The historic three-day BRICS Summit 2023 wrapped up on August 24 in the South African city of Johannesburg. What are the results of the event and how could it affect the global balance of power in the near future?
The leaders of Brazil, Russia, India, China, and South Africa, which together constitute the group of major emerging economies named BRICS, adopted the Johannesburg II Declaration on the final day of the 15th summit.
The member states committed to strengthening the framework of mutually beneficial BRICS cooperation
under the three pillars of political and security, economic and financial, and cultural and people-to-people cooperation. They also committed to enhancing strategic partnership for the benefit of their people through the promotion of peace, a more representative, fairer international order, a reinvigorated and reformed multilateral system, sustainable development, and inclusive growth.
New Fair Trade and Financial System
BRICS called for maintaining the “open, transparent, fair, predictable, inclusive, equitable, non-discriminatory and rules-based multilateral trading system with the World Trade Organization (WTO) at its core.”
The group expressed its concerns about unilateral illegal measures affecting trade and proclaimed the need for creating a fair and market-oriented agricultural trading system that would help end hunger and achieve food security.
“We call for reform of the Bretton Woods institutions, including for a greater role for emerging markets and developing countries, including in leadership positions in the Bretton Woods institutions, that reflect the role of emerging markets and developing economies (EMDCs) in the world economy,” the declaration said.
Previously, BRICS leaders placed special emphasis on the rising role of the New Development Bank
, founded by the group in 2015 to facilitate funding new infrastructure projects and various endeavors by developing nations.
Local Currencies & New Payment Systems as Alternative to Dollar
BRICS stressed the importance of encouraging the use of local currencies in international trade and financial transactions between members of the group as well as their trading partners.
The concept has taken on a new significance given the West’s weaponization of major reserve currencies in order to achieve its geopolitical objectives.
“We are concerned that global financial and payment systems are increasingly being used as instruments of geopolitical contestation. Global economic recovery relies on predictable global payment systems and the smooth operation of banking, supply chains, trade, tourism, as well as financial flows,” South African President Cyril Ramaphosa stated on Wednesday.
Likewise, a day earlier, Brazilian President Lula da Silva touched upon the idea of a “new reference unit” for BRICS nations, which would shield emerging markets from G7 currencies’ volatility caused by irresponsible monetary measures.
While the common currency concept was not discussed in detail during the 15th summit, Russian Finance Minister Anton Siluanov disclosed on August 22 that BRICS member states are continuing to discuss the creation of a “single unit of account.” Siluanov explained that it is not actually a single currency (akin to the euro in the EU), but an instrument “in which the cost of commodity deliveries and benchmarks for some goods can be expressed in order not to depend on a single currency or its issuing center.” The proposed single unit of account would become an alternative to the US dollar, per the minister.
On the final day of the summit, the BRICS leaders announced that they had decided to invite Argentina, Egypt, Iran, Ethiopia, the UAE, and Saudi Arabia to join the group
“We have decided to invite the Argentine Republic, the Arab Republic of Egypt, the Federal Democratic Republic of Ethiopia, the Islamic Republic of Iran, the Kingdom of Saudi Arabia, and the United Arab Emirates to become full members of BRICS. The membership will take effect from January 1, 2024,” Ramaphosa stated on Thursday.
Per Ramaphosa, the admission of new members to BRICS is just the first phase of the group’s enlargement process.
The participants of BRICS have also agreed that the name of the group will not change
after the new countries join it, as this will demonstrate continuity, as Russian Foreign Minister Sergey Lavrov
specified on the same day. It is expected that the expansion of BRICS will enable an increase in mutual investments between the member states and deepen further collaboration.
How Could BRICS+ Affect Global Economy & Politics?
The admission of six new members as well as the shift to new payment systems could have a substantial impact on the global balance of power, according to Sputnik’s interlocutors.
In particular, the aggregated gross domestic product of BRICS+ will total 37% of global GDP in terms of purchasing power parity (PPP), while the group’s population will account for 46% of global population, as Brazilian President Luiz Inacio Lula da Silva remarked on the final day of the summit.
“The bigger it is, the easier it will be to have a clearing system,” Angelo Giuliano, a Hong Kong-based political and financial analyst, told Sputnik. “You need to have a certain amount of unity and exchanges between those countries to make this platform relevant. So if it was only one or two countries, it wouldn’t make sense. But now, since you have so many exchanges between all those countries, this would make this system much more relevant and much more efficient. So the more countries join, the more countries will want to adhere to this system.”
“So this would actually challenge completely the US dollar hegemony […] The first priority for those countries is to challenge the US dollar hegemony, to bypass the dollar, and to go through a clearing system that would actually benefit everyone and will secure an independence of those countries. They want to regain in some ways their sovereignty, because the dollar has been weaponized by the US,” he continued.
At the same time, BRICS’ commitment to inclusion will give voices to those emerging economies of the Global South which have long been underrepresented in Western-centered international organizations, according to Giuliano.
“In the UN Security Council, for example, we don’t have any African countries, so they cannot change the UN. Maybe BRICS could be the new foundation for the future UN,” the expert presumed, adding that this could become a “huge shake-up” for the Western establishment.
Another intriguing point is Saudi Arabia‘s decision to join BRICS, given that it has long been considered “an absolutely crucial imperial ally of the United States,” as per Patrick Bond, professor of political economy at the University of the Witwatersrand. Earlier, Saudi Arabia demonstrated determination to diversify its foreign relations by adhering to commitments it made to OPEC+, despite the pressure from Washington. Bond also referred to Riyadh’s rapprochement with Beijing and a historic peace settlement between Saudi Arabia and Iran brokered by China. Saudi Arabia even broke its exclusive historic petrodollar relationship and started to sell some of its oil for yuans, the professor highlighted.
“These are the sorts of things that reflect the changing world order in which US power must adjust to losing some of its imperial allies like Saudi Arabia and possibly also Egypt and the UAE,” Bond told Sputnik, adding that Ethiopia has also embraced a more independent foreign policy, despite the country’s longstanding ties with the West.
“Ethiopia is looking forward to joining [BRICS] to promote the new foreign policy of the Ethiopian government led by Prime Minister Abiy Ahmad,” echoed Yasin Ahmad, head of the Ethiopian Institute of Public Diplomacy, while speaking to Sputnik. “Its main task is to diversify political and economic alliances, as well as cooperation in the field of security. The country is preparing to reach a new level in regional and global politics.”
“Yes, Ethiopia maintains fairly good relations with the countries of the West, but still strives for an alternative, multipolar center of power. I think we can become that very point of balance between cooperation with the collective West and integration with the Global South,” Ahmad continued.
The Ethiopian scholar stressed that the nation also wants to drift away from the dollar
and participate in the creation of a multipolar system of international relations.
The historic 15th BRICS Summit has apparently become a watershed, showing the Global South a new alternative model of development and offering freedom of choice.