by Mario Lettieri and Paolo Raimondi * –
On January 1, six new countries (Iran, Egypt, Saudi Arabia, the United Arab Emirates, Ethiopia and the complicated Argentina) joined the Brics group. There are another 40 ready to join, half of which have already submitted the official request. Among these there are many African nations: Nigeria, Algeria, Tunisia, Kenya, Senegal. And many important Asian nations such as Indonesia, the Philippines, Vietnam, Pakistan, Kuwait and many in Latin America have requested membership. Turkey and Palestine would also like to join.
It’s not just about numbers. The prospect is the change in the global economic and financial model and its governance. In addition to accelerating the process of de-dollarization through the immediate use of local currencies in commercial relations, the growing group of countries will be dominant above all in the energy and raw materials sectors, starting with the so-called rare earths.
The shift towards de-dollarization is not only about diversification in the use of the currency in international trade, but of course also reflects changing geopolitical alignments. As the group gains more members and momentum, it is expected to usher in a new era of economic multipolarity, significantly changing the traditional political and financial power structures that have long dominated the world stage.
The Brics-11 population today represents 45.6% of the world’s population and 31.5% of the Earth’s surface. The enlarged group already accounts for almost 37% of global GDP. If GDP were calculated using the purchasing power parity (PPP) method, it would already surpass the G7.
Today, they represent 41-44% of global oil production and consumption, 36% of gas production and consumption, 70% of steel production and 65% of steel consumption, 44% of steel production of fertilizers and 46% of fertilizer consumption, 57% of food production and consumption, and 48% of automotive production.
The accession of Saudi Arabia, which is the world’s second largest oil producer and the largest player on the energy market with its 19% of global reserves, together with the UAE and Iran, the seventh and eighth largest producing countries respectively in the world, it would represent an important change on the energy front. Indeed, US government data also highlights that, after the recent expansion, the Brics’ share of global oil production has risen from 19% to 41%.
The projection of its weight does not stop only with new memberships. Through Egypt, the UAE and Saudi Arabia, the group will have expanded access to the Greater Arab Free Trade Area.
Furthermore, with the next accessions the BRICS influence would extend to other regional organizations such as Latin America’s Mercosur, the African Continental Free Trade Area, the Eurasian Economic Union and ASEAN. Unfortunately, the European Union appears very rigid towards the Brics. It resembles a closed market rather than an open one. In this way, Brics can be seen by other countries in the so-called Global South as an antidote to the systems of Western trading groups, where negotiations are measured over decades and political conditions are imposed in exchange for access to the Western market.
Many American experts have highlighted with concern that, with the future accession of Sudan, the Red Sea would be totally controlled by Brics member countries. Perhaps it is for this reason that, in response to threats of attacks by the Houthis of Yemen, the USA, with the support of other NATO countries, has preventively taken military control of the Red Sea, a hub of strategic and commercial importance and geopolitics.
As has already happened in the past, the European economy will unfortunately be the one to lose out. Therefore, the rigidity of the EU’s approach towards the Brics is not understood. There is no attempt to understand that the future of Europe also concerns dependence on raw materials, essential for the digital and environmental transition, whose production is concentrated in a few non-EU countries. Therefore, instead of regretting the great globalization, it would be better to take note of the evolution that the new Brics objectively brings to production chains, structures and commercial chains in the world.
