The recent BRICS Summit in South Africa garnered more international attention than any other since the bloc’s inception in 2009. Controversy surrounding Russian President Vladimir Putin’s possible attendance featured in early coverage of the event after the International Criminal Court issued a March 2023 warrant for his arrest. The prospect of BRICS expansion – beyond Brazil, Russia, India, China, and South Africa — was another source of considerable pre-summit speculation and post-summit analysis, as those left out of the now-expanded grouping reflect on the decision. Of the many interested prospective members, invitations were only extended to Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates, with the expectation that these countries will agree to join the group in January 2024.
Beyond these developments, there was much talk — and a flurry of reporting — on prospects for a common BRICS currency or else a common trading system that eschews the U.S. dollar. Brazilian President Luiz Inácio Lula da Silva espoused the benefits of a bloc-wide currency, while Russia‘s Putin decried dollar dominance in his video address to the group, blaming U.S. sanctions for global economic volatility and assuring fellow BRICS members that an “objective, irreversible process of de-dollarization of our economic ties is gaining momentum.”
Despite the fanfare surrounding the event, the summit was mostly effective in highlighting the considerable divergence in views held by the current five BRICS members. This included on the issue of BRICS expansion, with members expressing varying opinions on nearly every proposed candidate. Reuters reported that debates about expansion were nearly stalled following Indian Prime Minister Narendra Modi’s reported proposal that inductees have a minimum GDP per capita and not be targeted by international sanctions. The latter condition would have excluded Iran, along with other possible future candidates, including Venezuela. In the end, the original five members agreed to more than double the number of bloc members.
Though of long-standing interest to the group, the currency matter is another apparent sticking point. Although all the BRICS members have expressed some degree of concern about overreliance on the dollar, India actively downplayed the prospect of a common currency. In an interview with CNBC, the country’s oil and gas minister said that international payment systems “have been in place for a long time” and that a process of de-dollarization is “not so easy.” South Africa also sidestepped discussion of the topic, noting that the prospect of a BRICS currency wasn’t on the agenda for the summit.
Largely Avoiding Ukraine
Then there’s Ukraine. Putin, who used the summit as a platform to defend his war, has achieved at least some degree of support within the BRICS for his views on Ukraine. The BRICS members are among those that have refrained from condemning Putin’s aggression. However, at the summit, Brazil, India, China, and South Africa preferred to emphasize their shared interest in “uniting and cooperating with other developing countries,” just as Chinese President Xi Jinping noted in a Xinhua report, rather than highlight their respective positions on the war. The BRICS declaration referred only briefly to the Ukraine “conflict” and members’ efforts to broker peace. In practice, even tacit support for Russia’s position has been costly for some BRICS members. Brazilian President Lula’s suggestion that both sides — Russia and Ukraine — were to blame for hostilities, in addition to some other, controversial statements about the war, have burned some diplomatic bridges for Brazil in Washington and elsewhere.
Indeed, the only obvious area of convergence among the BRICS nations, old and new, is an apparent interest in rethinking (if not entirely countering) Western (especially U.S.) economic and political dominance – although there, too, interests would appear to diverge somewhat. India is arguably just as concerned about China’s growing global influence, and the two countries’ ongoing territorial disputes, as it is about U.S. or dollar dominance. India is regarded as a somewhat reluctant member of the Quad strategic security dialogue (with the United States, Japan, and Australia), which China views as a mechanism to contain its global rise. But India isn’t always in sync with its fellow BRICS members, either, especially regarding the prospect of a China-led Global South. Then there are the newest BRICS invitees, which have dramatically different interests, world views, and degrees of dependence on the United States and China.
With all of this in mind, it is easy to be dismissive of BRICS plans and possibilities. A poorly articulated agenda, pronounced political and economic cleavages among key members, and economic uncertainties in member countries will no doubt limit the bloc’s capabilities. As U.S. National Security Advisor Jake Sullivan explained at a recent briefing, “This is a very diverse collection of countries … with differences of view on critical issues.” Indeed, for the time being, the Biden administration appears to be relatively unconcerned about BRICS or its ability to challenge the U.S.-led global order.
This makes sense, especially on the issue of de-dollarization. As economists Miguel Otero-Iglesias and Agustin Gonzalez-Agote recently wrote for my organization, the Inter-American Dialogue, “The dollar remains the preeminent global currency of choice across the three functions of money — as a medium of exchange, a unit of account, and a store of value.” Other currencies have been unable to diminish the dollar’s relative dominance. And in practice, structural limitations will continue to limit China’s ability to significantly challenge the dollar’s global position.
A Test of Resolve
Yet, despite the BRICS grouping’s limitations, the summit was notable — and attention-grabbing — for yet another reason. It was something of a litmus test of Global South resolve to measurably change the status quo. The BRICS members, and the more than 40 countries interested in joining them, have communicated deep and growing concerns about the nature of the global economic system and its political implications.
In the aftermath of the global financial crisis, there was consensus among many in Latin America and other regions that the dollar’s global dominance — and the U.S.-led global order, for that matter — had run their course. Those views are only intensifying, especially as China pushes that agenda, as it has since 2017 and even before. As the United States and its partners engage in a process of “de-risking” aimed at limiting economic linkages to China and Russia, some nations have sought to de-risk from the United States and its currency, even if the prospects for doing so are limited. Concerns are evident among U.S. allies, too, as the dollar is used to fight geopolitical battles.
For the time being, on the matter of de-dollarization, BRICS members would appear to be putting their currency where their mouth is, though still to a limited degree. Intra-bloc trade in BRICS member currencies has grown of late, though with China’s renminbi accounting for much of this activity. China continues to prioritize renminbi internationalization across the globe, whether by pushing for trade in its currency, negotiating currency swaps with BRICS and other Global South partners, or by issuing renminbi-denominated loans.
None of this poses an immediate threat to the efficacy of existing, Western-led configurations or dollar dominance, but the growing divide between the United States and its G7 partners and an increasingly China-led Global South is concerning, especially as the United States looks to compete more effectively with China in Latin America, Africa, the Pacific, and beyond.
This division will continue to intensify as China pursues de facto leadership of the Global South, propelled by developing country allies and increasingly limited access to Global North markets and institutions.