An analysis of the geoeconomic and geopolitical implications of the BRICS expansion

Fairly recently, the BRICS bloc of nations announced the historic addition of 6 new countries to the group. After 40 countries expressed their interest in joining the bloc and 23 formally applied, Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and UAE were invited to join as members from January 1, 2024. The BRICS countries- some of the top emerging economies- are seeking to grow a stronger coalition of developing nations that can better put the interests of the Global South on the world’s agenda. Undoubtedly, this expansion comes with major economic, geopolitical, and geostrategic implications. 

Global Economic Dominance: GDP, Population, Energy and Trade

 Earlier, the group was home to about 40% of the world’s population which contributes to 26% of the global GDP. With the addition of the new members, these numbers will jump to 46% and 30% respectively. The new members will contribute with an addition of about 11% to the current GDP of BRICS.

In its folds, the bloc now not only consists of some of the fastest-growing economies but is also very energy-centric. Besides Russia, all of the core BRICS countries are non-energy producing countries, however, Saudi has the second largest oil reserves after Russia. The share of global oil production of the BRICS+ group will increase to 40% from the current 18%. The strategic addition of some of the oil and energy hubs of the world will certainly reduce the liability and vulnerability of the core members in terms of volatile oil prices. The share of the group in global merchandise trade will rise from 20% to 25% and that of the global services trade will increase to 15% from 12% with an addition of 45% in their share of global forex reserves by 600 basis points. The most significant observation in terms of trade, however, is the increased potential for using currencies other than the US dollar. India and UAE have already entered into an agreement to use the Indian Rupee and Emirati Dirham for mutual trade. With a larger and more diverse group, the members will benefit from increased trade and investment opportunities amongst themselves. For some new members, the inclusion can be seen as an economic and political lifeline due to increased bilateral trade in the future. Argentina, currently facing a trying economic crisis, is set to benefit the most economically; followed by Iran which shares strained ties with the US.

Inclusion and Mutual Cooperation 

The fact that two countries- Iran and Saudi Arabia- that have long-standing rivalries and conflicting interests are now a part of the same group marks a landmark decision in the history of geopolitics. While managing these differences might pose to be a significant challenge for the bloc, it certainly brings the idea of a better, more inclusive future to the forefront.

BRICS+, while often termed an anti-west group, has always expressed itself as a non-west group that advocates for mutually beneficial global governance for the Southern members. With its expanded membership, BRICS could potentially stand tall with enhanced bargaining power in international forums: eventually leading to a more multipolar world order with the members seeking to challenge the dominance of the Western powers in global decision-making.

India, to some degree, shares a similar status as UAE, Saudi and Egypt with one foot in BRICS and another in the West. This strategic positioning will form the edifice of a more balanced worldview, especially in times of economic and political discussions. Given the involvement of major regional players in the African subcontinent, BRICS could play a more prominent role in mediating conflicts and offering alternative approaches to conflict resolution and stabilization efforts. 

A Counterweight to the West 

The notable expansion of the BRICS group carries profound implications for the global landscape, particularly for the existing members. This enlargement of the group not only augments its economic clout but also reshapes the geopolitical dynamics in critical regions. Membership expansion has clearly become a part of the core agenda of BRICS which poses a question towards the future credibility and reliability of the US dollar in the global trade horizon. With more than 40 countries interested in joining the bloc, we are looking at a potential future scenario where 2 of the 3 largest economies in the world could be trading with each other within the BRICS bloc without the dollar. So, ultimately, this historic expansion of BRICS+ represents a shift towards a more multipolar world order and underlines the importance of diplomacy and cooperation among diverse nations to address global challenges as a whole. 

Source: The Hindu, Economic Times