By Chris Devonshire-Ellis
If accepted, the new proposed BRICS members would create an entity with a GDP 30% larger than the United States, over 50% of the global population and in control of 60% of global gas reserves.
The Russian Foreign Minister, Sergey Lavrov has stated that ‘over a dozen’ countries have formally applied to join the BRICS grouping following the groups decision to allow new members earlier this year. The BRICS currently includes Brazil, Russia, India, China and South Africa.
It is not a free trade bloc, but members do coordinate on trade matters and have established a policy bank, the New Development Bank, (NDB) to coordinate infrastructure loans. That was set up in 2014 in order to provide alternative loan mechanisms from the IMF and World Bank structures, which the members had felt had become too US-centric. The Asian Infrastructure Investment Bank (AIIB) was set up by China at about the same time for largely the same reasons and to offer alternative financing than that provided by the IMF and World Banks, which were felt to impose political reform policies designed to assist the United States in return for providing loans. Both the NDB and AIIB banks are Triple A rated and capitalised at US$100 billion. The NDB bank shares are held equally by each of the five members. In total, the BRICS grouping as it currently stands accounts for over 40% of the global population and nearly a quarter of the world’s GDP. The GDP figure is expected to double to 50% of global GDP by 2030. Expanding BRICS will immediately accelerate that process.
Concerning a BRICS expansion, Lavrov stated that Algeria, Argentina, and Iran had all applied, while it is already known that Saudi Arabia, Türkiye, Egypt and Afghanistan are interested, along with Indonesia, which is expected to make a formal application to join at the upcoming G20 summit in Bali.
Other likely contenders for membership include Kazakhstan, Nicaragua, Nigeria, Senegal, Thailand and the United Arab Emirates. All had their Finance Ministers present at the BRICS Expansion dialogue meeting held in May.
We can examine the basic economic data of the proposed new BRICS members as follows. GDP figures given are nominal, 2022 growth rates are based on the first 9 months of the year from data issued by the respective Central Banks.
An expanded BRICS including the nations above together with Brazil, Russia, India, China and South Africa would possess about 45% of known global oil reserves and over 60% of all known global gas reserves. Its combined GDP as at today would amount to USD29.35 trillion, making it considerably larger than the United States economy at USD23 trillion and double that of the European Union’s USD14.5 trillion.
The new members identified above would add just under 1 billion consumers to the BRICS+ family, for a total of 4.257 billion, or just over 50% of the total global population in 2022.
Of note as concerns the new prospective members are the apparent qualifying criteria: possession of large volumes of global natural resources. I have indicated the energy plays, however these also extend to majority possession of nearly all global resources, including precious metals, rare earths, other rare minerals, energy resources such as coal and solar power, timber, agricultural land, fisheries, and fresh water.
Soft power also resides in the numerous political and trade blocs that permeate amongst members, key among them being the Shanghai Cooperation Organisation, along with strategic OPEC decision makers. Hand in hand with these are significant free trade blocs: ASEAN, Mercosur, the Gulf Cooperation Council, the Arab Trade Zone, Eurasian Economic Union and the African Continental Free Trade Area in addition to RCEP and to a lesser degree, the regional politically influential ALBA and SAARC
Such a grouping is geo-physically diverse as well, with BRICS+ potential members able to wield considerable influence in their own backyard: Argentina, and Brazil in Latin America, Nicaragua in Central America, Algeria, Egypt, Iran, Saudi Arabia and the UAE in MENA, Nigeria, Senegal and South Africa in Africa, Afghanistan, Kazakhstan and Russia in Central Asia, India, Indonesia and Thailand from South East Asia, and China in East Asia. All of course are members of China’s Belt and Road Initiative, and likely to influence other regional BRI countries in due course. Many other nations have signed BRI agreements and have increasingly close trade ties with China and Russia. That means these additional future potential candidates could be expected to later include:
Central America: Costa Rica, El Salvador, Guatemala, Honduras, and Panama
Latin America: Bolivia, Chile, Cuba, Ecuador, Peru, Uruguay, and Venezuela
Central Asia: Mongolia, Tajikistan, Turkmenistan, and Uzbekistan
South Asia: Pakistan, Sri Lanka, and Vietnam
Readers can make up their own minds concerning the implications of the development of the BRICS+ group and the impact on global trade – and future supply chains. However, it is apparent that while the current focus has been on the shifts created by the West’s imposition of sanctions on Russia, and trade sanctions upon China (including semiconductors) a rather more significant change in global trade and supply chains has been simultaneously occurring – and one likely to have even more profound implications. (excerpts)
My comment: The establishment of the BRICS organization also allows Russia and China to bypass the western sanctions imposed by the US and EU nations. This is why Russia is thriving economically even after astringent sanctions against them from the US and Europe.
For many decades the US has remained a financial powerhouse because of the petro-dollar. This maintained huge amounts of money transfers in US currency taking place on a daily basis worldwide. This maintained the US dollar as the world reserve currency, which has kept the dollar strong and impervious to inflationary problems.
With a growing BRICS group, the US dollar will no longer be the dominant global currency, which means it will be vulnerable to inflation pressures and economic fluctuations. Time will tell if this change in financial power will affect the US in a negative way. GE