What all to know about Brics and why it matters

Over the last quarter-century, Brics , an acronym initially coined by a Goldman Sachs economist, has evolved from a grouping of emerging market economies into a potential challenger to the Western-led global order.

Driving the news

• Prime Minister Narendra Modi on Tuesday arrived in Kazan to attend the Brics summit.
• In a statement before his two-day visit to Kazan, Russia, to attend the 16th Brics summit, Modi highlighted the inclusivity and agenda for the global good that the expansion of Brics has brought with the addition of new members last year.
• "India values the close cooperation within Brics which has emerged as an important platform for dialogue and discussion on issues concerning the global developmental agenda, reformed multilateralism, climate change, economic cooperation, building resilient supply chains, promoting cultural and people to people connect, among others," Modi said in his departure statement.
• “The expansion of Brics with the addition of new members last year has added to its inclusivity and agenda for the global good,” the PM said.
• Modi is expected to hold a series of bilateral meetings, including with the Russian president and Chinese President Xi Jinping, on the sidelines of the summit.

Why it matters

• The Brics group, which originally consisted of Brazil, Russia, India, China, and South Africa, has expanded to include four new members: Egypt, Ethiopia, Iran, and the UAE.
• The key focus of this Brics summit in Kazan is to explore how Brics can continue to push for a multipolar world order—one that challenges the dominance of the US and the Western-led global financial system.
• Russia and China, the group's most assertive voices, are particularly interested in reducing dependence on the US dollar and reshaping global governance. This year’s summit marks a pivotal moment in determining whether Brics can translate its ambitions into a coherent and influential global movement.
• Brics represents a significant portion of the world’s population and economic output, with its members accounting for nearly 40% of the global population and around 25% of global GDP.
• With the inclusion of new members, Brics now covers some of the world’s largest energy producers (Iran and the UAE) as well as some of its fastest-growing developing economies (Egypt and Ethiopia).
• This geographical and economic diversity lends weight to Brics' push for reforms in global governance, especially in financial systems. If successful, Brics could substantially alter the balance of power, especially in global trade, development financing, and international diplomacy.

The big picture

• Brics, in its expanded form, is both an opportunity and a challenge for the global South. For countries like Brazil, India, and South Africa, Brics represents a platform to amplify their voices in global governance without necessarily severing ties with the West. These countries benefit from trade relationships with both the US and Europe, and they are not keen on burning bridges.
• However, for Russia and China, the bloc serves as a strategic tool to counterbalance US global influence. Both countries are increasingly positioning themselves as champions of a new world order that eschews Western political and economic hegemony.
• The addition of new members like Iran, a country under heavy US sanctions, is symbolic of Brics’ growing identity as a counterweight to Western pressure. Iran’s inclusion, along with the UAE’s, adds complexity to the group’s economic potential, particularly in energy markets. This could enable Brics to challenge the US dollar's dominance in global oil trade, a sector where transactions are traditionally conducted in dollars. Reducing reliance on the dollar in global trade is a central goal for the bloc, particularly for Russia and China, which face the brunt of Western sanctions.
• But the group’s ambitions to dethrone the dollar and create a multipolar financial system are fraught with challenges. The New Development Bank (NDB), created by Brics in 2015 as an alternative to the World Bank, has made some progress but remains dwarfed by its Western counterparts. As per a Foreign Policy report, the NDB’s total lending in 2022 was about $8 to $10 billion, compared to $73 billion by the World Bank. While Brics aims to increase the use of non-dollar currencies in international transactions, progress has been slow. The global financial system, with its deep-rooted reliance on the US dollar for cross-border trade and reserves, won't be easily overhauled.

Between the lines

• Despite its anti-Western rhetoric, Brics is far from a unified bloc. The group’s internal dynamics are complicated by the differing political and economic interests of its members. Russia and China are the most aggressive in pushing for an anti-Western agenda, especially after the fallout from Russia’s invasion of Ukraine and China’s deteriorating relations with the US. Both countries see Brics as a vehicle to reshape global governance in their favor.
• But countries like Brazil and India are more cautious. These nations still rely on strong economic ties with the West and are hesitant to turn Brics into a purely anti-Western bloc.
• The diversity of the new Brics members also raises questions about the group’s future direction. The UAE and Egypt are US allies in the Middle East, while Iran is a long-standing adversary of Washington. These geopolitical contradictions could make it difficult for Brics to maintain a cohesive agenda. As Asli Aydintasbas of the Brookings Institution points out, “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.”

What they’re saying

• Analysts have mixed views on whether Brics can effectively challenge the West.
• Robert Greene, an expert at the Carnegie Endowment for International Peace, told Foreign Policy that while there is growing discontent with the current global order, Brics is unlikely to dislodge the US dollar any time soon. “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,” Greene says.
• According to Oliver Stuenkel, a Brics expert, "For Russia, it’s an important moment to show the West that it is not isolated." “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,” Stuenkel told Foreign Policy.
• Others, like Aydintasbas, believe that Brics is more about hedging against future uncertainties rather than presenting an immediate challenge. “Brics is popular because countries are hedging their bets for a post-American order,” she told the Foreign Policy. “Brics is an insurance policy for many of these countries.”
• For nations like India and Brazil, the group provides a forum for advancing their interests without having to choose sides in a new Cold War-like rivalry between the US and China.

What’s next

• The Kazan summit will be a key moment for Brics to demonstrate whether it can move beyond rhetoric and implement tangible changes in global governance. Russia and China are likely to push for a more assertive stance, including efforts to further reduce the role of the US dollar in international trade. However, this ambition may face resistance from within the bloc, as countries like India and Brazil remain cautious about antagonizing the West.
• The challenge for Brics will be to balance these differing national interests while presenting a united front.
• Additionally, the group’s expanded membership could lead to greater influence in international organizations like the United Nations and the IMF. By coordinating their positions, Brics members could exert more pressure for reforms that give emerging economies a greater say in global decision-making. However, whether these efforts will result in meaningful change remains to be seen.

(With inputs from agencies)