Beijing News reports:
The BRICS countries have decided not to admit any new countries as formal members this year. Russian President Vladimir Putin made it clear during his speech at the summit held in Kazan that the current list of nine formal members is sufficient, at least for now.
Is this surprising? Despite all the hype and earlier invitations, Saudi Arabia has formally rejected the proposal and has not even signed an agreement to become a partner country. Whether this will affect the close friendship between Putin and Saudi Crown Prince Mohammed bin Salman is yet to be observed.
The BRICS countries as a whole
Thirteen new countries are welcomed as official partners of the BRICS countries, having a seat at the negotiating table but not being recognized as formal member states. Algeria, Belarus, Bolivia, Cuba, Indonesia, Kazakhstan, Malaysia, Nigeria, Thailand, Turkey, Uganda, Uzbekistan, and Vietnam have all joined the ranks, aspiring to become potential members in the future.
Saudi Arabia not being on the official member and partner list? That’s the talk of the town. Despite expansion negotiations taking place in August 2023, Riyadh’s priorities seem to lie elsewhere as the Middle Eastern powerhouse did not sign the agreement.
But the BRICS countries won’t wait for anyone. They have enough momentum with the countries that have already joined, especially with the recent additions of Iran, Egypt, Ethiopia, and the United Arab Emirates, joining the initial five countries: Brazil, Russia, India, China, and South Africa.
This summit is not just an opportunity for these countries to take photos and shake hands. The focus is on money. The BRICS countries are vigorously promoting an alternative payment system that can bypass Western-controlled networks such as SWIFT.
Russia has been excluded from SWIFT since its invasion of Ukraine and now Putin is doubling down on supporting the establishment of a new cross-border payment system among the BRICS countries, allowing settlements in local currencies.
While Putin is playing the long game, this is also a diplomatic move. Despite being a NATO member, Turkish President Recep Tayyip Erdogan attended the meeting. He has long been interested in getting Turkey involved with the BRICS countries. Even UN Secretary-General Antonio Guterres was present.
The BRICS countries follow their own rules in the banking sector
So, what is the outcome here? The BRICS countries have been in existence since 2006, but progress has been slow. The New Development Bank (NDB) established by the BRICS countries is expected to provide around $5 billion in loans this year.
Yes, compared to the World Bank’s $72.8 billion, it’s only a small portion, but the momentum is there. The dollar won’t disappear tomorrow, but more and more countries see the BRICS countries as an insurance policy. They see a world where Western rules do not dominate.
However, as the BRICS countries grow larger, tensions between member states’ national interests are also intensifying. When you have countries like China and India, it’s difficult to get everyone to agree as they are not the best of friends.
The BRICS countries currently account for one-fifth of global trade. But does this mean they will overthrow the dollar? It won’t happen anytime soon.
Certainly, Putin is considering the establishment of a new payment system, but don’t expect the dollar to disappear from the global financial system due to some new initiatives. The United States remains the most powerful country on Earth.
The International Monetary Fund (IMF) is paying attention to the BRICS countries. Managing Director Kristalina Georgieva wants to know more. She says the idea is not new, but the devil is in the details. “We need more information to assess what is happening here.”
The BRICS Cross-Border Payment Initiative (BCBPI) can at least rival SWIFT on paper. But execution is where things may become complicated.
As the IMF focuses on restoring inflation rates to central bank targets and navigates a world of “low growth, high debt,” they are also paying attention to how the BRICS countries’ new initiatives are changing the landscape.
The Global Sovereign Debt Roundtable (GSDR) has been working to help countries restructure debt, and while progress has been made, there is still much work to be done.
