On February 7, slightly more than a month after Russia began its one-year BRICS presidency on January 1, the country organized the first event on the BRICS financial track.  During the event, deputy finance ministers and central bank governors of BRICS countries were able to discuss various issues related to their financial cooperation.  The participating countries included Egypt, Ethiopia, Iran, and the United Arab Emirates (“UAE”), all of which formally joined the BRICS on January 1, as well as the original members of the organization, i.e., Brazil, Russia, India, China, and South Africa.  As reported by the Bank of Russia, “[p]articular attention was paid to the issues of increasing the proportion of national currencies in mutual settlements and creating an independent, equally accessible financial infrastructure […]”.

Russia’s interest in reducing the world’s reliance on the U.S. dollar is widely known.  Will the country succeed in accomplishing this goal during its BRICS presidency?  The answer depends on whether Russia will be able to leverage the support of existing BRICS members to attract a large number of countries to join the organization.

“To reach a sufficient magnitude of cross-border flows to impact the dominance of the U.S. dollar, the BRICS system will need to attract and retain many members.”

When more countries join the BRICS and accept trading in their national currencies, more cross-border transactions around the world will occur within the BRICS system.  This will result in less demand for the U.S. dollar to pay for cross-border transactions occurring outside the BRICS system.  Yet, the U.S. dollar will likely remain significant, unless cross-border flows among BRICS members outweigh those outside the BRICS system.  To reach a sufficient magnitude of cross-border flows to impact the dominance of the U.S. dollar, the BRICS system will need to attract and retain many members.

The BRICS should, therefore, welcome the applications for membership submitted by 30 countries.  These applications, which have been confirmed by Russia without identifying the applicants, will likely be approved during the organization’s summit to be held in October 2024.  These applications are expected to include those submitted in 2023 by 14 countries: Algeria, Bahrain, Bangladesh, Bolivia, Cuba, Kazakhstan, Kuwait, Nigeria, Pakistan, Palestine, Senegal, Thailand, Venezuela, and Vietnam.

Despite this large number of applications, Argentina’s withdrawal from its planned entry into the BRICS and Saudi Arabia’s hesitation to join, even though it has been invited directly by the organization to do so, have signaled a challenge facing the BRICS: will the organization be able to attract more countries to achieve its goal of building an effective system that can truly compete with the U.S. dollar?

Worth noting:

To overcome this challenge, the BRICS needs to take actions that show the organization’s ability to provide its present and potential members with promising prospects.  The BRICS will, therefore, need to identify at least the following two actions as the organization’s priorities:

• Helping resolve complex regional conflicts, such as those between Ukraine and Russia and those in the Middle East, as these conflicts have already adversely affected many members and potential members of the BRICS

In a post titled Emergency: Red Sea Crisis Unleashes Devastation on Africa, Magdalene Uzoechi, a Nigeria-based member of a public LinkedIn group named SINOTALKS^® Global Business & Development Network, reported the “profound suffering” that the Red Sea crisis has inflicted on Africa:

Africa, already grappling with a multitude of challenges, now faces the ominous specter of rising inflation, escalating poverty, and heightened food insecurity.  The ripple effect of [the Red Sea] crisis reverberates from East to West, North to South, affecting the lives of millions.  Smallholder farmers, already on the brink, bear the heaviest burden, intensifying their ongoing struggle for sustenance.

Beyond the economic fallout, the Red Sea crisis imperils regional stability and peace.  African nations, intricately linked by trade and interdependence, teeter on the edge of strained relations and potential conflicts arising from resource scarcity and economic strain.

It is imperative to emphasize that urgent action is required to halt the crisis and prevent further humanitarian catastrophe.  The international community must unite to address this emergency promptly, working towards a world that is more resilient and interconnected.

[emphasis added]

The plight across the African continent is also being felt in particular within South Africa, a member of the BRICS since 2010.  Multiple factors, including the negative impact from the Red Sea crisis, have already led South Africa’s struggling economy to record an unemployment rate of more than 30%, with the unemployment rate for young people under 25 doubling that, at 60%.

The potential role of the UAE, a new member of the BRICS, in helping to resolve these conflicts cannot be underestimated.  The UAE’s mediation between Russia and Ukraine has led the two countries to exchange hundreds of prisoners of war.  This gives hopes that the UAE may similarly use its mediation skills to help restore peace in the Middle East.  While maintaining its support for Palestinians through increasing Arab political coordination, the UAE has announced its “strategic decision” to maintain ties with Israel.  This special position may enable the UAE to help find a solution for the Middle East.

Understanding how resolution of these conflicts helps shape the future of the BRICS may motivate other member, such as Egypt, Ethiopia, Iran, Russia, and China, to become more effective in restoring peace around the world.

• Reducing differences between China and India

Almost immediately after the 2023 BRICS Summit ended, Indian Prime Minister Narendra Modi warned of the rise of a “new model of colonialism” if countries with critical minerals do not regard custodianship as a “global responsibility”.  The criticism was seen by some to be directed at China, which is the largest global producer of rare earth metals and has imposed export restrictions on metals crucial to the manufacturing of computer chips.  In response, Beijing almost immediately published a new map of China, including an area over which the country and India have an existing territorial dispute.

“[…] how can these two founding members of the BRICS convince other countries to join an organization whose solidarity is weakened by themselves?”

All of these differences, together with recent steps taken by the Maldives to move away from India and forge stronger relations with China, should spark a question in the minds of those considering the future of the BRICS: how can these two founding members of the BRICS convince other countries to join an organization whose solidarity is weakened by themselves?  As Russia has amicable relationships with both India and China, the two countries may be willing to put aside their differences during Russia’s BRICS presidency, in the hope of accomplishing their common goal: a BRICS system that allows trading in members’ national currencies.

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^† The citation of this article is: The Editorial Board of SINOTALKS^®, Priorities of the BRICS Under Russia’s Leadership, SINOTALKS.COM^®, SinoExpress™, Feb. 14, 2024, https://sinotalks.com/sinoexpress/202402-english-russia-brics.