The world is changing. The old international order seems to be waning and being succeeded by a new world order, plunging the world into a turmoil that marks this very transition. With the current struggle between the global powers shaking the status quo, new conflicts and new alliances emerge. As the core purpose of the Next Century Foundation is to engage in dialogue for peace, it is essential to take these new players on the world stage into account. The BRICS group is an increasingly important actor in the international arena that could influence many of the future developments. But this alliance differs from the old cold war power blocs in so much as it is not ideological but is instead, completely pragmatic, and spans nations with very different ideologies.
The acronym “BRIC” (Brazil, Russia, India, and China) was first used by Goldman Sachs economist Jim O’Neill in 2001 to describe the four rapidly growing economies. The BRICs Initiative was launched in 2009 and later in 2011 the group was joined by South Africa, converting the lowercase ‘s’ to ‘S’ – as an intergovernmental organization of emerging economies that given their growth could dominate the international economy, during the span of the 21st century; and more specifically according to O’Neill, they could dominate the global economy by 2050. To better explain both their growth and therefore, their importance to the international arena, look at the BRICS contribution to the global economy. In the 1990s, their contribution to the global economic growth was about 16%; a figure that rose to 30% by 2008. During the years 2003 – 2007, BRICS accounted for 65% of the expansion of the world’s GDP (Gross Domestic Product). So, from the outset, BRICS was an economic phenomenon.
As the years progressed, this phenomenon started to manifest itself in another form – it posed atypically as an ‘enemy’ of the Western institutions – like the IMF and the World Bank – as a notable player, capable enough to counterbalance the western influence in the international arena. In 2013, in the 5th summit, held in South Africa, the bloc stated its intentions to create a global financial institution, as an official opponent to the Western Bretton-Woods institutions – a New Development Bank (NDB), that was finally established in 2015. The New Development Bank aims to fund: “infrastructure and sustainable development projects in alignment with the development objectives of our members and their commitments under the SDGs and the Paris Agreement”, mostly around the developing countries. The group doesn’t have its own currency yet, but there was a proposal made by the Brazilian President Lula da Silva, during the BRICS summit in Johannesburg in August 2023, to create a common currency, in order to diminish states’ dependency on the American dollar – and especially as a means of reducing their vulnerability to dollar exchange rate fluctuations. However, the rest of the founding member-states seemed more supportive of enhancing national currencies for intra-BRICS trade, stating that a common currency is: “more of a medium to long term ambition”, especially since their economies/currencies are quite different from one another, thus making a common currency a difficult and undesirable project for some. Yet, a BRICS blockchain-based payment system is in the works – the BRICS Bridge multisided payment platform, which would connect member-states’ financial systems using payment gateways for settlements in central bank digital currencies, countering the SWIFT system, which serves the dollar. This move suggests that a de-dollarization effort is ‘in the making’, but the outcomes of such a plan remain to be seen.
During the Johannesburg summit, the bloc invited Egypt, Ethiopia, Saudi Arabia, the United Arab Emirates, Iran and Argentina to join them. All of them, apart from Argentina (which, after President Javier Milei was elected in late 2023, withdrew itself from BRICS), joined the bloc in January 2024, marking the second expansion of BRICS, after the entry of South Africa in 2011. Even before the expansion, the bloc accounted for more than 40% of the global population – 3.2 billion people and a total 29.5% of the world’s land surface. In terms of economy, BRICS in contrast with the G7 – before the expansion – accounted for 34.92% of the global GDP in Purchasing Power Parity (PPP) in 2023, while the G7 accounted for 30.05%. BRICS topped the G7 in 2018, when the GDP in purchasing power parity (PPP) for BRICS rose to 32.33%, while the G7 fell to 31.84%. As evident by the numbers, this gap between the two groups is a steadily increasing economic phenomenon over the past six years and is expected to continue. The bloc of the five founding members controlled 26% of the global GDP. Another interesting note is that all (11) current member-states account for almost half of global food production as the bloc is a strong player in the grain markets, accounting for ~1/5th of the global exports in 2021, along with the U.S. (20%) and the E.U. (21%).
