Of late, I was frequently confronted with questions about the actual purpose of BRICS and its path forward by many individuals who have engagements in international businesses and, to some extent, have worries involving their wealth, mostly kept in US dollars, at home and abroad. I concluded that it may be useful to try to explain the ‘whats and whys’ of BRICS to make it a little clearer as to what to realistically expect of this political initiative at this relatively formative stage. It should be noted, however, that as we keep reading about news involving BRICS, there are plenty of grey areas in the subject, which can be interpreted in different ways, and most of which are only subjective and, in some ways, uncertain.

First and foremost, the title BRIC (Brazil, Russia, India, and China) was brought to our popular vernacular in 2001 by Jim O’Neill, an economist at Goldman Sachs, in his influential paper entitled ‘Building Better Global Economic BRICs.’ He analysed the spectacular economic growth the countries were set to experience and looked into the implications of future trends for the international political economy. His analysis was aimed at making optimistic economic predictions and giving a clear indication of how these countries were being constructed as profitable investment destinations to which global financial flows could be directed. In the first decade since its birth, BRICs (here the ‘s’ denotes plural) became an aspirational bloc working with its own internal dynamics, such as holding summits and making commitments to large-scale infrastructure projects within their own countries as well as transnational ones in their regions. Soon enough, they flexed their economic muscle by establishing a new lending institution — the New Development Bank — and challenging the hegemony of European and North American countries in international finance.

In 2011, South Africa — an emerging economy and a young democracy — joined this grouping as an economic outperformer in the Global South, taking BRICs to BRICS, where the S now stood for its new member. In the last two decades, BRICS countries have undergone dramatic land-use transformations and initiated large-scale infrastructure projects within the regions of which they are a part; for example, China’s attempts at re-establishing the Silk Road Economic Belt across Europe, Asia and Africa; in India, the current government’s plan to develop 100 smart cities connected by bullet trains; Moscow’s aspiration to build the Russian Far East into a new economic bridge between Europe and Asia and Africa; and the expansion of industrial large-scale farming in Brazil and South Africa are all manifestations of BRICS visions for ‘sustainable’ and ‘smart’ development. This story covers the first two decades since 2001.

In 2019–2020, it became apparent that the contested potential of BRICS as a cohesive bloc has been in decline. In a paper by Professor Evan Mawdsley, it was cited that the initial cohesion was increasingly impossible to sustain amid differing and, at times, even conflicting political interests amongst the BRICS nations. Heightened India-China hostility in recent years and the muted economic performance of Brazil and South Africa have undermined BRICS’ potential for coordinated geopolitical influence and economic policies. Yet BRICS continued to meet annually, with the latest round held in 2023, and thus kept their focus on its future buildup.

Over the past decades, BRICS countries have experienced significant economic growth. However, their political voices in global governance have not grown on par with their economic surge. There is a widening gap between the actual role of emerging markets and developing countries in the current global system. However, it seems that for the moment, domestic and international political and economic challenges, including wars, limit this quest. However, the impact of the political grouping on global governance has become the subject of an ongoing debate among political scientists and scholars since BRICS’ 2006 Ministerial Conference.

Now, BRICS countries account for 26 per cent of the world’s geographic area, over 32 per cent of the global economy’s GDP, nearly 20 per cent of global trade, 25 per cent of global foreign direct investment, and 42 per cent of the world population. The increasing importance of BRICS countries in the global economy is unleashing the multipolar era and nature of today’s global economy. Beginning in 2023, we are experiencing another global inflection point, one that challenges the existing globalisation paradigm and one that fundamentally challenges western economies’ global economic leadership. Lately, BRICS countries’ foreign reserves, increasing innovation and technology leadership, and global leadership on several traded goods, services and commodities are reshaping their relationship with the western economies. The most significant facts are that the Russia-Ukraine conflict, the subsequent sanctions on Russia, the most recent US semiconductor trade sanctions on China and the US proximity to Taiwan have unleashed new geo-economic and geopolitical crises and frictions.

It should be mentioned that one of the outcomes of a renewed ‘cold war’ is the increased fragmentation of the global economy between Western nations’ economic and political allies and nations closer to the Russia-China axis of power, and by extension, the BRICS nations. In 2023, BRICS nations unleashed a new world economic order, designing a new globalisation architecture and governance. This new architecture has promoted the expansion of BRICS by adding new members. It is expected that this new governance will help promote a multipolar global economy where BRICS is exerting influence on a series of global agendas, such as climate change and protectionism. This global architecture will also lead to new trade and investment alliances and new global supply chain networks. As an example, we can cite the case of Russia increasing its exports of natural gas and oil to both China and India. It is now clear that, in two decades, BRICS economies have become vital players in the global economy. From exports of mineral and agricultural commodities to exports of manufactured products and software, the BRICS countries today are an integral and vital component in shaping today’s global economy and global geopolitics.

