Lack of Shared Interests
India, the world’s most populous country as of July 2023, is in a border dispute with China, which resulted in minor military clashes in 2020 and 2022. China’s naval activities in the Indian Ocean led India to strengthen defense ties with the United States, Australia, and Japan through the Quadrilateral Security Dialogue (QSD). Just days after the BRICS summit, in a move that jeopardizes meaningful cooperation for global peace and economic development, China’s Ministry of Natural Resources released a new version of its national map that lays claim to Indian and Russian territory. India promptly lodged a diplomatic complaint.
Dedollarization
There have been discussions of creating a BRICS currency, which proponents believe could unseat the US dollar. Replacing the dollar in trade, however, would be problematic: because it is liquid and freely convertible, the dollar is widely used in trade, many oil-producing nations peg their currencies to it, and it is the preferred currency for foreign reserves. In general, not even BRICS nations want to hold BRICS currencies as reserves. The only BRICS currency used in global reserves is the Chinese yuan, making up a record low of about 2.5 percent. Replacing the dollar with a BRICS currency was not even on the agenda of the most recent BRICS summit.
Lack of Institutions
The only BRICS institution in existence is the New Development Bank (NDB), which until recently was an exclusively US-dollar bank. Backed and largely funded by China, it provides loans similar to those provided by China through the Asian Infrastructure Investment Bank and the Belt and Road Initiative. In 2016, the NDB started structuring some loans in the currencies of other BRICS countries; but given the low convertibility and high instability of member currencies, its working currency remains the US dollar. At the most recent BRICS summit, stabilizing member currencies was a higher priority on the agenda than dedollarization.
Eschewing the US-Led Global Economy
The size and health of BRICS economies varies dramatically. Argentina’s inflation, meanwhile, has risen above 100 percent. Ethiopia, despite rapid GDP growth, remains one of the poorest countries in Africa, with a GDP per capita of just over $1,000 per year. Arguably, the BRICS nations with the most global power and influence in politics and diplomacy are China and Russia. But since the beginning of the war in Ukraine, Russia’s economy has been deteriorating and now faces dwindling foreign currency reserves and economic sanctions. The USI stated that China was trying to build its own influence through BRICS as it has done through other groups, such as the Shanghai Cooperation Organization and the Belt and Road Initiative.
Controlling Minerals and Oil
With its inclusion, Saudi Arabia, the largest exporter of crude oil, will join China, the largest importer of oil, in an economic coalition that will account for 42 percent of global oil production. Expansion of membership also places several OPEC+ members in the grouping. There are suggestions that BRICS will somehow benefit from the sale of oil, but the OPEC+ members of BRICS have not announced that they will leave OPEC, which still controls the quantity and price of oil. Furthermore, the group’s official opposition to artificial trade restrictions would make it impossible to control commodity prices. The Johannesburg II Declaration, issued by BRICS, states clearly that they “oppose trade barriers” and blames global economic decline on ”trade fragmentation.”
In the end, many of the group’s goals, such as dedollarization or regulating the price and quantity of oil and minerals, seem unlikely or impossible. Meanwhile, the goal of escaping US hegemony, if achieved, could just lead to Chinese hegemony. However, the biggest contradiction of the BRICS agenda is revealed in Xi Jinping’s closing speech when he advises the BRICS nations to avoid hegemony, bloc-building, and sleepwalking into a ”new Cold War”—given that his vision for BRICS is to build and dominate a large bloc to counter the US and the G7.
https://mises.org/wire/assessing-brics-expansion-debunking-expectations
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