Review of World Affairs

• The BRICS Paradox: Expanding Influence but Patchwork Progress

By Shashi P.B.B. Malla

The BRICS Phenomenon

Even as internal divisions and absent leaders hung over proceedings, last week’s BRICS summit in Rio de Janeiro, Brazil delivered an unmistakable message: the world’s emergent economies are intent on shaping their own destiny, seeking consensus where once there was only Western dominance (South China Morning Post/SCMP, July 10).

In a joint declaration adopted last Sunday, BRICS leaders warned of the threat posed to the global economy by the “indiscriminate” use of tariffs and “proliferation of trade-restrictive actions” – thinly veiled references to US President Donald Trump’s signature trade policy while also condemning the recent American and Israeli military strikes on Iran.

The 10-member bloc – which includes founders such as Brazil, Russia, India and China [ South Africa was requested to join almost immediately ], as well as newer entrants like Iran, Egypt and Indonesia – today represents nearly half the world’s population and accounts for roughly 40 % percent of global economic output.

Conceived two decades ago as a forum for rapidly expanding economies, BRICS has evolved into what many now view as a Chinese-led counterweight to the Western order.

Observers point to Sunday’s joint declaration as evidence that BRICS could yet become “an alternative structure to a US-led world order,” cautioning that the group’s growing diversity is also its greatest challenge.

“The test is whether the grouping agrees on much more than it disagrees when it comes to items on its agenda,” said Sarang Shidore, director of the Global South programme at the Quincy Institute, a Washington-based think tank.

Shidore said Brazil had shown considerable diplomatic skill in helping to forge consensus on both the bloc’s condemnation of attacks on Iran and the summit’s final communique, even as BRICS rapid expansion had brought with it internal differences (SCMP).

One of the bloc’s most delicate compromises emerged in its call for a peaceful two-state solution to the Israel-Palestine conflict.

While Iran has long maintained that Israel should be destroyed, an Iranian diplomatic source quoted by Agence France Presse (AFP) said that Tehran’s “reservations” had been relayed to Brazil, but it stopped short of rejecting the joint statement.

To be taken seriously, BRICS must move beyond rhetoric, strengthen its internal cohesion and deliver “tangible external impact”, according to Michaela Papa, principal research scientist at the MIT Centre for International Studies.

“Some leaders were absent or unwilling to attend the summit [Xi, Putin, Sisi], she told This Week in Asia, highlighting persistent divisions over issues such as reform of the UN Security Council and inconsistent mutual support during crises.

“Nonetheless, Papa credits the bloc with building consensus on development finance, global health, the climate and artificial intelligence: “areas where the Trump administration’s multilateral engagement has waned.”

“If BRICS can step up, its credibility will grow,” Papa said.

‘A Russo-Chinese Duopoly’?

Chinese President Xi Jinping was conspicuous by his absence from this year’s BRICS summit – the first time he has missed since assuming power more than a decade ago – with Premier Li Qiang attending instead.

Russian President Vladimir Putin, facing an International Criminal Court warrant over the 2022 invasion of Ukraine, was also notably absent.

As a signatory to the Rome Statute, host nation Brazil would have been obliged to carry out an arrest.

Despite these absences and differences of opinion, BRICS’ influence continues to spread.

“BRICS is emerging as the most important hook for alternative structure to the US-led order – not anti-American, but nevertheless engaged in issue areas where the US is increasingly absent,” Shidore said, pointing to development finance, defending the multilateral trading order and expanding access to health and climate solutions.

But the group’s concrete achievements are modest, largely centred on the New Development Bank, which funds infrastructure and sustainab;e development across the Global South.

“A grouping as heterogeneous [as BRICS] will need more time and a sharper focus to expand its delivery of solutions in an increasingly fragmented world,” Shidore added.

The creation of a BRICS “guarantee fund” to lower financing costs and attract more private capital to key development projects – which is reportedly in the works — would demonstrate “the kind of quick, problem-solving follow-through that many emerging economies increasingly find missing in G 7 or NATO processes,” said Jamil Ghani, a doctoral candidate at Singapore’s S. Rajaratnam School of International Studies whose research interests include foreign policy.

Yet calls for more inclusive governance persist.

Brazil has urged the New Development Bank to broaden its rotating presidency beyond the five founding BRICS members – a move Jamil said would “help dispel the perception of a Russo-Chinese duopoly and make BRICS more attractive to ASEAN partners.”

So long as BRICS pursues de-dollarisation, it will remain on Trump’s radar.

The US is also stepping up the pressure.

Earlier this week, Trump threatened that any nation pursuing “anti-American policies” with BRICS would face a 10 % percent tariff on exports to the US – the first time an American president has explicitly targeted BRICS as a bloc.

“So long as BRICS pursues de-dolarisation, it will remain on his radar,” Papa said, referring to the group’s ambition to insulate its economies from Western sanctions and trade wars.

Ghani said Trump’s threat was likely to force newer BRICS members such as Indonesia, Egypt and the UAE to weigh the benefits of economic diversification against the risks to US market access.

