BRICS Summit 2023: How emerging economies are reshaping the geopolitical landscape

Eight Arab countries including Algeria, Bahrain, Egypt, Kuwait, Morocco, Palestine, Saudi Arabia and the UAE are all lobbying hard to join BRICS

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In possibly one of the most consequential BRICS summits since the bloc was created in 2006, over 60 global leaders are expected to attend the summit in Johannesburg

BRICS Summit 2023: How emerging economies are reshaping the geopolitical landscape

Vumani Mkhize

last update on 21 Aug 2023

It’s a distinctly African theme for this year’s BRICS summit set to be held in Johannesburg this week. The theme is titled, ‘BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism’.

The 22-24 August summit seeks to showcase the best of what the continent can offer from an organisational and policy perspective.

Over 60 global leaders across Africa, Latin America, Asia and the Caribbean are expected to attend. 20 dignitaries including the UN Secretary-General António Guterres are also attending, along with scores of business leaders from across the globe.

It’s possibly one of the most consequential BRICS summits since the bloc was created in 2006.

While it may be all systems go for the 15th annual summit, the path to hosting the event hasn’t been a smooth one for South Africa. The International Criminal Court’s arrest warrant issued to Russian President Vladimir Putin threatened to destabilise South Africa’s chairmanship of the summit.

As a signatory to the Rome Statute, South Africa would have been legally obligated to arrest Putin had he set foot in the country. However, in July Putin agreed to “attend” the summit virtually, putting an end to a diplomatic tightrope that South Africa was finding increasingly difficult to navigate.

Geopolitical tensions with the West were already simmering in May after the United States’ ambassador to South Africa, Rueben Brigety accused the country of providing arms to Russia despite its professed neutrality in the Russia-Ukraine war. South Africa’s President Cyril Ramaphosa vehemently denied the claims, launching an investigation which has since found no evidence of Ambassador Brigety’s claims.

US ambassador accuses South Africa of supplying arms to Russia https://t.co/rWsP483U94
— BBC News (World) (@BBCWorld) May 11, 2023

Global events have been at the core of shaping the at times fractured narrative around the summit. The West’s traditional dominance is being challenged by the changing geopolitical climate. The war in Ukraine and resulting sanctions on Russia have raised calls by BRICS members to reduce their reliance on the US dollar.

This is the geopolitical minefield that South Africa has had to navigate in order to host this summit, and having got to this point Pretoria is looking forward to getting down to BRICS business — because there is a lot of it.

BRICS consists of five of the world's major emerging economies — namely Brazil, Russia, India, China and South Africa. Home to three billion people, the bloc represents more than 40% of the world's population.

Up to 40 countries have expressed an interest to join and 23 have formally applied for membership. This week's summit could potentially provide a roadmap to expansion or even a shortlist of soon-to-be-inducted members.

Key issues

Thirteen years since a new member was added, BRICS is facing an intriguing moment in its brief history of existence. A key issue that is set to be discussed this week centres around the inclusion of new members.

Up to 40 countries have expressed an interest to join and 23 have formally applied for membership. Speaking at a recent press conference on the issue of expansion, South Africa's foreign minister Naledi Pandor said: "South Africa, as chairman of BRICS, will hold talks at the summit on the enlargement model, its principles and standards. We are gradually moving towards consensus on BRICS expansion issues, and we hope to reach it at the summit."

This week's summit could potentially provide a roadmap to expansion or even a shortlist of soon-to-be-inducted members, but that's all dependent on leadership approval.

AFP — People walk past a banner outside the venue for the 2023 BRICS Summit at the Sandton Convention Centre in Sandton, Johannesburg, on August 20, 2023.

The benefits of joining BRICS for member countries include gaining access to development financing from the recently established New Development Bank, established in 2015.

Loans amounting to $5.5bn have already been disbursed to South Africa for five projects. Overall the bank has financed nearly 100 projects worth around $33bn. Other benefits include greater collaboration on trade, health and the use of local currencies.

