Johannesburg, South Africa hosted the highly anticipated BRICS summit where top officials from Brazil, Russia, India, China, and South Africa met from August 22-24. They aimed to enhance collaboration and counter Western dominance. The summit revealed that six additional nations, Argentina, Ethiopia, Egypt, Iran, Saudi Arabia, and the United Arab Emirates, will officially join the coalition in January 2024. This marks the first expansion of the coalition since South Africa joined in 2010.
The implications are clear: the expanded BRICS coalition will now collectively produce 43% of global crude oil, while OPEC controls 38% of the market. BRICS’ potential as an alternative to Western financial supremacy relies on integrating these countries. Inclusion of Iran and Saudi Arabia seemed unlikely a year ago, but improved relations, facilitated by China, have eased historical rivalries toward regional diplomacy. Saudi Arabia even expressed willingness to address Yemen’s instability stemming from its civil conflict.
Authorities in Tehran and Riyadh have indicated that the principal factor prompting their change in approach was the worsening of their relationships with the United States. Saudi Crown Prince Mohammed bin Salman has expressed his intentions to pursue a rapprochement with Iran, which would help facilitate the overall goals of Saudi Arabia’s “Vision 2030” set of goals to be reached by that year.
Egypt’s President Abdel Fattah al-Sisi swiftly embraced the invitation, emphasizing cooperation among invited nations to advance shared economic goals. Egypt’s current economic crisis, including a nearly 50% depreciation of the Egyptian pound against the dollar since March 2022, aligns with its BRICS entry. Scarce dollars have strained meeting debt obligations, prompting a $3 billion IMF loan bid.
Nations weigh IMF and World Bank dynamics carefully due to often unfavorable loan terms.
This significant element drives many countries toward BRICS for collaborative economics, seeking an alternative to dominance by others. Alongside Ethiopia’s inclusion, these two nations could emerge as Africa’s future economic leaders.
The announcement of the latest additions to BRICS triggered enthusiasm among anti-imperialists and criticism from Western analysts. However, the most significant aspect of the summit might be the conspicuous absence of certain discussions altogether. During the summit, there was a notable lack of deliberations regarding the much-anticipated BRICS currency, which has the potential to deal a substantial blow to the dominance of the dollar and introduce an unprecedented shift in the global economy. This poses another question for BRICS nations to keep in mind, what happens if one of these states decides they do not want to de-dollarize anymore?
Head of the New Development Bank Dilma Rousseff has been of the most vocal voices supporting new alternatives to the dollar. Rousseff, who held the office of Brazil’s president from 2011-2016 and assumed the leadership of the NDB in March 2023, has called for the use of domestic currencies as a crucial step in diminishing reliance on the US dollar. In an interview with the Chinese media outlet CGTN on April 14, Rousseff outlined her vision for the NDB’s currency strategy, “It is necessary to find ways to avoid foreign exchange risk and other issues such as being dependent on a single currency, such as the US dollar.”
In April of this year, Brazilian President Lula da Silva expressed his endorsement for the establishment of a unified currency to facilitate trade among the BRICS countries. “I am in favor of us creating a currency in BRICS for trade between our countries, like the Europeans created the euro,” said Lula. While the announcement the world has been waiting for did not come, it is still seen as a priority by the member states.
South African Minister of International Relations and Cooperation Nalendi Pandor appeared optimistic that the New Development Bank led by Rousseff is still pursuing dedollarization, saying that Rousseff “indicated some really exciting thinking about the future and the whole discourse around the use of local currencies. So this is a matter that is clearly on the agenda of the board of governors of the NDB.”
While the inclusion of new members excited anti-imperialists and drew Western analysts’ critique, a crucial summit element was the absence of discussions about the long-awaited BRICS currency. This currency could significantly challenge the dollar’s dominance, reshaping the global economy. This prompts a question: What if one of these states reverses its decision to de-dollarize?
Achieving equilibrium within BRICS encounters a major hurdle: the internal stability of member states. National policies remain fluid, contending with constant challenges from rival factions aiming to influence governance and direct a country’s path.
This challenge particularly casts a shadow over Argentina, a recent BRICS addition, potentially sparking concern within the emerging coalition.
President Fernandez backs BRICS, but his support is overshadowed by upcoming elections and his decision not to run. As Argentina readies for new leadership, its BRICS ties hang in the election’s balance. Top contenders include Patricia Bullrich, Javier Milei, and Sergio Massa. Massa alone commits to BRICS, while Milei leads polls against BRICS membership.
Far-right libertarian candidate Milei, whose campaign was backed by the media firm Grupo Clarín and the Atlas Network, advances a supposed solution to Argentina’s economic woes: to scrap the peso altogether and adopt the US dollar instead. “To end the treasury cover-up and inflation, given Argentine politicians’ thievery, the only way is to shut down the Central Bank and dollarize,” Milei tweeted. Analysts vary on Milei’s chances, yet he has a real shot at derailing Argentina’s newly-minted membership in BRIC.
Despite acclaim from anti-imperialists, as it pursues a multi-currency world economy that dethrones the US dollar as the global fiat currency, BRICS will likely face more challenges and operations similar to the one now unfolding in Argentina.
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