S.Africa: BRICS 2023: BRICS Summit highlights – BRICS as a Russian, Anti-Western Alliance

(005320.38-:E-003569.93:N-HO:R-SU:C-30:V)   

[This is an analysis that was published by one of our bigger banks. When I look at BRICS and where it's going, I think the Russians will be driving it and trying to turn it into an anti-Western alliance. The next BRICS summit in 2024 will be in Russia. That is no doubt because of the threat of Putin's arrest. So nobody can arrest him in Russia. Jan]

BRICS Summit highlights

15th annual BRICS summit held in Johannesburg – wrap up.

The BRICS bloc held their 15th summit in Johannesburg for three days from 22 to 24 August 2023. The “BRICS and Africa” theme was centred around climate change, developing education and skills, unlocking the African continental free trade area, and empowerment of women.

The discussions focused on the progress that the BRICS bloc has made in terms of infrastructural development, educational development, increased trade and climate change. There was also a focus on improving supply chains, expanding the BRICS membership, and deepening the interaction of trade using local currencies.

It was announced that six countries will be joining the group from January 2024. These are Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates. Unfortunately, the criteria used to select these six countries has not yet been revealed, although President Cyril Ramaphosa indicated that the BRICS members have reached an agreement on the guiding principles, standards, criteria and procedures of the BRICS expansion process. The foreign ministers of the existing BRICS member countries have been tasked with further developing the BRICS partner country model, and a list of prospective partner countries will be prepared in time for the next BRICS summit.

There is no obvious overarching reason why the six countries were selected, although each of the existing members would have reasons to support some or all of the new members. For example, Brazil is Argentina’s largest trade partner, and the president of Brazil, Luiz Inácio Lula da Silva, stated that he is in favour of Argentina joining.

It is also noticeable that all of the six new countries’ largest import partner is China, with each country sourcing between 17% and 29% of their imports from China. There is also some meaningful trade between the 11 member states.

The six additional members represented 3.2% of world GDP in 2022, taking the total for the 11 BRICS members up to 29.2% of world GDP. This contribution to world GDP (which can be calculated in various ways, for example using purchasing power parity data) is based on nominal annual GDP per country, converted into dollars at the prevailing exchange rate in 2022, as calculated by the International Monetary Fund (IMF).

De-dollarisation
Members of BRICS spoke about de-dollarisation prior to the summit, leading to an array of questions and expectations ahead of the summit. However, no public discussions were held on the topic of de-dollarisation and most questions remain unanswered, although there were talks suggesting that each country should make greater use of their own currency when undertaking cross-border trade. This implies less use of the dollar in international trade, which raises numerous challenges for companies involved in foreign trade. Using the dollar for offshore receipts/payments is much easier, more efficient and less risky than most domestic currencies.

To conclude, the BRICS summit attracted a huge amount of media attention and is being viewed as the most important BRICS summit to date, largely due to the decision to expand the membership base. However, many questions remain unanswered including the criteria for membership, the role of the BRICS’ New Development Bank vs. the IMF/World Bank, the desire to establish a BRICS currency, etc.

The next BRICS summit will be held in Russia in October 2024. We will continue to monitor developments in the interim.