BRICS expansion and its geo economic and geo political implications; Hurdles and recommendations

Originally: an organization of 5 countries which includes, Brazil, Russia, India, China and South Africa.

a. Expansion
1. It gave membership to 6 new countries, Saudi Arab, UAE, IRAN, Egypt, Ethiopia and Argentina,
however, Argentina has withdrawn and rest of 5 confirmed their membership.
2. They were given membership in Johannesburg in Oct last year. By participating in the foreign
minister conference in Moscow, 5 of them except Argentina confirmed their membership.

b. Economic Expansion:
1. GDP Size:
i. Approximately 20 trillion China and 3.7 trillion of India and 2 trillion Russia, Brazil 1
trillion plus, South Africa near 0.8 %, Saudi Arabia with 1 trillion plus, 0.5 trillion plus
UAE and 0.5 Trillion Egypt.
ii. 5 countries: more than 2.5 trillion GDP has entered. BRICS GDP has increased to 29
trillion plus, it’s almost 32 to 33% of the world.

2. Intra organization trade:

i. It’s increasing because these countries have signed free trade agreements by
minimizing tariffs and non-tariffs barrier, maximum would be less than 30 percent.
ii. Trade is increasing: Since the day of BRICS formation, trade between India and
South Africa has increased, trade between India and Brazil has increased, trade
between South Africa and Brazil has increased, Russia trade with Brazil and South
Africa, and even China and India trade has increased and increasing.
iii. The trade between the newly admit countries would also increase.

3. Safe Energy Future:

i. BRICS nations are the largest producer of hydrocarbons, Saudi Arabia, Russia, UAE and
Iran. They are also the largest hydrocarbons consumers too. Thus hydrocarbons will be
the major trade between them. Energy future of these countries is also safe.

4. New Development Bank: it was established in 2014, is expanding now. China was supposed to
contribute 41 billion dollar with 18 billion each from Russia, India and Brazil and 12 billion from
South Africa. Now the contribution will increase with new admissions, South Arabia and UAE will
be the major contributor out of these

c. Geo politics: This economy is triggering Geo politics, as BRICS is primarily an economy
organization, causing geo political shifts in the global power politics.
i. New Development Bank VS IMF and World Bank and European central Bank: IMF
provides loan to meet the budget deficit, to meet the balance of payment crisis. On the
 other hand, World Bank provides loan to finance developmental projects and social
welfare activities. BRICS bank has merged all these roles into one bank.
ii. World Bank Favored Global North: Over the years, IMF and world banks had been
influencing the decision making capacity of developing countries in the favor of US, G7
and global North.

iii. NDP Bank would favor Global South: Now NDP will give loan to global South, if this
happens, still the capacity of NDB to challenge World Bank is low, and however, GDP
size of BRICS nation and future of bricks nations are the opportunities that can make the
NDB bank stronger in the days to come. The decision making capacity of South or
developing countries would turn to South. The more it influences, the more it would
effect, IMF and World Bank.

iv. De dollarization:
1. Until now 58% of the global trade transactions are in dollar, Yuan has come to second
position, euro is on the third portion, and ruble is on fourth number.
2. Currency swap agreements are taking place between nations and they are increasing now,
and the major actor behind it is China.
3. Through these agreements, China is trying to dedollarize the world.
4. Now BRICS is also playing its part in these currency swap agreements. The BRICS nations
have agreed to make trade transactions through mutually swapped currencies.
5. XI Jinping has said: It’s high time BRICS go for its own currency in order to get rid of dollar
exploitation.
6. As US has been putting sanctions on countries throughout the world, because it controls the
dollar, thus, it keeps on exploiting the world. Minimum dollar dependency would ensure
minimum exploitation and more political decision making autonomy for the countries.

v. BRICS VS G7:
1. Global economic dominancy was done by US and western World, particularly G7, all the
economic decisions till now were in favor of Global North, G7 and west, exploiting the global
south. For instance, Climate policies.
2. We should focus on our decision making autonomy and for that we need an organization,
that’s BRICS. The more BRICS get stronger the setbacks for G7 would increase.

Other Impacts:

a. GDP more than European Union

b. Share in oil production will rise to 43%
c. Six of the Top 10 oil producers in the world
d.

Hurdles:
 1. Conflicts among the member nations:
e. India VS China: economic rivalry, geo strategic rivalry, water conflicts
f. Saudi Arab VS Iran: geo strategic, sectarian conflict
g. Ethiopia VS Egypt: water conflict
h. It is hard for the organizations with internal conflicts to become stronger.
2. Absence of Common Threats:
a. It is necessary for an organization to go stronger to have a common threat, but in BRICS we
cannot see a common threat. NATO got stronger because it had a threat which was USSR
and now it is reviving because of USSR. A
3. Member Nations are threat for each other`s security:
a. China and India
b. Saudi Arab and Iran
c. Internal conflicts lead to internal threat.
4. Ideological Differences:
European Nations are all democratic countries and liberal economies but BRICS has variety.
India, Brazil and Egypt are hybrid democracies. Dictatorship in Saudi Arab, Clergy in Iran and
Communism in China and Russia
5. Religious Differences:
Religions of European Union and G7 are predominantly Christianity, but BRICS there are variety.
6. Language Barrier:
7. Close relations of Member Countries with USA:
a. India: influence of US is still more
b. Saudi Arabia: more influence of USA, defense deals
c. Egypt: more influence of USA
d. UAE
e. South Africa

Prioritizing BRICS over USA would be difficult for these nations to a great extent, India and US strategic
partnership would hurt interest of CHINA and RUSSIA, and Saudi Arabia and UAE support for USA would
hurt Iran’s tension, causing tensions for the BRICS

Solutions:

1. There must be a mechanism for the resolution for intra organizational conflicts, which we
witnessed in European Union and ASEAN
2. Ideology of global South: South-South Cooperation, which is an emerging and increasingly
strong ideology, that the US and global North has exploited us, thus, we need to increase, South-
South Cooperation. This ideology should be promoted as it can prove to be a unifying factor.
3. Socio-Economic collaborations: more the collaboration, lesser the importance of differences
will be, its economic future is quite bright.