A Challenging Power:

The BRICS (Brazil, Russia, India, China and South Africa) bloc is composed of emerging markets with major potential for industrial and economic growth which have cast themselves as an alternative to the G7. Since a four-country BRIC was first established in the early 2000s, the bloc has sought to improve their visibility to attract external investment to strengthen their economies. For example, BRICS has launched the New Development Bank (NDB) as an alternative to the IMF and World Bank.

Does BRICS pose a threat to the economic hegemony of the G7? This multifaceted question has generated intense debate in international politics, especially since Brazil is back in the international arena and is developing closer ties with China as well as within its own region.

BRICS offers an alternative bloc for emerging economies that perhaps have struggled with IMF’s structural adjustment and austerity programs. Furthermore, this bloc challenges the hegemony of the G7, offering commercial alternatives to create infrastructure for social, economic and environmental development. These strategies are attractive not only to the bloc, but also to other countries that might negotiate with them.

In 2021, Egypt, the United Arab Emirates, Bangladesh, and Uruguay acquired NDB stocks and invested in BRICS. In 2022 and 2023, Mexico, Argentina, Nigeria, and Algeria, among other countries, declared their intent to join the bloc. They hoped to change existing global structures and open the door to debate and reflection on the political, social, and economic challenges of development in emerging economies. In addition to economic cooperation, BRICS has discussed food insecurity, agriculture, technology, the environment, human rights, and safeguarding democracy.

Second, BRICS raises the question of China’s political-economic ascendance in the global order. This has generated certain tensions with the United States, which believes that the expansion of BRICS would allow China to gain greater diplomatic and commercial sway in Latin America. China has become the top exporter and the second largest importer in the world. Its primary commercial partners are the US, Germany, and Australia. As tensions have developed, China has been more willing to build ties within Latin America, especially given the region’s renewable energy potential.

Despite economic instability, Latin America has established itself as an attractive market for investment in technology and renewable products. This is why China has invested in the region, financing and coordinating solar and wind renewable energy development projects in countries including Uruguay, Chile, Argentina, Brazil, and Mexico.

China’s significant investments have promoted economic interdependence and closer commercial ties with Latin America. Furthermore, China has identified Brazil as a key ally in South America. Brazil is particularly crucial as a member of the South American trade bloc Mercosur, and is the most important country with regard to Chinese products reaching South American markets.

Furthermore, some have pointed out that a stronger BRICS could rescue Russia from the economic blockade imposed due to its war on Ukraine. In 2022, Putin stated that there was interest in redirecting commercial flows to the bloc. The countries in the bloc never took part in sanctions against Russia, due to economic interdependence with the latter. These existing economic ties included the export of Russian petroleum to China and India, dynamic growth of agricultural cooperation with Brazil, China, and India including the export of fertilizers, and the expansion of Russian information technology companies in India and South Africa.

Finally, BRICS has discussed creating an international payment mechanism using digital or physical currencies to reduce dependence on the US dollar.  This would provide the bloc with greater freedom in negotiations, strengthen its role as an alternative force in global commerce, and erode the dollar’s international economic hegemony. At the same time, some BRICS countries have also discussed carrying out financial transactions in bilateral accords in their own currencies. For example, Brazil and China want to create a development bank that could serve as a clearing house that accepts the currency of either country for business or loans. This would simplify financial transactions between these countries and remove US dollars from the equation.

As a result, the G7 countries see BRICS as an imminent threat, since it challenges G7 hegemony in international relations. The specter of growing Chinese and Russian power was of particular concern at the most recent G7 meeting on 19-21 May 2023. At that summit, global geopolitics, food insecurity, and even climate change were sidelined by a focus on continued economic sanctions against Russia and how to slow China’s political and economic expansion in regions of strategic economic importance for the G7.

Finally, even if the G7 views BRICS as a major threat to its hegemony, most countries in the latter bloc are not aiming to elbow out other strong global economies. Instead, BRICS seeks to expand its options for better commercial ties. The political-economic orientation of BRICS aligns with the national interests of its member states. It wants to maintain the flexibility to move between systems to allow for better commercial opportunity, technological exchange, and mutual support among partner countries through fostering a multilateral environment conducive to reforming global governance.