The following blog however, will explore the biggest increase in figures after the expansion of BRICS, which is the global share of oil reserves. As proven by the Oil Crises of the 1970s and the Oil Crisis of 2022 that shocked the global economy, Energy is a vital component of every nation’s economy and, most importantly their well-being.
Oil, trade and power
Oil is one of the most significant factors in the international affairs’ arena, as for decades, there were many attempts from key players to gain benefit from countries rich in oil and other mineral deposits. Oil is a strong ‘card’, which strengthens the position of both small and larger states in political and diplomatic negotiations. Currently – as it is mostly a western oriented world, when it comes to the institutions and the structure of the international field – oil transactions are made in dollars, since 1944 with the establishment of the Bretton Woods system. Even after 1971, when the former President Nixon, decoupled the dollar from its relation to gold (the pre-existing system); the dollar is the most reliable and low-risk investment, with low transaction costs. Before the expansion of BRICS, only Russia was among the top 10 countries with the biggest oil reserves, but now, after the accession of Saudi Arabia, the United Arab Emirates, Egypt, Ethiopia and Iran, the proportion of oil reserves globally, held by countries within the BRICS, increased. Saudi Arabia is the second country in oil reserves in the world, scoring just below Venezuela, which holds first place. The share of oil reserves globally, by countries within the bloc rose to over 43%.
It’s important to highlight that the western alliance, and more specifically its head – the United States of America – have made some serious enemies over the years, that given the current developments, puts the Western alliance’s position in a more adverse place. Both Iran and Russia for example, are suffering from western sanctions; and with the war raging in Ukraine, the sanctions against Russia have created a severe fueling problem – most notably within the European Union. As a response to the sanctions, since 2022, President Vladimir Putin announced that Russia would reschedule the oil and natural gas routes towards countries from the BRICS bloc. This move proved to be vital for Russia’s economy as crude oil exports, offered at discounted prices, has allowed Russia to run a current account surplus, which more than tripled in the first quarter over the same period in 2021 and a ruble, which traded at 7-year highs and has become the world’s best-performing currency in 2022, despite being heavily battled by the western sanctions. The group having the biggest exporters of oil globally, it also includes the biggest importers of oil – India and China, both of which have not joined the western bloc in the sanction scheme against Russia.
The sanction scheme is the reason why in the 2023 BRICS Summit the Brazilian President, proposed the creation of a common currency, something that even Russia seemed to consider, after the sanctions in 2022, yet this remains an uncertain scenario. A common currency would be in the interests of the countries inside the group, contributing to the ‘de-dollarization’ of the global economy, by minimizing the global transactions’ dependency on the dollar. However strange it may seem, a de-dollarization is a rather plausible scenario; the New Development Bank ‘s aim is to invest in infrastructure in the emerging, developing economies – meaning investing in the Global South. By 2022, the NDB has provided nearly $32 billion to emerging economies in a total of 96 projects. Some specialists estimate that these developments are consistent with China’s plans on global economy – the One Belt, One Road Initiative (OBOR). As mentioned above by taking the Chinese – Iranian bilateral agreement, Iran is a part of OBOR, which translates into more infrastructure, generated by Chinese companies, Chinese investments in Iran, that aim to revival the Silk Road trading routes, also including the Maritime Silk Road of the 21st century. On the other hand, Russia’s view on BRICS is more a means to counter western sanctions and a strong ‘weapon’ to aid its fight with the West.
