How an ad hoc gaggle of countries turned themselves into global revolutionaries and why it might yet matter for the West.
One of the more remarkable developments over the last 25 years is that an investment banker’s arbitrary acronym for a quartet of emerging market economies has become the rubric for rebellion.
The BRICS countries—or BRICS+, since the original grouping of Brazil, Russia, India, China, and later South Africa has since further expanded to include four more members—are meeting this week for their headline summit in glitzy Kazan, Russia, on the banks of the Volga. On the agenda this year, the first full summit after the formal incorporation of Iran, Egypt, Ethiopia, and the United Arab Emirates into the bloc, will be the usual talk of creating a truly multipolar world order to challenge U.S. and Western hegemony. A big part of that, especially for sanctions-battered members such as Iran and Russia, will be efforts to come up with viable alternatives to the global dominance of the U.S. dollar.
The overarching question this year, 23 years after Goldman Sachs banker Jim O’Neill (now Lord O’Neill) invented the term “BRICs” as a nifty shorthand for what seemed like the economies of the future, is whether the increasingly disparate club can manage to craft an actual alternative to the Western-led international order or whether it will become just a fight club for wannabes.
“For Russia, it’s an important moment to show the West that it is not isolated, and it will be really interesting to see how far other countries are willing to go along with what Russia clearly wants—to make BRICS more clearly anti-Western than it currently is,” said Oliver Stuenkel, an expert on BRICS at the Getulio Vargas Foundation, a university and think tank in Brazil.
“Brazil and India clearly want to push back against that, so the Kazan summit will give us a really interesting sense of the true political dynamics in the global south between BRICS countries,” he said.
The expanded BRICS is indeed a diverse bunch. It includes a Marxist-Leninist superpower and a revanchist authoritarian state. It includes the world’s biggest democracy as well as Latin America’s largest. New members include countries under the U.S. security umbrella and countries under U.S. sanctions. Prospective members could even include NATO countries such as Turkey and global pariahs such as North Korea and Syria.
The West, when it pays attention to BRICS at all, tends to dismiss the grouping as an incoherent grab bag. But there is a common thread, as durable as that behind the Bandung Conference in 1955 that kick-started the global south’s efforts to create a brave new world.
Outside of Washington, and the G-7 and the European Union, it is hard to appreciate just how much resentment there is of Western hypocrisy and hegemony, all mortar helping to bond the loose membership of BRICS. That has become especially evident over issues such as the conflict in the Middle East, the hyperweaponization of U.S. sanctions, and the outsized cost for middle-income countries of the dollar’s exorbitant privilege.
“It is not a cohesive bloc, but it is a cohesive message, about the desire for an alternate global order, and it is coming from sizable economies,” said Asli Aydintasbas of the Brookings Institution.
It took eight years for the BRICS countries to turn their arbitrary acronym into a proper grouping and another six to start laying the foundations of an alternate global order. By 2015, the BRICS had a bank, called the New Development Bank (NDB), that was meant to offer an alternative to Western-dominated lenders such as the World Bank. It has sort of worked: The NDB expected to make loans worth about $8 billion to $10 billion last year, compared with the $73 billion doled out by the World Bank’s two financing vehicles. But while the “BRICS Bank” aims to increase non-dollar loans, it still collides with reality. The NDB had to suspend operations in Russia, a member state, because of U.S. sanctions on Moscow.
In the years since, though, member countries have also sewn invisible but hugely important ties through constant mid-level meetings to deepen relations on trade and investment, diplomacy, law, finance, and more. At heart is the idea that emerging economies can’t emerge unless they nudge the leviathan out of the sun.
The animating ideas behind BRICS—reformed global governance and greater political and financial sovereignty—are still today just broad enough to harbor the whole sprawling membership. (Though not always: Argentina was poised to join the club, until newly elected President Javier Milei, an advocate of deeper dollarization, nixed his country’s bid.)
All sorts of countries, especially those in BRICS that have bigger economic heft than geopolitical influence, want to see reforms to the way the world is run, meaning a revision to how the United Nations works, to quotas and leadership at multilateral financial institutions such as the World Bank and the International Monetary Fund (IMF), and to much more.
They all share, to a greater or lesser degree, a visceral reaffirmation of sovereignty as the organizing principle of international relations; they are more Westphalian than Borussia Dortmund. Western, especially U.S., meddling in areas such as human rights, the rule of law, domestic politics, and diplomacy rankles as much for being unwelcome as for being often hypocritical.
All share, more or less, an understandable desire to escape the tyranny of the dollar; even staunch U.S. allies outside of BRICS such as France and Germany have chafed at the manacles of the greenback.
And all of them, to different degrees, foresee a world in which a West in decline is no longer the only power in town, making it imperative to prepare for, if not hasten, what comes after. That’s even true for prospective members such as Turkey, which has spent the last two decades balancing the West against the rest.
