Expansion of BRICS and Its Scope

(General Studies II – International Relations Section – Bilateral, Regional and Global Groupings and Agreements involving India and/or affecting India’s interests. Effect of Policies and Politics of Developed and Developing Countries on India’s interests, Indian Diaspora.)

• The BRICS group—initially comprising Brazil, Russia, India, China, and South Africa—has expanded with the inclusion of Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE in 2024. This expansion marks a significant milestone in the group’s journey to challenge the Western-dominated global order.
• The BRICS nations have long sought to create a more representative and fairer international system, and this expansion is a step towards that goal. However, with this growth comes a mix of opportunities and challenges that will shape the future of global governance, economics, and geopolitics.

Significance of BRICS and Its Expansion –

1. Economic Expansion and Influence:
2. The expansion adds $2.6 trillion to the BRICS GDP, creating a $28.5 trillion economy, which represents 28.1% of global output.
3. The BRICS group, even before expansion, accounted for 26% of global GDP and 40.8% of the global population, making it a significant economic force.
4. By 2050, new members like Egypt and Ethiopia are projected to grow their GDP by 635% and 1,170% respectively, further enhancing the bloc’s economic weight.
5. The expanded BRICS group now controls over 43% of global oil production, doubling its capacity and extending its geostrategic reach into the Middle East.
6. Additionally, the original four BRICS members control 72.5% of global reserves of rare earth minerals, crucial for the production of high-tech goods, with China alone producing 85% of globally refined rare earths in 2020.
7. Shift Towards the Global South:
8. The expanded BRICS bloc now represents 45% of the world’s population, signaling a shift in the global economic center of gravity towards the Global South.
9. The bloc’s influence is set to grow, especially as G7 economies are projected to decline in their share of global GDP, making BRICS an essential player in future economic dynamics.
10. The emergence of a new global middle class, of which BRICS countries like China, India, Brazil, and Egypt will account for 59% by 2024, further strengthens the group’s economic influence.
11. Challenge to Western Dominance:
12. The creation of the New Development Bank by BRICS is a strategic move to reduce dependence on Western-led institutions like the IMF and World Bank, promoting a more favorable financing model for infrastructure and sustainable development.
13. Symbolically, the annual BRICS summit highlights the group’s commitment to setting a global agenda that challenges Western-centric norms and promotes the interests of emerging market economies.
14. While a common BRICS currency remains a distant goal, the group’s efforts to increase the use of local currencies in bilateral trade underscore its ambition to reduce reliance on the US dollar.

Limitations and Challenges –

1. Internal Imbalances and Power Dynamics:
2. The BRICS group’s economic leverage heavily relies on China, which contributes 62.9% of the bloc’s economic output. This creates an imbalance, with China holding disproportionate power within the group.
3. The economic disparity between China and India, with China’s economy being five times larger, adds to the complexities of achieving consensus on key issues.
4. Ongoing border disputes between China and India, along with India’s opposition to China’s Belt and Road Initiative, further strain bilateral relations and complicate intra-group dynamics.
5. Geopolitical Complexities and Rivalries:
6. The inclusion of new members like Iran, Saudi Arabia, and Egypt introduces deep-seated geopolitical tensions, making consensus within the group more challenging.
7. Iran’s controversial stance as a state sponsor of terrorism and its regional conflicts with Saudi Arabia create further complications for the bloc’s image as a promoter of peace and stability.
8. In Africa, tensions between Egypt and Ethiopia over the Grand Ethiopian Renaissance Dam add another layer of complexity, as the dam poses an existential threat to Egypt due to its reliance on Nile River water.
9. Challenges in Rebalancing Global Power:
10. While BRICS aims to rebalance the global order, the existing Western-dominated system remains more homogenous and stable, based on well-established rules and fewer geopolitical tensions.
11. The dominance of the US dollar remains unchallenged, with 90% of all foreign exchange transactions involving the dollar and 60% of global foreign exchange reserves held in dollars. In comparison, the Chinese renminbi accounts for only 3% of global reserves.
12. The lack of macroeconomic convergence among BRICS members makes the creation of a common BRICS currency highly unlikely in the near future, limiting the bloc’s ability to significantly alter the global monetary system.
13. Domestic and Geopolitical Uncertainties:
14. China, while economically dominant, faces significant domestic challenges, including a slowing economy, soaring youth unemployment, an aging population, and potential risks in its overheated property market. These factors may impact China’s global standing and, by extension, the BRICS bloc’s influence.
15. Russia’s invasion of Ukraine has tarnished BRICS’ reputation as a promoter of peace, with Russia now considered one of the world’s riskiest countries for international business. The seizure of foreign assets further complicates its role within the group.

The expansion of BRICS undoubtedly strengthens the bloc’s economic power and geostrategic reach, making it a formidable force in global affairs. However, group’s diverse mix of political, economic, and cultural systems, coupled with its internal tensions, highlights the complexities of forging a unified path towards a new global governance system. As BRICS continues to evolve, its success will depend on navigating these challenges and maintaining a cohesive vision for the future.