Despite this fact, BRICS countries now enjoy very small votes in multilateral institutions such as the IMF and the World Bank, with fewer than 15 per cent of voting rights in these institutions. ‘This underrepresentation is felt throughout the global south, further stressing the need for a counterbalance, a more representative global economic design, governance, and architecture’, writes Ronak Gopaldas.

BRICS has recently expanded with new memberships. The new members include Egypt, Ethiopia, the UAE and Iran. Saudi Arabia is yet to announce its decision to join the group. As a result, BRICS nations have reached a combined investible wealth of $45 trillion, thus adding to their abundance of wealth, resources and power. Most of these nations are not only rich in resources such as oil but are also rich in funds due to their powerful economies. In the beginning of 2024, the BRICS New Development Bank decided to fund projects in local currency. This decision, backed by its $45 trillion of investible funds, can have a pushback for the US dollar. With more participants, the BRICS strategy to lessen international reliance on the dollar took a massive step forward in another key area, namely, investments. With BRICS currency still being developed, BRICS can invest in its development as well as in gold, which the block has said previously might be the backing their currency needs most.

It should be emphasised that BRICS now represents 45 per cent of the global population and contributes to 36 per cent of the global GDP, surpassing the G7’s 30 per cent share. Wealth analyst Andrew Amolis predicted in an interview with CNBC that ‘the 85 per cent forecast for BRICS will be the highest wealth growth of any block or region globally.’ There is little doubt now that BRICS is challenging the world order and establishing itself as a powerful rival to the G7 and other international institutions. India is leading the charge in wealth expansion, with an estimated 110 per cent jump in wealth per capita by 2033, followed by Saudi Arabia. The UAE is poised for 95 per cent growth, while China and Ethiopia’s wealth are expected to grow 85 per cent and 75 per cent, respectively, said Lee Ying Shan in World Economy.

However, the single most important point to emphasise is that BRICS do not limit their ambitions to an economic agenda but rather seek to leverage their collective economic weight to pursue a wider political ambition. Believing that the progress of emerging and developing countries is hindered by a Western-centric economic and political order, BRICS has engaged in a few actions to rebalance and counteract the existing global order alongside its institutions, notably to reduce dependence on the World Bank and IMF, institutions that are historically led by Europeans and Americans and are often criticised, correctly, for their lack of transparency and draconian structural adjustment programmes, which encouraged and led to the creation of the New Development Bank.

Although a few of the BRICS members are keen to reform the international monetary system and challenge the dominance of the US dollar, it is less clear, if at all, how this will be achieved. While the creation of a common BRICS currency would, in theory, reduce vulnerability to dollar exchange fluctuations, the implementation of a BRICS currency is, at best, many years away given the lack of macroeconomic convergence widely considered to be critical to a successful common currency. Also, rebuffing any prospect of dethroning the dollar, according to the Bank of International Settlements, the US dollar remains the single most traded currency, accounting for 90 per cent of all foreign exchange transactions. Secondly, as the world’s reserve currency since 1944, the dollar accounts for 60 per cent of the global foreign exchange reserve, whereas, by comparison, the Chinese renminbi accounts for 3 per cent. In short, while BRICS will likely increase their use of local currencies for bilateral trade, in part reducing their exposure to foreign exchange volatility, the demise of the US dollar and the introduction of a BRICS common currency are still somewhat far-fetched.

In summary, the expanded BRICS is economically stronger yet geopolitically much less so, and while they may rebalance the global order, any thoughts, at this stage or in the near term, of replacing it are convincingly misguided. We must recognise that the eclectic mix of different political, economic and cultural systems lays bare the difficulties associated with reaching a common ground on any new system of global governance. By contrast, the western-dominated system they seek to counteract is, while far from being perfect, founded on a well-established rule-based order and without the scale of geopolitical tensions that currently engulf the newly expanded BRICS.

However, some western analysts compared the current US dollar as weak because the US has been engaged in printing money to pay for its wars, just as the Roman Empire ended in the same way with massive gladiators entertaining Romans while their bankers debased their currency to pay soldiers and bills. There may be a surprise waiting to unfold! Who knows?

Humayun Kabir (kabirruhi@gmail.com) is a former senior official of the United Nations.