Charged Affairs

By: LeAnn Glover | Rising Expert for Africa | February 13, 2024 | Photo Credit: iStock

In the ever-changing world of international economics, Brazil, Russia, India, China, and South Africa (BRICS) have emerged as a transformative force with the potential to reshape global financial dynamics and challenge the dominance of the US dollar. Comprising Brazil, Russia, India, China, and South Africa, BRICS represents over 40% of the world’s population and nearly a quarter of global GDP. The global community, and the US in particular, should be aware of the multifaceted influence of BRICS, its impact on the US dollar, and its expansionary trajectory, in addition to South Africa’s notable gains from its BRICS’ membership. This can help inform strategic considerations for the United States in regards to the bloc.

The Evolution of BRICS and its Benefit to South Africa 

Since its inception in 2001, BRICS has evolved into a pivotal force in the global economy, fostering mutual cooperation, trade, and investment among its members. For example, it established the New Development Bank (NDB) to finance infrastructure and sustainable development projects in emerging economies. Its aim is to simplify trade procedures by reducing trade barriers and enhancing trade facilitation measures. 

For South Africa, joining BRICS in 2010 was a watershed moment that redefined its role on the global stage. BRICS provided the country with access to an influential platform for economic, political, and diplomatic engagement with emerging markets, allowing it to participate in important discussions and decisions that shape the international economic landscape. As the smallest economy within the alliance, South Africa gained access to BRICS’ own massive markets, which led to trade diversification and investment opportunities, increased exports, and foreign direct investments from BRICS member countries. Additionally, South Africa has benefited from the transfer of knowledge and best practices from fellow member nations. For example, it has gained insights into successful development models, infrastructure development, and technological advancements that have been instrumental in addressing its own development challenges. The country has leveraged its membership in BRICS to garner support for its development initiatives, such as transportation networks and energy projects, through collaborative efforts within the alliance.

Challenges that BRICS Poses to the US and the Existing Economic Order 

BRICS has positioned itself as a counterbalance to the United States economic order, asserting more geopolitical and economic influence. The question arises of whether it should expand its membership to new entrants such as Mexico, Indonesia, and Turkey, as well as resource-rich African countries such as Democratic Republic of Congo (DRC). However, expansion necessitates careful consideration to maintain cohesion and prevent dilution of the alliance’s core objectives. New members could bring fresh perspectives, additional resources, and new markets to the table, but they could also complicate the decision-making processes. The United States must stay vigilant about the evolving dynamics within BRICS and adapt its approach accordingly. 

One of the most significant implications of BRICS’ rise is its potential to challenge the long-standing dominance of the US dollar as the world’s primary reserve and reference currency. The alliance has been actively exploring alternatives to dollar-denominated transactions, gradually reducing dependence on the dollar. Russia and China have led efforts to safeguard their interests, promoting the use of local currencies for international trade and finance. This shift could recalibrate global financial power dynamics, leading to increased geopolitical and economic competition and affecting the US’ bilateral relations with countries seeking to join BRICS. 

How Can the US Respond to the Rise of BRICS?

The United States finds itself at a crossroads, facing the dual challenge of responding to BRICS’ ascent and potential expansion. It should continuously monitor the economic and trade policies of BRICS member countries to identify any shifts or developments that may impact global trade dynamics, particularly in regions of strategic interest, and its position in the international economic landscape.

A strategic approach for the US involves recognizing BRICS as a legitimate entity with growing influence and focusing on constructive engagement. Rather than resorting to a confrontational stance, the United States could utilize its soft power to encourage dialogue, cooperation, and adherence to global norms and regulations. Collaboration with BRICS on issues like climate change, global health, and economic stability can foster a sense of shared responsibility, demonstrating leadership while avoiding unnecessary rivalry. The US can develop a BRICS-focused foreign policy, deepen cooperation with specific BRICS countries, and engage proactively with countries seeking to join BRICS, offering strategic partnerships and support to counterbalance BRICS’ influence. The US should meanwhile strengthen trade partnerships with other nations and regional blocs to diversify trade relations and reduce dependency on any single trade alliance. Investing in technological advancements and innovation is also crucial to maintaining competitiveness in key industries and capitalizing on emerging opportunities.

BRICS in a Multipolar Future 

BRICS has transcended its acronym status to become a formidable force shaping global economic and geopolitical landscapes. Its potential to impact the US dollar’s dominance, its expansionary ambitions, and its role as a platform for economic development and cooperation cannot be ignored. As the world navigates a multipolar future, a nuanced approach that balances recognition of BRICS’ achievements while safeguarding global stability is essential. The United States, South Africa, and the world at large stand at a critical juncture – one that requires astute diplomacy, cooperation, and vision to harness the transformative potential of BRICS.

LeAnn Glover (she/her) is YPFP’s Rising Expert for Africa. She is a Project Assistant based in Washington, D.C, where she works mainly on locally-led development, human rights, climate change, and African development.