The major forces within BRICS, the ones who can exert more power on the other members are China and Russia. However, there is this impression that BRICS is a bloc where every member is equal to one another, an alliance that is based on cooperation and therefore, the states are on more ‘equal’ terms with one-another; in comparison to the western bloc, where the hegemony of the U.S. is evident. This century long hegemony of the American model has caused big controversy, as a supposedly just system proved to be unjust and unequal. That is a major reason why so many states from all over the world are turning towards BRICS in recent years, with more than 40 countries expressing their willingness to join the bloc. It is rumored that Venezuela is among the ‘candidate’ countries, as the Venezuelan government of President Nicolás Maduro has announced a cooperation with the BRICS through investments, while Maduro clearly stated that they aspire to join the bloc by this year, while aiming to substantially contribute to the alliance. It’s important to note that Venezuela is a strong ally nation with Russia and they have enhanced their ties by signing a bilateral agreement as a way to counter the western sanctions that plague both of their respective economies and societies. Another friendly country to Venezuela is Iran, with which they enhanced their ties after 2020, to boost their crude oil production.
So, it is understood that BRICS, even before the latest expansion was an important player in the international scene, as it already held 1/3 of the global GDP, almost 35% in GDP in PPP, having a population of 3.2 billion and almost 30% of the Earth’s land surface, altogether topping the G7. After the expansion the Purchasing Power Parity it will reach $65 trillion – 37.3% of the world, the population share rose to 3.67bln, meaning approximately 45% of the global population; and yet the biggest and most significant increase is observed in the oil reserves. The share of BRICS – before the expansion – was around ~8,8%, with Russia being the most powerful oil producing country within the bloc. After the expansion the estimations vary between ~41 – 45%, with the leading country being Saudi Arabia. If Venezuela gets to join the bloc – given the good relationship it holds primarily with Russia, which is a leading country of the alliance, these numbers are about to skyrocket (if the production levels remain the same until the time of the accession), reaching approximately 55.5%, as Venezuela currently holds almost 17.5% of the world’s oil reserves.*
In Conclusion
As proven by the Oil Crises of the 1970s and the Oil Crisis of 2022 that shocked the western and mostly the European Union’s economies, that is why I place the Energy at the focal point of this article, as the western sanctions over the years have targeted the energy production of various countries that have a strong energy market, therefore posing a threat to the American interests. In other words, BRICS could signify a complete change of the world as we know it, utilizing their power in the global market and the fact that they are an opposing bloc to the western global hegemony, may also add to their prestige; therefore, making BRICS more appealing as a power bloc with which to cooperate. This is verified by the number of countries that wish to join the bloc, and the fact that some of them are powers to be reckoned with, both economically and in terms of international relations (e.g.: Venezuela, Algeria, Cuba, Belarus, Turkey etc). If Venezuela joins the BRICS, this could signify that the countries long-targeted by the U.S. Government, could be able to effectively deal with the impact of the sanctions, thus reducing the need for negotiations with the West, since they might be in a better position than before and also pose as a strong alternative, to the western institutions, for countries of the Global South that don’t wish to work together with the West. According to Prof. Padraig Carmody from Trinity College Dublin: “Through BRICS, China is trying to grow its power and influence – especially in Africa,” [..] It wants to be be the leading voice for the global south.”.
It is also worth mentioning that most of these countries are not ‘friendly’ nations to the West, and that can be deemed a failure of the U.S. to pose as a just and likeable model, an ally that is appealing to the majority of the world to cooperate with. The vast number of severe mistakes made by U.S. Governments over the last century has placed the U.S. and the western model altogether on the opposing side – causing a crisis that undoubtedly, along with other powers growing internationally, makes it particularly difficult for a comeback. This hardship can also be reflected in the fact that, along with this changing of balance comes a change of narrative and perception; particularly the greying of the notion of good and bad – being increasingly difficult for a country or a schemed to be labeled good or bad, right or wrong; as the old scheme of what was good and what was bad seems to have been shaken, thus amplifying the general crisis, which clearly challenges the global status quo.
*The calculations made are estimations, based on data found on the internet, and some divergence may occur, if or when compared with other research that calculated the same data.
