More bricks in the wall will make it bigger but less sturdy

What’s happened?

On August 24th in South Africa, the annual summit of the BRICS group (comprising Brazil, Russia, India, China and South Africa) accepted applications from six other countries—Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE—to become full members on January 1st 2024. EIU thinks the expansion of BRICS will potentially boost its geopolitical influence, but the group will become even more unwieldy and the direct economic impact will be small.

Why does it matter?

Already hampered by long-standing internal tensions (especially between China and India) and by the neutral reaction of BRICS members to the Russia-Ukraine war, the addition of six new countries risks generating more problems than solutions, and will make it harder to find consensus. Given that five of the six new entrants are autocracies, the democratic states in an expanded BRICS (Argentina, Brazil, India and South Africa) will be in a minority, while the addition of Iran, a close Russian ally that is similarly subject to US economic sanctions, will be problematic, aggravated by poor relations between Iran and the two new Arab members.

More positively, the expansion will give BRICS a timely boost after a long period of drift, and will add several key emerging markets, giving the organisation more balance. Argentina is a logical inclusion (and was Brazil’s main pick), and Egypt and Ethiopia—Africa’s second and third most populous countries—will give the continent a stronger voice. Saudi Arabia and the UAE will provide extra financial clout and are key oil producers (alongside Iran). Pre-summit reports pointed to a larger number of new BRICS applicants, but the details of the selection process are unclear.

In terms of headline figures, such as the percentage of global population, GDP and trade attributable to BRICS countries, the group is clearly influential, but this has little do with BRICS as an organisation, given its minimal direct impact on trade and investment flows, and its lack of formal structures (apart from the New Development Bank). The driving force behind BRICS is geopolitical rather than geoeconomic. Its main aim is to advance the cause of multilateralism by providing for an alternative forum for developing countries that lack strong voices in established institutions (such as the IMF, the G7 and the UN Security Council).

What next?

The BRICS group will not become a solid construction, regardless of how many bricks are added to the wall, and it will continue to face internal tensions and divisions. However, the expansion will bolster its geopolitical significance and its combined economic power, and the organisation will continue to evolve. The relatively trouble-free and productive BRICS summit will enhance South Africa’s standing without damaging its relations with key Western partners.