BRICS expansion has taken place at the time when the world is witnessing sharp geo-strategic and geo-economic changes
Russia took over the reins of BRICS from 1st January, 2024. It is therefore time to take a long-term, dispassionate view of the expansion and future prospects of the group in wake of the 15th BRICS Summit in Johannesburg, South Africa in August, 2023.
 
The last Summit attracted unusual attention inter alia because of the huge interest of about forty countries to become members of the group. Six countries viz. Argentina, Egypt, Ethiopia, Iran, the UAE, and Saudi Arabia were invited to join the grouping. Argentina, under its newly elected far-right leader, subsequently declined the offer.
 
The growing East-West confrontation in recent years particularly between the US and China on trade and technology issues, and between the West and Russia because of Russia’s invasion of Ukraine, had energized China and Russia before the Summit to expand the grouping and move it in a pronouncedly anti-western direction. This was not to the liking of some other members particularly India.
 
It would appear that in the wake of tumultuous geo-strategic and geo-economic changes, an increasing number of countries wish to hedge their bets and keep one foot in the boat dominated by China. As several developing countries face the debilitating economic impact of the Russia-Ukraine conflict and the lingering effects of Covid, they want to be in a space where they can easily access Chinese funds for economic projects and overcome their debt and inflation challenges.
 
In the Johannesburg Summit, guiding principles, standards, criteria, and procedures to admit new members were evolved. No details were, however, made public.
 
Do they fulfil the objective and criteria of original BRICS?
 
Like South Africa, none of the five new members satisfy the original criteria of large territory, large population, and large economy for membership of BRICS as stipulated by Jim O’Neill in 2001. While the objective of the original grouping was to seek a greater voice in the western dominated financial and economic architecture, the emphasis now appeared to be on political acceptability.
 
Some new members diversify BRICS’ global presence, but have little to contribute in the way of financial or economic heft. There are growing fears about Ethiopia’s debt stability amid its ongoing talks to secure a USD 2 billion loan from the International Monetary Fund. Egypt is mired in its own economic crisis amid a severe dollar shortage and struggling currency. Iran appears to be getting increasingly roiled in expansion of the Israel-Hamas conflict through its proxies in Lebanon and Yemen. The deadly attack in Kerman, Iran on 3rd January in which 84 people were killed and the rising insecurity in the Red Sea will exacerbate tensions in West Asia.
 
With Saudi Arabia, the UAE, and Iran, the group has added three of the world’s largest oil exporters. It would now constitute 42% of global oil supply. Saudi Arabia was ranked as the second-largest global oil producer in 2022 while the UAE and Iran are ranked as sixth and ninth, respectively. Along with Russia, which ranks third in global oil output, BRICS now covers four of the world’s top 10 energy exporters.
 
Over the long term, an expanded BRICS grouping could be significant for energy markets. For years, OPEC+ states and large consumers like India and China have complained that Western energy sanctions on Iran and Venezuela have constrained investment and export flows. More recently, the EU embargoes on Russian seaborne crude oil and petroleum products and the EU-G7 price caps have created a new sanctions mechanism that targets revenues rather than export volumes. Other exporters worry that new sanction tools could target them in future. They are also wary of G7 interventions that have reshaped energy flows.
 
The enlarged BRICS would include both oil and gas exporters and two of the largest importers, China, and India—both of which refused to join the “price cap coalition” targeting Russia. Producers and consumers in this group have a shared interest in creating mechanisms to trade commodities outside the reach of the G7 financial sector. For energy markets, enlargement of BRICS is largely symbolic for now—but it is an early warning signal that countries are exploring ways to skirt the US financial system and reach of the dollar.
 
The economic heft of the BRICS has been growing over the years, led chiefly by China and India. However, in nominal dollar terms the group is nowhere close to challenging the dominance of G7 over the global economy. The original BRICS-5 accounts for a total GDP of USD 27.72 trillion (IMF 2023 figures) which represents 26.1% of the world economy. As against this, the G7 accounts for a GDP of USD 45.97 trillion which is 43.8% of the world economy. Moreover, the BRICS-5 accounts for about 42% of the world population while the figure for G7 is just 10%.
 
Even with the 5 new members, the nominal GDP of the 10-members rises to USD 30.24 trillion accounting for 28.9% of the global economy which still falls far short of G7 countries.

The situation changes dramatically when considering GDP in Purchasing Power Parity (PPP) terms. The G7 accounts for USD 52.23 trillion which is about 30% of the global GDP. On the other hand, the original BRICS-5 accounts for USD 56 trillion which is 32% of world GDP. With the addition of the 5 new members, the total GDP rises to USD 63.1 trillion which accounts for 36.1% of the global economy in PPP numbers.
 
Inclusion of members like Iran has given rise to apprehension that the grouping might adopt an anti-western stance which appeared to be the original intent of China and Russia. This appears unlikely because of the presence of other countries, most of whom would like to safeguard their relations with the West. Due to the wide divergence of views on critical issues between the various BRICS countries, it would not evolve into some kind of geo-political rival or adversary to the United States.
 
Conclusion
 
It is reported that Pakistan is interested in joining BRICS. It will be India’s endeavor to keep Pakistan out for as long as possible as it can hardly contribute anything to strengthen the group. Russia’s cooperation as the Chair of the Grouping will be helpful in this regard. In the years ahead, the grouping needs to strengthen its cohesiveness to ensure a greater say in global economic and financial affairs.
 
***The writer is a Distinguished Fellow at Ananta Aspen Centre; he was the ambassador of India to Kazakhstan Sweden and Latvia; views expressed here are his own