“BRICS is popular because countries are hedging their bets for a post-American order,” Aydintasbas said. “BRICS is an insurance policy for many of these countries.”
The problem—and it’s an especially acute one for members such as Brazil and India, which see BRICS as the manifestation of their preference for a nonaligned foreign policy—is that the bloc is very much aligning in one direction. With the hardened anti-American stances of Russia and China now joined by the likes of Iran, the bloc is becoming less a club bracing for a post-American world and more a group seeking to accelerate it. That’s perhaps the bloc’s biggest fissure and one that may prove hard to bridge.
For its first decade-plus, BRICS lived in a world without an overt cold war. “Now, in a context of geopolitical tensions, countries have to consider if being part of BRICS has a cost, if that causes real friction in their relationship with the West,” Stuenkel said. “Russia along with China is deliberately trying to integrate BRICS into a Sino-Russian world order, part of a Sino-centric global structure.”
In a photo distributed by the Russian state-owned news agency Sputnik, Russian President Vladimir Putin addresses a BRICS parliamentary forum in St. Petersburg on July 11. Valery Sharifulin/AFP via Getty Images
BRICS has, since its inception, talked a lot more about creating a new global order than doing anything concrete to create one. One area in which the group, led by China, has been particularly active is money. Dethroning the dollar has been, and will remain, a central goal of BRICS; last year’s summit concluded with the explicit mission of drafting a blueprint to make that a reality.
BRICS members have different beefs with the centrality of the dollar, which serves to unify them for now but which also highlights the fissures just waiting to widen. For some, such as China, Russia, and Iran, an alternative to the dollar means a way to sanction-proof their economies. Russia and Iran are already under siege, and China has spent the last several years buttressing its financial ramparts. The West’s freezing, and potential seizure, of Russia’s overseas central bank holdings in early 2022 remains a searing and cautionary tale for countries that fear they could be next, even if they don’t seek to invade a sovereign neighbor.
Because the dollar remains the most used currency for cross-border trade, and the main currency in central bank vaults, and because U.S. banks ultimately take part in almost every dollar transaction, the reach of U.S. sanctions is global and crushing. Russia and China haven’t spent the last few years building alternatives to Western payment systems out of altruism. They are building escape pods.
The other BRICS members also bristle at the dollar’s dominance but not because they fear sanctions per se (though some, such as Ethiopia, do as well). What they worry about is that the dollar dominates their economic life and they have no say over it. Many are commodity exporters and have little choice but to trade in dollars, since commodity markets remain dollar-denominated. A shortage of dollars can paralyze trade and poleax public finances. All are exposed to the vagaries of U.S. Federal Reserve interest rate decisions that can make their money worth less, their inflation higher, their capital balances redlined, and their debt unsustainable.
The reality is that the dollar remains dominant. It has increased its share in cross-border transactions in recent years and remains the major (if declining) currency of choice for central banks. The Chinese renminbi has inched slightly higher in its share of cross-border trade, but that is mostly because China is such a big trading country and most of the currency’s trade involves Chinese counterparties either buying or selling; what makes the dollar’s resilient share remarkable is that it remains the currency of choice for third countries entirely removed from the United States. While Russia and China have taken steps to increase the use of the renminbi in their own growing cross-border trade, and China has signed a few token oil trades to be paid in yuan, those are hardly harbingers of a global currency.
“It’s easy to have complaints about the status quo paradigm, but it is harder to envision what a realistically attainable alternative would look like,” said Robert Greene, an expert at the Carnegie Endowment for International Peace and a vice president at Patomak Global Partners, a financial consultancy. “There is a difference between increased use of the renminbi for payments and actual de-dollarization.”
And there’s a related collision between the expansion of BRICS and the expansion of its ambitions to replace the dollar. Middling countries are actually more reliant on the U.S. dollar than larger economies such as China’s. For a whole host of countries, it is almost impossible to even trade currencies, let alone settle payments, without using the dollar as a go-between. The bigger BRICS gets, the stickier the dollar becomes for its own members.
Finally, there is a philosophical problem with the group’s efforts to coin an alternative to the dollar, when the only serious alternative on offer is the renminbi.
China has made great strides in technical areas such as increasing bilateral swap lines to make Chinese currency readily available to partner nations, and it has created a parallel payments system that could edge aside the Western-controlled SWIFT platform that oversees transactions between banks. China has even financed once prospective BRICS members such as Argentina with ample yuan to enable them to repay their dollar debts to organizations such as the IMF. All that goes some little way toward providing alternatives to the dollar, in some places and at some times.
But if the only way to dethrone the dollar, and thus neuter Washington, is to crown China the financial foreman of the world, that’s not creating a multipolar system. That’s just trading one master for another.
“Do we think that India is going to want a world where the renminbi is the dominant currency in Asia?” Greene asked.
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