BRICS is an acronym for Brazil, Russia, India, China, and South Africa. The group is looking to challenge the US dollar by launching a new currency for global trade.
Among the 25 countries that have applied to join the BRICS alliance, five could be allowed entry into the bloc in the coming months. According to reliable sources, their entry into the group is "almost certain" and the announcement of the bloc's expansion into BRICS+ could be made at the summit.
From BRICS to BRICS+
The five countries likely to join the BRICS alliance are Saudi Arabia, the United Arab Emirates, Argentina, Egypt, and Indonesia. A senior government official from one of the BRICS countries has confirmed the expansion plans, albeit on the condition of anonymity due to diplomatic protocols. Four of the five potential new entries in the BRICS alliance this August would be Muslim-majority nations.
Other countries reported as having sought membership of the bloc include Algeria, Mexico, Nigeria, Bangladesh, Iran, Venezuela, Syria, Indonesia, Ethiopia and Bahrain.
It has been reported that Pakistan had also expressed its desire to become part of the BRICS platform, but last week it emerged that India had blocked Pakistan's participation in a June 24 virtual summit held on the sidelines of a BRICS conference and open to non-BRICS-member countries.
It is increasingly becoming clear that the BRICS bloc is an attractive global platform for nations to collaborate, especially on issues of international trade and currency exchange simplification, and many aspirants have expressed their intent – if not official position and foreign policy – to join the alliance.
Saudi finance could power NDB, BRICS currency
The expansion could make the BRICS alliance stronger in terms of GDP and purchasing power parity (PPP). Additionally, Saudi Arabia’s induction into the bloc could fund the New Development Bank (NDB) and ensure a constant cash flow for its projects. The NDB has struggled due to US and EU sanctions on Russia, due to which it has yet to receive or lend new loans.
The NDB bank was created to challenge the global domination of the US dollar. It is expected that Saudi Arabia’s induction into the bloc would fund the NDB, making the alliance financially stronger and less reliant on the US dollar, which is the preferred currency in international trade for now.
If Saudi Arabia enters the bloc and accepts the new BRICS currency for cross-border transactions, the US dollar's dominating status in global transactions could see a precipitous decline. The Middle Eastern juggernaut is the largest exporter of oil to the US and Europe, sending millions of barrels to them every year.
Moreover, if Saudi Arabia decides to settle Europe's oil payments in the new BRICS currency instead of the US dollar, it would hit the American economy indirectly, and its global financial leadership directly.