The likely result, he predicts, will be a patchwork of subgroups within BRICS – advancing at different speeds on issues such as e-customs, local-currency settlements and AI standards – rather than a united front.

Trump is threatening tariffs on BRICS as a whole.

What’s got him so worried?

As US President Donald Trump wages a trade war across the globe, a new target has come into his line of fire: the BRICS group of emerging major economies (CNN Business/Simone McCarthy, July 10).

Trump in recent days has threatened members of the China- and Russia-backed club with 10 % percent extra tariffs on goods imported to the US – in addition to heightened tariffs already looming for some of them.

“Any country aligning themselves with the Anti-American policies of BRICS” will face those duties with “no exceptions,” Trump wrote on his social media platform Truth Social last Sunday, as leaders from the group met for an annual summit in Rio de Janeiro.

Days later, he went further, suggesting he wants to break up the group.

“If they’re a member of BRICS, they are going to have to pay a 10 % percent tariff, just for that one thing – and they won’t be a member long,” Trump said during a cabinet meeting.

Trump’s focus on BRICS comes at a time when the club appears to be ascendant.

Eponymous members Brazil, Russia, India, China and South Africa have since last year expanded their grouping to include Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates (UAE) – and more countries are waiting in the wings to join.

It’s not clear if Saudi Arabia has accepted an invitation to join.

It also turns up the international spotlight on the group, which roughly serves as the Global South’s answare er to the US-led Group of Seven – G 7 – advanced economies,  

but is often dismissed by experts as comprising nations 

too politically and ideologically disparate to be effective.

That raises the question of just what Trump is so concerned about as he eyes BRICS warily from Washington.

Does BRICS want to ‘degenerate’ the US Dollar?

In his railings against the group, Trump has homed in one area he sees as a specific threat: the US currency, the Dollar.

“BRICS was set up to hurt us, BRICS was set up to degenerate our dollar and take our dollar, take it off as the standard,” Trump said during the cabinet meeting last Tuesday.

It’s not the first time he’s said something like this. In November, as president-elect, Trump threatened he would put “100 % percent” tariffs on BRICS countries unless they committed to never create “a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar.”

He reiterated the threat against “seemingly hostile” BRICS countries earlier this year.

The lofty goal of a “BRICS currency” was floated by Brazil’s President Luiz Inacio Lula da Silva back in 2023, but the proposition, so complex it may be practically impossible – has not been a focus of the body.

Expanding trade in national currencies

BRICS countries are, however, interested in expanding trade in their national currencies, rather than relying on the US dollar – an aim that, if successful, could reduce the dollar dependence of a significant chunk of the global economy.

By some estimates, BRICS members account for more than a third of global GDP based on purchasing power parity.

Currently, the size of the US economy and the stability of the dollar have made the greenback the lifeblood of global finance and a significant factor in American global power.

In a joint declaration released during their summit Sunday, the group of BRICS leaders backed ongoing discussions of a “cross-border payments initiative” between member countries.

Analysts say that such a system, if developed, could potentially become an alternative to the Western SWIFT inter-bank network, using BRICS countries’ currencies or their digital equivalents.

Bypassing SWIFT and a dollar-denomination trade system has obvious benefits for certain BRICS countries, such as Russia and Iran, as it could allow them to circumvent heavy Western sanctions.

But other countries also see a benefit in not relying on the US dollar for trade.

China has long looked to make its renminbi an international currency and chip away at what it’s called US “financial hegemony”.

In comments last month at a financial forum in Shanghai, the head of China’s central bank Pan Gongsheng called for the development of a “multi-polar international monetary system” or one in which no single currency is dominant.

But even with the will, reaching that point would be no quick transition – and there are likely many different views and competing interests within BRICS on how to get it done, not to mention technical challenges.

Brazil’s Lula on Monday alluded to that when he repeated his view that global trade needs alternatives to the US dollar, but added that this would be something that “happens gradually” and “carefully”.

Outrage in Brazil as Trump threatens tariffs of 50 % percent

US President Donald Trump plans to impose hefty tariffs to punish Brazil for what he calls a political “witch hunt” against authoritarian former President Jair Bolsonaro.

The threat sparked outrage in the South American nation, partly because of economic fallout, but also for another reason: Trump linked his move to the ongoing trial of Jair Bolsonaro, Brazil’s president from 2019 to 2023, on charges of forming a criminal organization to stage a coup.

On January 8, 2023, about a week after President Luiz Inacio Lula da Silva took office, Bolsonaro supporters stormed Congress, the seat of government, and the Supreme Court in the capital, Brasilia, vandalizing both buildings.

To this day, Bolsonaro refuses to acknowledge Lula’s win.

The US president has used tariffs as a political tool in other cases.

In this case, Trump’s tariffs are mainly about a domestic Brazilian issue, irking many in Brazil.

“It is unacceptable and quite an affront for one country to try to interfere in the politics of another country in this way,” the Brazilian political scientist and international relations expert Leonardo Paz Neves told Deutsche Welle (July 11).

“Brazil is a sovereign country with independent institutions that will not be told what to do by anyone,” Lula wrote on X.

The writer can be reached at:

shashimalla125@gmail.com