BRICS – Implications for global trade

No doubt: the BRICS-plus group of countries has become a heavy-weight in global economics on its own. The grouping of now ten countries, the five initial BRICS countries plus five new members (Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates) as well as a larger number of associated countries come close to represent half of the world’s population, and generate a solid quarter of the world’s economic product.

The vision of the creator, a Goldman-Sachs banker, of the acronym BRICS initially was to designate a set of most promising emerging economies, probably to direct investors to new opportunities. The leading economy of the group, China, however, soon discovered that the grouping could serve other interests, ultimately political goals. The creation of the New Development Bank established in Shanghai has been building up a sort of counterweight to the Western-dominated Bretton Woods Institutions, the World Bank and the International Monetary Fund, and is facilitating trade among BRICS partners more and more outside the realm of the US dollar. This purpose not only reduces the BRICS countries’ dependence on the economic and financial power of the US dollar but in addition it minimizes the countries’ exposure to Western, in particular USA sanctions. With this, the BRICS were getting a clear political positioning against Western views regarding the global order and the rules governing it.

For some, BRICS has become a vehicle of a geopolitical opposition against the G-7, i.e. the leading powers of the industrialised world. For others, BRICS could become the voice of the Global South when seeking a new world order. From the outset, the group was characterised by the divergences of their basic economic and political interests. While the group’s initial members aspire to strengthen their share of world trade, their individual interests go in different directions and view different priority markets, also in geographic terms, and aim at different goals. The process of enlarging membership in 2024 showed there was no unity of doctrine regarding the group’s goals. Some opposed the idea of any anti-Western political positioning and some still seem to oppose China’s aspiration to lead the group as the voice of the Global South.

When proceeding to enlarge the group, three countries who had been invited to join even refused and rejected this political choice, thus demonstrating that individual members consider their specific national interests as a priority and in certain cases as being in contradiction to interests of some other group members. Argentina, Saudi Arabia and Kazakhstan refused to join and, thus, illustrated that old dreams of the Non-Aligned movement of the past have not been born again. The term of the Global South has not replaced the old Third World concept.

This is the overall picture of the group today: It is more of a conglomerate of countries than an organisation; it lacks common structures, a common priority goal and it will develop according to different interests and purposes. It does not plan to develop common trade rules, or even a free trade concept, and will continue to impose individually decided sets of trade tariffs among them. International analysts think that the BRICS will continue, as a group, to grow in overall geographical size and economic weight and will increase their share in global trade, but that they will never be a decisive engine of change in geopolitics.

Among the founding members, Russia and China have a clear vision of destroying the existing world order and pushing back the dominant role of the USA. The other founding members, Brazil, India and South Africa, are more comfortable with a vision of directing the world into a multi-polar order, in which they think they will be better positioned for their sovereign autonomous foreign policies. This boils down to a clear analysis that the BRICS are not likely to end up as a power bloc succeeding in dominating the world. Members’ geopolitical ambitions are too divergent to fit into a common geostrategic purpose.

For such a vision, we should rather look at another grouping: the Shanghai Cooperation Organisation (SCO), created by Russia and China twenty-four years ago. Today, China is its leading member. And it is China’s determination to transform this organisation into an anti-Western coalition in order to systematically challenge the current dominated world order. Beijing celebrated the organisation’s recent summit in Tianjing, with extraordinary pomp. This demonstrated that China has recognised that its geopolitical ambitions cannot be successfully pursued through the BRICS. The potential for changes to the world order may rather lie with a structured organisation such as the Shanghai Cooperation Organisation. Its membership may count a smaller number of countries, but geographically they are closer to each other; they represent a growing Eurasian bloc with China and Russia at its centre and a clear purpose of containing moves of ethnic self-determination among their populations. The growing interest of some new members from Asia, such as India, has however completely new reasons. They must be seen as a response to new developments within the Western domination of the world order, i.e. US President Trump’s strategies and policies to change his country’s relations with the whole world.

A final note of caution however: As regards the most recent development in global trade rules of geopolitical relevance, the world with China’s ascension to a super-power level, got a heavy knock, possibly of lasting effect, with the current US Administration’s newly introduced trade tariffs. They are hitting and snubbing the whole world, allies, partners, friendly countries and traditional adversaries alike, and seem to have a sobering impact on governments all over the world. Washington’s new policies may give a totally unexpected push towards a new world order. If looming trends are confirmed, BRICS and other groupings may still become instrumental in changing structures of global trade. So, it cannot be excluded that BRICS’ presently limited capacities for changing the world order would have to be re-evaluated one day. The growing absence of a dominant Western superpower in the world’s power equation may create opportunities even for a grouping such as the BRICS to develop a common political determination in shaping the future international order.

Picture: Pedro Szekely