The BRICS group, in its Summit in South Africa’s Johannesburg, took a huge leap in the expansion of its reach through the announcement that it has invited six other countries - mostly from the Middle East, to be a part of the bloc of emerging economies.
The six nations that have been extended an invitation to join the BRICS include Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates from January 1 next year. With this, the number of oil-producing countries has shot up in the group.
BRICS was originally formed in 2009 with India, Russia, Brazil, and China and then it first expanded to include South Africa in 2010.
The group now seeks to build a stronger coalition of developing countries, aiming to put the interests of the Global South on the world’s agenda.
Over 40 countries had expressed their interest in joining BRICS before the start of the Summit in Johannesburg, out of which 23 had formally applied to join.
Percentage of global GDP of invited nations
Saudi Arabia shares the highest percentage of global GDP among the list of six invited countries to the BRICS with 1.10 per cent share and having the 17 spot in the World Bank Index 2022. UAE shares 0.50 pc, Egypt 0.47 pc, Argentina 0.63 pc, Ethiopia 0.13 pc and Iran 0.39 pc.
Invitation to oil-producing countries
The BRICS has extended invitations to six oil-producing countries to join the group. Notably, three of the six countries - Saudi Arabia, Iran, and the UAE - are key members of the Organisation of Petroleum Exporting Countries (OPEC).
Take a look at the nations invited to join the group.
Iran
Iran is home to the second-largest gas reserves and a quarter of the oil reserves in the Middle East. It urged the group to provide its membership, with an eye to strengthening its ties, both economic and political, with the non-Western powers.
Iran has worked on its military partnership with Russia in the last few years while also improving its economic ties with China. The invitation to join the group is being seen as a reward for the same as more countries with good relations with China join the bloc. This may, however, well be a cause of concern for India, which shares border dispute with China and sees it as potential adversary.
On the other side of the coin, Iran’s induction is likely to increase geopolitical tensions with the West.
Iran has attempted to diversify its economy away from oil and boosted its trade with the BRICS members.
Iran’s vice president for politics Mohammad Jamshidi described the invitation as a “strategic victory”.
Saudi Arabia and UAE
The induction of two biggest political and financial giants in the Persian Gulf and two of the world’s largest energy suppliers is likely to add to the group’s quest to put up a challenge to the US-led world order.
Saudi and UAE have been longtime partners of the United States who rely for their protection.
Saudi views joining the BRICS as a move in its bid to balance out its relations with the US and Europe with its largest trading partners in the East, China and India.
However, the Saudi foreign minister suggested that his nation has yet not decided on joining the BRICS.
The UAE, on the other hand, has looked for a bigger leadership role in the Middle East lately, even though it led the country to diverge from American interests.
The UAE has thrived on non-Western partnerships economically. The country’s trade with India and China has seen a boost as Dubai flushes with Russian money, oil and gold after sanctions on Russia by the West following the Ukraine war.
The Emirates still receives a major part of its weaponry from the US, which is less likely to decrease in the near future.
Argentina
Argentina, the third-largest economy in Latin America, finds its supporters in the BRICS including India, Brazil which is its largest trading partner, and China. The country has close economic ties with China.
Egypt
Egypt is one of the countries topping the list in American aid, however, it has managed to maintain a strong relationship with Russia while also growing its trade ties with China.
The country has been making efforts to lessen its dependence on the US over the last one and a half years as it faced troubles while relying on the dollar.
The shortage of dollar made it difficult for the country to repay its debts, compelling it to devalue its currency.
Upon joining BRICS, Egypt can trade in its local currency, thus boosting its own economy. The country also hopes to attract more investment from the partner countries in the group.
Ethiopia
Seen as a potential bright star of Africa, Ethiopia was one of the world’s fastest-growing economies of the world. However, a civil war that panned over two years affected its progress. With the economy shrinking, and the US cutting trade privileges and food aid to the country, the government found it hard to hold the nation together.
Significance of induction
China recently advocated for the re-establishment of ties between Saudi Arabia and Iran. The role played by China would traditionally have been filled by the US. Also, India signed an agreement with the UAE recently regarding trade in Indian rupees and Emirati dirhams instead of in the US dollar.
The pricing of the energy products may have been taken into consideration while deliberating on the new members for BRICS. The reduction of liability and vulnerability in terms of the cost of oil would also have been considered with the induction of the six countries.
The BRICS has vocally challenged the use of unilateral sanctions against the nations and the prevalent dominance of the US dollar in global trade. The expansion of BRICS opens up new avenues for trade within these countries.
The creation of opportunities for the partner nations (in BRICS) to trade fairly easily using local currencies is one of the motives behind such inclusions.
