to entities domiciled in Russia. As the NDB relies on external funding (through mechanisms such as the issuance of debt securities on national and/or international capital markets) and capital from bank members, the ongoing conflict combined with external pressure from the West and sanctions to Russia have made it difficult for the NDB to seek external resources. This is one more factor impeding internal cohesion among the BRICS.

That said, it is also important to note the opportunities in the midst of a complex international scenario. Oil exporters to China known as the petro-yuan club – i.e. Russia, Iran, the United Arab Emirates, and Angola – are increasingly using the Chinese currency in commercial transactions. India and Indonesia have also announced similar initiatives. Meanwhile, Brazil has showed signs of interest in expanding the use of a common currency in Mercosur. For the next BRICS summit, the launch of a payment system in common currencies is expected.

But most headlines have highlighted the fact that BRICS is considering expanding for the first time since 2010, when South Africa joined what was then known as “BRIC.” Such a move would change the nature of the grouping and its role in the international order.

Why Expand?

The main reasons for expanding BRICS can be attributed to the intensification of the East-West confrontation, the deepening of “BRICS Plus” cooperation, and the demands of node countries.

In the new context of the ongoing conflict between Russia and Ukraine and the intensification of China-U.S. competition, the East-West confrontation has become increasingly prominent, where both sides seek to expand their networks of partnerships. As developing countries, and to some extent regional powers in their geographic locations, the BRICS countries are driven, in theory, by a strong motivation to absorb other node countries from important strategic locations to join their field, as in the case of Argentina in relation to Brazil, just to name one.

Facing criticism of BRICS as an exclusive club and going beyond outreach with respective sub-regions, BRICS Plus was introduced during China’s presidency in 2017 to strengthen dialogue and cooperation between BRICS countries and other developing countries and promote the establishment of broader partnerships. Although BRICS Plus presents a platform for developing countries, enabling them to increase their representation in global governance, this expansion process is also part of China’s broader economic and geopolitical interests.

And therein lies the rub. The current scenario in which the expansion of the BRICS is being discussed is one of wide divergence, which makes the topic a controversial point. The five nations do not all have similar positions in relation to the expansion of the group.

How Can Expansion Favor China and Russia?

Wang Yi, China’s top foreign affairs official, has boldly declared that the Asian country is proposing procedures for a future and gradual expansion of the BRICS beyond the economic sector, since the NDB already includes countries that are not official members of the group, such as the UAE, Egypt and Bangladesh. Wang says China will seek the consensus of the other member countries on this point.

China is immensely important in the BRICS, as shown by its ability to bargain in decisions. By the same token, the group is also crucial for China, which seeks to secure itself as the main power in the midst of the possible reorientation of the world order currently underway. Beijing’s objective in defending the expansion of the BRICS would be the formation of a coalition of countries in opposition to the G-7 bloc and its attempts to curb China’s global growth.

Initially, China’s expansion ambitions did not have the support of Russia. But in a context of increasing isolation from Western countries, which have been pressuring Moscow with sanctions due to the war, Russia’s dependence on China has been strengthening and, together, they are forming an anti-Western bloc.

In the context of tension between the United States and Russia and a trade battle between the U.S. and China, expansion would have a strategic geopolitical element, especially in relation to the attempt to attract allies with strategic resources or strategic geographic positions, as well as to leverage the project toward the de-dollarization of the global economy.

What’s Left for Brazil and India?

Brazil and India, however, are reluctant to expand and have a desire to maintain the group with its five members. In addition to the complicated geopolitics, with neither wanting to be seen as part of an anti-Washington grouping, there is a more basic calculation: With the entry of new members, the two countries may have their influence in the group diminished, and the BRICS would cease to be an exclusive group. There’s also the fact that both Brazil and India yearn for more voice in international relations, including positions as permanent members of the United Nations Security Council – a pursuit that has found little support from China and Russia.

Another argument we must take into account about the expansion of the BRICS is related to the size of the group. A larger grouping can reduce political convergences and make it difficult for ideas to come together. For example, the coalition of developing countries in the United Nations, the G-77, includes a large number of developing countries, but has a reduced degree of power.

China, which has proposed the idea of BRICS Plus since 2017, will once again raise this topic at the 15th summit and should bring to the debate the possible criteria for expanding the group. However, this will be an agenda worked on by the group over time and should not be defined at a single summit. Due to the clear resistance on the part of Brazil and India, it’s obvious that the idea of expansion does not enjoy a consensus. Even if there was in-principle agreement on expansion, how to select and add new members would be a complicated question. 

There are other issues at stake that should be addressed at this meeting, such as de-dollarization projects and reforms of international organizations, as well as the bloc’s ongoing effort to propose more decision-making positions for emerging powers, especially the BRICS countries, in an international market increasingly in flux. More importantly, it is expected that the next summit will already announce a payment system in common currencies within the framework of the NDB. The issue of expansion should not be allowed to overshadow the progress already happening in other areas.