By Antonio Graceffo
After the BRICS Summit in August, it was announced that the current members — Brazil, Russia, India, China, and South Africa — had invited six more countries to become members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE).
The recent BRICS expansion is commonly viewed by the Western media as the People’s Republic of China (PRC) expansion of its coalition in a parallel international order, independent of U.S. influence. Many regarded this as China’s growing clout in the Global South.
The primary commonality between these very different countries lies in their trade relations with China, as well as their desire to reduce reliance on the U.S. dollar and to diminish U.S. hegemony. Nevertheless, this alone may not be sufficient to establish a global coalition.
On the outset, member countries exhibit significant disparities in their needs and levels of economic development. Saudi Arabia and the UAE are rich, oil-producing nations. Iran and Russia are heavily sanctioned and excluded from most of the world’s markets. Ethiopia is relatively poor and experiencing instability. And India is developing quickly, with the hope of becoming a global power in the future.
In comparison with “alliance” or “bloc” in terms of international relations, the nature of “BRICS” lacks institutional infrastructure, with no military defense agreements nor formal free trade. Despite ongoing discussions regarding the creation of a BRICS currency, there has been no progress in that direction. Currently, the only BRICS currency considered an international currency is the yuan, which even BRICS members refuse to use as a primary reserve currency. The other BRICS currencies face challenges like declining value and limited convertibility.
Along with differences in needs and wants, the BRICS countries sometimes even exhibit clashes of interests with China. India, the largest country by population, is one of the most important BRICS members, with a vibrant economy, rapid GDP growth, and steadily increasing foreign direct investment. It is a member of the China-led Shanghai Cooperation Organization (SCO), but India refused to join China’s Belt and Road Initiative (BRI) because of the lopsided benefits that China would derive and moreover, it has gone so far as warning other nations not to join the BRICS.
The U.S-China trade war, tariffs, and the chip ban have created tremendous opportunities for New Delhi. As businesses leave China, they are increasingly relocating to India. Apart from being in direct competition for the same investment dollars, China and India have engaged in two military skirmishes along a disputed border since 2020.
In September, China published its official map which sparked great controversy as it had included Indian territory as part of China, leading to New Delhi’s series of protests against China. Shortly after the map debacle, Xi Jinping failed to attend the G20 meeting held in New Delhi. This month, U.S. President Biden met with Prime Minister Modi, and the two leaders issued a joint statement reaffirming their commitment to a free and open Indo-Pacific. The PLA Navy has become more aggressive in the Indian Ocean, particularly in the Bay of Bengal, prompting India to develop closer defense ties with the United States. The joint statement also mentioned the fact that India, along with the U.S., Japan, and Australia, is a member of the Quadrilateral Security Dialogue (The Quad), a military alliance countering China in the Pacific.
Moreover, at the G20 India inked a large-scale international infrastructure agreement with the U.S., Saudi Arabia, and the UAE. This agreement underscores that India is not ready to turn its back on the U.S. or the Western-centric international order in favor of China.
The infrastructure deal also has implications for the potential role Saudi Arabia may or may not play in a China-led international order. Saudi Arabia, in spite of being both a new BRICS member and a major recipient of BRI investment, has refused to fall into Beijing’s orbit. Saudi Arabia has always been a key U.S. ally in the Persian Gulf, agreeing to price its oil in dollars and hold its foreign currency reserves in U.S. Treasury bills, in exchange for U.S. military protection from Iran. When Xi Jinping brokered a peace deal between Iran and Saudi Arabia, earlier this year, he hoped to gain some diplomatic advantage with Riyadh, but in spite of its primary enemy agreeing to peace, Saudi Arabia — which hosts Prince Sultan Air Base, an active United States Air Force Air Expeditionary Base — refused to cancel its mutual defense assistance agreement with Washington.
During the time of China’s economic rise of the past decade, the U.S. was weaning itself off of oil imports. The U.S. is now the world’s largest crude oil producer, but still imports oil, mostly from Canada and Mexico, with a small quantity coming from Saudi Arabia. Xi Jinping hoped that he could capitalize on the fact that the U.S. was no longer a significant customer for Saudi Arabia, while China is now the largest oil importer in the world. Riyadh, whose currency is pegged to the U.S. dollar, rejected Beijing’s requests to price all of its oil in yuan or to hold yuan, rather than dollars, as its primary reserve currency.
The UAE is in a situation similar to Saudi Arabia.The Emirati dirham is pegged to the U.S. dollar. The nation’s foreign currency reserves are in dollars. The UAE has a Defense Cooperation Agreement (DCA) with the U.S. and hosts 5,000 U.S. military personnel.
There has been some speculation that China might be able to obtain discounted oil, by having OPEC members (Iran, Saudi Arabia, and the UAE) join BRICS. However, the price of oil is a direct function of the quantity of supply, determined by OPEC. And this will not change as a result of the expanded BRICS grouping. Russia, not a full OPEC member, has been selling discounted oil to China, but this is because of a need to bypass international sanctions, and has nothing to do with BRICS.
In the end, BRICS expansion appears to be a symbolic gesture for a seeming global power to grow, but lacks the substantive power or transformative potential to alter the existing world order or pave the way for a China-led global paradigm shift.
This article originally appeared in The News Lense on 2023/09/20
