Rival emerges in uncertain times

08 December 2023

BRICS is an international organisation consisting of Brazil, Russia, India, China, and South Africa. It was formed as BRIC in 2010 but when South Africa officially joined earlier this year became BRICS.

At the BRICS summit in August 2023, it was announced that Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates had also been invited to join the organisation. Commentators started referring to the “BRICS Eleven” however Argentina has since declined. Membership of the other nations is due to take effect in January 2024. Fourteen other nations, mostly African and South American have also expressed interest in joining.

Brazil, Russia, India, and China are some of the ten largest countries by population, area, and GDP in the world and comprise 42% of the global population. The five BRICS states are members of the G20, with a combined GDP of nearly a third of the global GDP.

While the BRICS were originally brought together to promote investment, over the last decade they have transformed into a more geopolitical bloc, forming their own multilateral policies.

The BRICS group is now considered the main geopolitical rival to the G7 bloc of advanced nations. BRICS have developed their New Development Bank, operating parallel to the World Bank, and have also created the BRICS Contingent Reserve Arrangement which is now perceived as a competitor to the International Monetary Fund.

Then there is the BRICS Payment System, a concept initiated at the 2015 BRICS summit in Russia, a year after Russia invaded Crimea. The BRICS nations planned for a payment system that would be an alternative to the well-established SWIFT system. Russia proposed the main benefits as a backup in case of disruptions to the SWIFT system. Seven years later Russia was excluded from the SWIFT system as part of sanctions after invading Ukraine in 2022. China, India, Russia and Brazil have also launched their own alternatives to SWIFT.

The BRICS nations are now investigating the feasibility of a new BRICS common currency.

What is slowly emerging is an international BRICS economy running parallel to the established global economy, independent of the World Bank, IMF, SWIFT and the US Dollar.

For Australian farmers producing global commodities such as wheat, meat and wool the implications are complex and not yet fully understood. Will there be an exchange rate between the US Dollar and a BRICS currency? Will there be trade barriers between BRICS and non-BRICS countries?

In the meantime, we must go on producing food, fibre and pharmaceuticals that the world still wants.