On the downside, BRICS only accounts for 16% of global trade, and staggeringly the volume of trade amongst member countries is only 6%. The fact that there is so little intra-BRICS trade is an indication of how fractured economies within the Bloc are, and this presents a big opportunity for leaders to create an environment where goods and services move more freely between BRICS.

While the creation of a free trade area amongst BRICS countries is not on the agenda in Johannesburg, discussions around fostering more trade within the bloc and addressing trade imbalances will be held.

The benefits of joining BRICS include gaining access to development financing from the New Development Bank. On the downside, BRICS only accounts for 16% of global trade, and the volume of trade amongst member countries is only 6%.

The Arab world and BRICS

Among the 23 countries that have formally applied for BRICS membership include eight Arab countries.

Algeria, Bahrain, Egypt, Kuwait, Morocco, Palestine, Saudi Arabia and the United Arab Emirates (UAE) are all lobbying hard to join BRICS. The benefits of BRICS membership for countries in the Arab world are largely driven by economic diversification.

AFP — Russian President Vladimir Putin meets with Egyptian President Abdel Fattah El-Sisi in Strel'na, outside Saint Petersburg, on July 26, 2023, ahead of the second Russia-Africa summit.

With many Arab economies dominated by one sector such as oil and gas, they are at times left vulnerable to the increasingly unpredictable movements of global markets. Gaining access to a wider, more diversified Brics market offers more opportunities for Arab countries to pivot from single-sector industries.

This is one of the main reasons why Saudi Arabia — the biggest economy in the Middle East — is seeking to join Brics. As the world's largest oil producer, Saudi Arabia is well aware of the need to diversify its economy in order to ensure the future prosperity of the Saudi nation.

Joining Brics will allow Saudi Arabia to fully execute its economic diversification programme, "Vision 2030". For the ambitious programme to work the Saudis need cooperation from other countries which have developed industries such as manufacturing, tourism, sport and new technologies. Tapping into these diverse resources offered by BRICS would be of material benefit to the Saudi economy.

Overall for Arab countries, their strategic location also serves as a bridge between Africa, Europe and Asia thus serving as an important economic hub. On the diplomatic front, joining BRICS also helps countries from the Arab world align with an economic bloc that operates as a counterbalance to the prevailing Western political and economic governance system.

For the ambitious Vision 2030 programme to work the Saudis need cooperation from other countries which have developed industries such as manufacturing, tourism, sport and new technologies. Tapping into these diverse resources offered by BRICS would be of material benefit to the Saudi economy.

De-dollarisation

Ahead of the Johannesburg summit, there has been a significant amount of speculation amongst analysts regarding the creation of a single BRICS currency. These discussions are premature because of the complex regulatory hurdles that member countries still have to navigate before the idea of a single currency is ever realised.

When the Euro was rolled out in 1999 it had been decades in the making following extensive discussions around financial integration and fiscal policies. BRICS lacks the financial integration and market sophistication to create a single currency at this point.

While a common currency isn't quite on the table for BRICS countries, there does seem to be a greater impetus to use local currencies over the US dollar. China, Russia and India have all in the past year been touting the internationalisation of their currencies in a direct challenge to the hegemony of the US dollar.

But even though the political sentiment within BRICS is to de-dollarise, the greenback is still by far the most dominant currency in the world amounting to almost 90% of global transactions.

AFP — A man walks past a banner outside the venue for the 2023 BRICS Summit at the Sandton Convention Centre in Sandton, Johannesburg, on August 20, 2023.

Discussions at the Johannesburg summit will no doubt be focusing on how member countries can trade more using their national currencies amongst each other. It will be interesting to see how issues around the volatility of emerging market currencies and the repatriation of non-dollar currencies will be addressed.

Summit outcomes

The three-day summit will no doubt be filled with robust debate amongst member countries, and the big delegation of African leaders expected at the summit will want to make their presence felt, and perhaps get investment pledges.

For the BRICS leadership, formulating a joint statement at the end of the summit will not be a walk in the park, because the member countries are still quite a loose group which have diverging and at times competing interests. Differences aside, BRICS is determined to reshape the global geopolitical landscape and challenge the dominance of the West.

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