Dollar or Yen; Shifting Global Currents and the Rise of BRICS

Formed in 2006, BRICS is a powerful economic cooperation group comprising the biggest growing economies in the world. It was once speculated to dominate the global economy by 2050, surpassing the G7 in terms of GDP, according to a Goldman Sachs report in 2001. However, the growth of these economies started slowing down after the global financial crisis in 2008 and the oil price collapse in 2014. Russia, Brazil, and South Africa struggled economically as their total output grew 13%, 7%, and 12% respectively, not even one-fourth of their growth just more than a decade ago. Therefore, the once sought-after BRICS investment fund, or perhaps the statistic of the hype towards BRICS economies, has plunged by 21% in 5 years and has even been merged with the emerging markets equity fund. 

In the face of the bloc’s decline, the announcement of the entry of Egypt, Iran, Ethiopia, Saudi Arabia, and UAE will dynamically transform the economic and political power balance between the West and the Global South. For instance, Saudi Arabia’s entrance into BRICS arises from its increasingly west-independent foreign policies amidst the US-China power struggle. Even as the biggest US ally in the Middle East, Saudi Arabia’s decision shows BRICS’ ambition to become dominant in the global south. Iran has also maintained active diplomacy with Russia, exporting drones and missiles to the country for its ongoing war with Ukraine Scholars predict that Iran and Russia would maintain a much closer militaristic tie with Iran now joining BRICS.

Argentina’s approach, however, differed to the other new BRICS members. The South American country backed out of its entry after the populist right-wing President Javier Milei was elected in November of last year. Despite Milei’s clear intentions to utilize bilateral ties to China and the US, the president lashed out against Beijing’s communist regime, describing them as assassins and announcing his dissent against Argentina-China cooperation. 

BRICS has long since been a vessel of political alliance, and especially with the presence of two global powers–China and Russia–the bloc poses a strong appeal to developing countries.  New members of BRICS will benefit from having the support of  China and Russia, and the two superpowers will be realizing their ambition toward a regional hegemony. As such, concern surrounds Washington as the addition of new BRICS member states creates a stronger counterforce to the American power.  

Nonetheless, BRICS would provide positive opportunities for global cooperation. Countries that are willing to join have different backgrounds, history, economy, and culture. The United Arab Emirates, recently joined BRICS, promised publicly of investing in China for expanding its economic relationship to Asia. Consul general Saoud Ali al al-Mualla stated China and the United Arab Emirates want to expand cooperation through investments in the Pacific Islands and Africa. New countries' involvement in BRICS can allow many other countries to anticipate further economic cooperation between countries. 

This shift in economic relations of third-world countries from reliance on the West to emerging superpowers such as China and Russia signifies a trend toward multipolarity. In the face of changing geopolitical currents, countries must tread the waters carefully.