The members of the BRICS bloc of major emerging economies have recently met to decide on adding new members and creating a common currency to challenge the United States dollar.
The five nations that make up BRICS – Brazil, Russia, India, China and South Africa – represent more than 40 percent of the global population, and their share of the world economy – when measured in purchasing power parity – outperforms that of the American-led G7 bloc.
Once viewed simply as a loose association of disparate emerging economies seeking to find a way to make it easier to sign trade deals with one another, BRICS has in recent years taken on a more concrete shape as an economic bloc that stands in opposition to the West.
The foreign ministers of BRICS met in South Africa on June 1 and 2 for a summit along with senior officials from more than a dozen other nations looking to forge closer links with the BRICS bloc, either by signing lucrative deals or by joining the group.
Eight countries sent representatives to Cape Town for a talk with the BRICS bloc, known as the “Friends of BRICS” discussions. These eight are Comoros, Cuba, the Democratic Republic of the Congo, Gabon, Iran, Kazakhstan, Saudi Arabia and the United Arab Emirates. Five other nations – Argentina, Bangladesh, Egypt, Guinea-Bissau and Indonesia – participated in the discussions virtually.
These are just some of the nations that have formally expressed their desire to join the bloc. Other prospecting nations include Mexico, Nigeria and Turkey.
Indian Foreign Minister Subrahmanyam Jaishankar remarked that some of the talks included deliberations on the guiding principles, standards, criteria and procedures of what an expanded BRICS bloc would look like. No set standards were released, as these are still a “work in progress,” according to Jaishankar.
South African Minister of Foreign Affairs Naledi Pandor said the foreign ministers were aiming to complete work on a framework for admitting new members and submitting them for the approval of BRICS leaders before they meet for a summit in Johannesburg, South Africa in August.
If the group does expand, BRICS is expected to provide other emerging economies with a platform to advocate for their interests and coordinate action contributing to each other’s economic growth. This will help BRICS in its ultimate goal of providing a credible alternative to the benefits offered by the current Western-led economic order.
BRICS to continue work on creating new currency
In light of the West’s weaponization of sanctions following Russia’s special military operation in Ukraine, BRICS has taken the lead in discussing creating a new currency that all member nations could use in international transactions.
The use of alternative currencies was among the prominent talking points during the recent BRICS meeting, with member nations discussing how this potential new currency could shield other member countries from the impact of Western sanctions.
Pandor noted that BRICS is looking to “ensure that we do not become victims to sanctions that have secondary effects on countries that have no involvement in issues that have led to those unilateral sanctions.”
Analysts have noted that BRICS members are also interested in pushing for a common currency to usher in a non-dollar-denominated world with multiple reserve currencies, which they believe would give them more autonomy in terms of internal policies. Without a common currency, for now, these nations are striving to sign trade agreements that settle payments in their own currencies.
India, for example, already has agreements with at least 18 countries, including Russia, to settle certain international transactions in Indian rupees. China has already signed currency swap deals with several nations, including Brazil, to allow them to conduct trade in the Chinese yuan to reduce the cost of bilateral trade and limit their exposure to fluctuations in the value of the American dollar.
In the New Development Bank, the Shanghai-based multinational bank created by BRICS, bank chief and former President of Brazil Dilma Rousseff revealed that the bank is gradually moving away from the dollar and is promising at least 30 percent of loans to be conducted in the local currencies of member states.
“It’s about financial independence and sovereignty,” said South African Ambassador to BRICS Anil Sooklal. “These countries want greater determination in terms of investments, trade and financing sources. They don’t have to be straitjacketed into a certain currency or financial institution.”
Several BRICS nations have already brought up proposals, which are being considered by officials at the New Development Bank. Pandor said the bloc “will be guided to them as to what the future model might be,” without providing any further details.
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