The recent BRICS alliance summit, held in Johannesburg, South Africa, marked a historic inflection point. During the summit, invitations to join the grouping were extended to six new members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE, who are all set to join on 1 January 2024.
Despite reservations from some quarters about the prospects for BRICS+, the expansion is widely recognised as a pivotal moment, laying the foundations for a tectonic shift in global power dynamics in the future. Its objective is to recalibrate the global power distribution, shifting away from the dominance of a unipolar world under the US towards a more balanced, multipolar order.
With the inclusion of the new members, the BRICS alliance will boast 46% of the world’s population and control 30% of its economic output. Notably, it will include the world’s second-largest economy, China, as well as three of the world’s biggest oil exporting nations, Saudi Arabia, UAE and Russia, which play key roles in the OPEC+ alliance. Egypt, meanwhile, is the second-largest economy in Africa.
Middle Eastern countries have emerged as indispensable hubs for international commerce
Furthermore, the New Development Bank, founded by the BRICS group in 2015 with the objective of reducing dependency on Western-dominated financial institutions like the IMF and the World Bank, aims to increase the share of funding it raises in local currencies from less than 20% to 30%, according to its CFO. These figures and standings signal the emergence of a different world order.
Global stage
Meanwhile, Middle Eastern leaders, notably those from the countries forming the Gulf Cooperation Council (GCC), and Egypt, have increasingly been making their presence felt at the highest echelons of global decision-making – for example, at the World Economic Forum in Davos and more recently at the G20 summit in India.
A number of factors have contributed to this growing influence, enabling these nations to reshape their role in global affairs.
Central to their ascent has been the deliberate expansion of their economic and diplomatic influence. Through carefully crafted economic policies and diplomatic initiatives, they have effectively positioned themselves as pivotal actors in shaping international policies and decisions and addressing global challenges.
For instance, Saudi Arabia has taken proactive steps to mediate in conflicts in various regions including Ukraine and Sudan. It has also worked on ameliorating its relationship with Iran and Syria. At the G20 summit, US president Joe Biden commended the UAE’s role and influence, particularly in the historic India-Middle East-Europe Economic Corridor initiative.
Deeper integration within BRICS can contribute to reducing the dominance of the US dollar
Another critical element in Middle Eastern countries’ rise to prominence is their strategic geographical positioning. Nestled at the intersection of major trade routes, they have emerged as important hubs for international commerce.
Meanwhile, the role of Middle Eastern nations in the global energy landscape cannot be overstated, given their pivotal place in global energy markets and growing investment in future energy sources, including green hydrogen and carbon capture technologies. Notably, amid economic slowdown and unrest in Europe and the US, these nations have demonstrated economic resilience (see the AB article ‘GCC bucks recession’).
Implications
As well as allowing them to forge stronger strategic partnerships and enhance their influence on the world stage, the inclusion of Saudi Arabia, the UAE and Egypt in the expanded BRICS framework promises a multitude of other potential benefits, boosting economic opportunities and prosperity. Saudi Arabia and the UAE already stand as key trading partners with the BRICS, and it is hoped that closer ties will facilitate further expansion of trade and economic diversification opportunities.
On the currency front, deeper integration could contribute to reducing the dominance of the US dollar as a global trading currency. While a separate BRICS currency is not expected in the near future, the newly expanded bloc might follow the precedent set by the UAE and India, which have employed local currencies for trade financing and settlements, thus reducing reliance on the US dollar.
Hence, in a world where diplomacy and cooperation are increasingly growing, it’s good to see GCC and Middle Eastern nations joining the debate – whether or not the wider BRICS ambitions are achieved.
