In 2001, a bold forecast from economist Jim O’Neill at Goldman Sachs set the stage for a shift in global economic power. He predicted four emerging markets—Brazil, Russia, India, and China—would dominate the world economy by 2050. This prediction materialized in the formation of the BRIC group, which later expanded to BRICS with the inclusion of South Africa in 2010. The aim was clear: to amplify the voice and influence of emerging economies on the global stage. Fast forward to today, and BRICS has taken another significant step with the introduction of BRICS+.
The Expansion of BRICS
In January, BRICS made a significant move by welcoming five new countries: Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. This expansion, doubling the bloc’s membership, extended its reach into North Africa and the Middle East, forming what is now known as BRICS+. This new coalition represents more than 45% of the world’s population and 28% of its GDP, encompassing some of the fastest-growing economies globally.
One of the most striking aspects of BRICS+ is its newfound dominance in the global oil market. With the inclusion of oil-rich Middle Eastern countries, BRICS+ now accounts for 44% of the world’s crude oil production, putting it in direct competition with the OPEC+ oil cartel. This development has significant implications for global energy markets and geopolitical dynamics.
The Strategic Concerns
The rapid growth and expansion of BRICS+ have sparked concerns, particularly among some US political conservatives. They warn that this economic bloc could threaten Western countries by creating its own reserve currency, establishing a united military, or leveraging collective bargaining to raise trade costs. However, the reality of BRICS+ is more complex and less threatening than it might initially appear.
While BRICS+ is a formidable economic alliance, it lacks the structural cohesion necessary for coordinated action against Western interests. The member countries cooperate to a certain extent but often have divergent political and economic interests. For instance, India and China, two of the largest members, are considered political adversaries. This lack of unity makes it unlikely that BRICS+ could form a common currency or establish cohesive trade agreements like those seen in the European Union or NAFTA.
The Real Impact of BRICS+
Despite its challenges, BRICS+ can potentially reshape global economic and geopolitical landscapes. Analysts express concerns that the alliance could empower potential Western adversaries, especially China and Iran. However, experts like George Monastiriakos of Geopolitical Monitor argue that BRICS+ is not a strategic threat to the US due to its internal structural challenges, ideological differences among its members, and economic weaknesses in some of its newest additions, such as Egypt.
These internal dynamics were highlighted when Javier Milei, the President of Argentina, withdrew from joining BRICS+ despite initial interest. This move underscores the complexities and potential instabilities within the alliance.
Looking Ahead
As BRICS+ continues to evolve, it will likely grow in membership and influence. The alliance’s ability to navigate its internal differences and leverage its collective strengths will determine its future impact on the global stage. Understanding the dynamics of BRICS+ is crucial for small business owners and entrepreneurs, as it could influence global markets, trade policies, and economic opportunities.
While BRICS+ is an emerging powerhouse with significant potential, it has challenges and limitations. Its impact on global economics and geopolitics will depend on how effectively it can unite its diverse members and navigate the complex international landscape. As always, staying informed and adaptable will be key for businesses aiming to thrive in this ever-changing global environment.