The BRICS group of emerging markets is looking to expand its global influence and capitalize on the fragmentation of the current world order. Foreign ministers from the BRICS countries, as well as representatives from Saudi Arabia, the United Arab Emirates, Egypt, and Kazakhstan, will meet in Cape Town to discuss the potential expansion of the group to include additional member countries and the establishment of a common currency.
The Cape Town meeting serves as a warm-up for the upcoming BRICS summit in Johannesburg, which is scheduled for August 22-24. The purpose of this meeting is to highlight the bloc’s ambitions to become a significant economic and political force. However, as tensions between the United States and China rise, Western countries are concerned that the BRICS may be positioning itself as a counterweight to the US and the European Union.
One notable feature of the BRICS’ independent stance is its refusal to join the Group of Seven (G7) in blaming and sanctioning Russia in the aftermath of President Vladimir Putin’s full-fledged invasion of Ukraine. The desire for expansion and a common currency is consistent with China’s goals, and several attendees in Cape Town, including Iran and Cuba, are facing US economic sanctions.
South African President Cyril Ramaphosa emphasized the importance of BRICS, with many countries around the world expressing interest in joining the group. The meeting’s host, South African Foreign Minister Naledi Pandor, believes that BRICS has the potential to be transformative and to represent nations that want to play a role in global affairs, particularly benefiting the Global South.
Brazilian President Luiz Inacio Lula da Silva has been an outspoken supporter of the BRICS initiative, advocating for the use of a common currency. He sent his Finance Minister, Fernando Haddad, to lobby for Argentina’s assistance at a meeting of the New Development Bank, a Shanghai-based lender established by the BRICS nations. Argentina’s foreign minister is expected to attend the BRICS meeting virtually.
Dilma Rousseff, Lula’s protege and president of the New Development Bank, has stated that the bank is looking to expand its membership. Bangladesh and the United Arab Emirates will join in 2021, and Egypt will join in February. Saudi Arabia is currently discussing membership, which would help Crown Prince Mohammed bin Salman diversify the Saudi economy and strengthen ties with Russia and China. China is the kingdom’s primary oil customer, and Russia helps to keep crude prices stable through OPEC+.
The Gulf region’s goals of expanding trade ties and establishing itself as a global transit hub are aligned with joining major trade blocs. The process of joining the BRICS has been ongoing for some time, and there is momentum toward that goal.
Jim O’Neill, then the chief economist at Goldman Sachs Group, coined the BRIC acronym in 2001 to highlight these countries’ rapid economic growth. South Africa joined BRICS in 2010, but the group has yet to fully realize its potential. Despite accounting for over 42% of the world’s population and 23% of global GDP and 18% of trade, there is a desire for greater influence within the group.
The idea of expanding the group was first raised at last year’s summit in China, with 13 countries formally requesting to join and at least six others expressing interest. However, India is cautious and wants to ensure that an agreement on the membership process is reached in order to avoid being sidelined by China and its allies. Jim O’Neill, an expansionist, has called for strict membership criteria.
The feasibility of establishing a shared currency has been met with skepticism, as it would almost certainly necessitate the establishment of a single central bank. South African Central Bank Governor Lesetja Kganyago has warned that the introduction of a common legal tender would necessitate the establishment of such an institution.
According to Robert Schrire, a politics professor at the University of Cape Town, the group’s composition lacks political and economic coherence. With China and India destined to be geopolitical rivals and Brazil, Russia, and South Africa’s economies heavily reliant on commodity exports, the potential for effective collective action based on shared interests is limited. According to Schrire, expanding the group will exacerbate these fundamental contradictions.
Given its close ties to Russia and its status as the United States’ second-largest trading partner, South Africa faces diplomatic challenges in hosting the BRICS meeting. Furthermore, if Russian President Vladimir Putin attends the summit, South Africa would be obligated to execute an arrest warrant issued by the International Criminal Court on war-related charges. South Africa, on the other hand, has stated that it will provide diplomatic immunity to attendees of both BRICS meetings as a matter of routine, though this may not be sufficient to override the ICC warrant.
In conclusion, the upcoming BRICS meeting in Cape Town aims to broaden the group’s membership and investigate the establishment of a common currency. While BRICS seeks to assert its global influence, questions are being raised about its potential as a counterweight to Western powers. The group’s composition and the feasibility of a shared currency have raised concerns, while South Africa faces diplomatic challenges as the host country.
