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BRICS Nations Saga: What We Know So Far

BRICS Summit

Posted: August 30, 2023 at 12:08 pm   /   by   /   comments (0)

The BRICS group of major developing economies has announced the addition of six new members in an effort to restructure the global world order and create a counterbalance to the United States and its allies.

Iran, Saudi Arabia, Egypt, Argentina, the United Arab Emirates, and Ethiopia will join the existing five members, Brazil, Russia, India, China, and South Africa, as revealed during a conference in Johannesburg on Thursday.

The expansion was regarded as “historic” by China’s president, Xi Jinping. He has been a key proponent of new member admittance, portraying an expanded Brics as a means for the global south to have a bigger voice in global affairs.

Concerns About The New Members

A broader participation raises concerns about the cohesiveness and coherence of the BRICS, whose present members already vary greatly in terms of political systems, economic strength, and diplomatic aspirations.

“I am skeptical in terms of the effectiveness of the organization after the expansion and whether, in the end, the expansion is more symbolic than substantive,” said Yun Sun, head of the China program at the Stimson Center in Washington.

“The more members there are, the more interests the organization needs to reconcile and accommodate.”

This is especially true in a consensus-based organization like BRICS, where decisions are adopted only if all members agree.

The new members are a diverse group. Two of them are in serious economic trouble. Argentina, a serial defaulter with a lengthy history of inflation and currency problems, is the IMF’s largest borrower. Egypt is the IMF’s second biggest debtor while being in the midst of its own economic crisis.

Ethiopia, Africa’s second-most populous nation and formerly one of the fastest-growing economies on the continent, is recovering from the destruction of a two-year civil war in the country’s Tigray region, which concluded in December amid allegations of grave human rights violations.

BRICS Nations And Oil

The alliance now includes five of the top ten oil-producing nations, bolstering its financial and economic influence. Saudi Arabia, Russia, and Brazil are the second, third, and eighth largest oil production nations, respectively (the United States being first), with the UAE and Iran ranking seventh and ninth. The three West Asian nations are important OPEC members.

It remains to be seen how this will affect oil output and pricing in relation to demand. Since last year, it has been clear that Saudi Arabia has defied repeated US suggestions not to curtail output in order to mitigate the effect of sanctions on Moscow. Instead, Saudi Arabia has joined forces with Russia in OPEC+ to do just that to keep prices stable.

In July, the two nations agreed to further reduce output in order to raise prices, which have remained low owing to poor demand.

The West Asian presence in the BRICS puts OPEC’s top officials in the same room with major oil customers. Despite the world’s concerted effort to replace fossil fuels with renewables, hastened by Russia’s conflict in Ukraine, and despite China’s slowing economy, China and India will continue to be among the world’s major oil users for the foreseeable future.

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