What did BRICS+ provide for emerging economies during its first post-expansion summit?

Analysis by: Asmaa Rafeat, researcher at the Egyptian Center for Strategic Studies.

Kazan, Russia, hosted the 16th BRICS Summit from October 22-24. It witnessed the participation of 32 countries, including newly inducted members joining as permanent members for the first time, including Egypt.

The summit was held under the theme ‘Fostering Multilateralism for a Fair and Just Global Development and Security.’

Discussions centered around three main pillars of cooperation: politics and security, economy and finance, and cultural and people-to-people relations. The summit holds particular significance as it takes place amid unfavorable global and regional circumstances that have impacted the global economy, especially emerging economies.

Given that BRICS is a bloc of emerging economies, a question arises: what has the BRICS summit offered to emerging economies?

 

A Summit amidst crises: Key takeaways from the 2024 BRICS Summit

The BRICS Plus summit convened amidst a world marked by inequality and a double standard in the way major powers address international crises.

The timing of the summit was a win for emerging nations, underscoring their ability to come together to discuss and address their shared challenges and assert their presence on the global stage.

With the intensification of the conflict in the Gaza Strip and its expansion towards Lebanese territories, the importance of the bloc in enhancing its geopolitical role in various regions of the world, particularly the Middle East, grows evident. The founding members have recognized the region’s significance and its impact on their economic interests, as it serves as a gateway to European and African markets.

Moreover, the desire of BRICS countries, especially China, to shift towards a multipolar world justifies the invitation extended to four out of six countries to join BRICS during last year’s summit.

The concluding statement of the summit called for the full implementation of UN Security Council resolutions.

The summit reaffirmed its support for full membership of the State of Palestine in the United Nations within a steadfast commitment to the two-state solution based on international law.

It commended the ongoing efforts of Egypt and Qatar, as well as other regional and international efforts, to achieve an immediate ceasefire, accelerate the delivery of humanitarian aid, and the withdrawal of Israel from the Gaza Strip.

The summit demanded that Israel immediately cease military operations in Lebanon, emphasizing the need to preserve Lebanon’s sovereignty and territorial integrity and to create the conditions necessary for a political and diplomatic solution to protect peace and stability in the Middle East, while stressing the importance of strict adherence to relevant UN Security Council resolutions.

On the economic front, the summit successfully positioned the bloc and its objectives in the right context, away from the excessive ambitions envisioned by some members and analysts since the announcement of the bloc’s expansion in August of the previous year.

This was evident in the economic discussions surrounding the launch of a unified BRICS currency, as Russian President Vladimir Putin – whose country is currently the biggest beneficiary of moving away from the dominance of the US dollar in international transactions – clarified that the launch of a unified currency for the bloc would not occur in the near future.

It is important to note the significant time required to achieve the bloc’s ambitious economic goals. This process involves the bloc progressing through various stages of economic integration until reaching the point of launching an official currency. This is evident when comparing the European experience, which took approximately 42 years from the formation of the European Coal and Steel Community, the initial nucleus of the European Union, until the launch of the unified European currency.

This was despite the geographical, cultural, and historical proximity of the European Union member states, a situation quite different from that of the BRICS bloc.

Additionally, the use of local currencies in intra-trade faces challenges, requiring a certain level of foreign exchange reserves of the currencies of all member states within each country’s foreign reserves. It is not feasible to propose any local currency as an alternative to the dollar, as this would require numerous financial and monetary reforms.

The following figure shows the proportion of different currencies in foreign exchange reserves, demonstrating the dollar’s continued dominance over the years.

 

Egypt and BRICS: Active Egyptian participation

President Abdel Fattah al-Sisi was eager to actively participate in this summit.

In his speech, he highlighted the importance of cooperation among developing countries to address current challenges, especially the crisis in the Middle East caused by the Israeli war on the Palestinian people, its extension to Lebanese territories, and its impact on navigation in the Gulf of Aden and the Red Sea, as well as on international trade and the stability of global supply chains.

The president emphasized the importance of maximizing the benefits of multilateral development banks to enhance access for developing countries to concessional financing, including climate finance.

He stressed the need for exchange of expertise among bloc members in various fields, as well as the implementation of joint projects for mutual benefit. He also emphasized the importance of continued cooperation and consultation among developing countries to ensure the effectiveness of the multilateral international system and collectively confront attempts to impose unilateral policies that harm the interests of developing countries.

To maximize Egypt’s benefits from membership in the bloc, we see the need to complete the structural reform path that the state has initiated, but whose pace has been affected by successive global crises.

These crises have increased the challenges facing the state, on one hand, and on the other hand, have highlighted the importance of completing the reform path, addressing the challenges of the production system, and undertaking a number of institutional reforms and integrating the informal sector into the formal sector.

All of this is a prerequisite for exploring increased export opportunities provided by joining the bloc.

These reforms will contribute to enhancing the state’s benefit, not only from the advantages offered by the BRICS bloc, but also enabling the state to benefit from the many opportunities provided by various trade agreements and regional and global blocs of which Egypt is already a member.

To achieve the goal of increasing Egyptian exports to the bloc’s member states in a way that achieves national objectives, it is necessary to analyze the structure of exports and imports between Egypt and the group’s countries. It is observed that there are a number of opportunities that enhance Egypt’s trade benefits, as the import structure of BRICS countries includes a number of goods in which Egypt has a comparative advantage, opening up new markets and greater opportunities for access to foreign markets.

Among the most important of these goods are mineral fuels and mineral oils, plastics and their products, electrical machinery and equipment and parts thereof, natural pearls and precious stones. After identifying the target list of goods, it is necessary to work on increasing Egypt’s production of these goods and improving their quality to enhance their competitiveness in foreign markets.

Among the most important opportunities to enhance Egypt’s benefits from its membership in the BRICS bloc is the diversification of funding sources and reducing pressure on the US dollar.

This can be achieved by taking advantage of the financing opportunities provided by the development bank in various development areas. It is essential to shift from loans and borrowing to partnership relationships and attracting capital, and providing opportunities for investment companies from the bloc countries to invest in the Egyptian market and direct them towards targeted sectors, especially infrastructure projects, the industrial sector, and technological fields, as well as transportation.

In addition, it is important to select successful development experiences implemented by the bloc’s countries for Egypt to enhance levels of growth and economic development.

The importance of Egypt’s commitment to adopting a clear vision towards the international system, adhering to a balanced relations approach with different powers, and moving away from the state of international polarization that has dominated global interactions, further evident since the outbreak of the Russian-Ukrainian conflict, and advocating for the importance of representing the demands of all countries equally.

Here, the bloc – through its members – must contribute to reintroducing the concept of global governance in a coherent form that supports clear values and imposes specific constants on assuming global leadership in light of the rapidly changing global developments.

This would thereby contribute to adopting balanced paths and moving countries away from the state of international polarization.

Finally, we should note that despite the bloc’s economic strength and position, it alone cannot guarantee the achievement of its economic goals.

On the contrary, the summit has successfully discussed a number of political issues and highlighted its dissenting opinion against the superpower, thus imposing the bloc’s weight on the global stage as a unique and different multilateral framework capable of overcoming the failures of the multilateral frameworks established by the circumstances of a geo-economic and geo-political reality that has been surpassed.

In addition to being a bridge between continents, through building a strong network of interests based on comprehensive development plans between emerging and developing powers in the Global South, enabling them to maneuver on the international stage and mobilize more firmly and stably supportive diplomatic positions.

 

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