In the past few days, news has spread about the desire of many countries to join the BRICS, an international cooperative composed of five emerging economies, including Brazil, Russia, India, China, and South Africa. More than 40 countries have expressed their interest in joining the group, according to South Africa, the host country of the 15th BRICS Summit, which is scheduled to be held in Johannesburg from Aug. 22 to 24.
The growing number of countries that would like to join the group shows the increasing influence of the BRICS bloc. Why are more and more countries becoming interested in joining the group?
First, they are looking to overcome U.S. hegemony over global financial institutions. For example, the International Monetary Fund does not grant loans to developing countries for free but only after conducting negotiations related to the devaluation of the currencies of those countries in favor of the dollar and the exit of the governments of those countries from the economy, i.e., via the sale of state-owned companies, the reduction of energy subsidies, and a decrease in spending in general. Currencies that don't provide any real way for the economy to grow or obtain foreign currencies is a means to impoverish people and increase pressure on them in favor of foreign investors, as well as a way to sell assets that deprive countries of their economic capabilities and potentially allowing other investors to prey on the people. This vicious circle represents the desire of the United States to control developing countries. These loans come with high interest rates and non-facilitated payment terms, which places pressure on the countries that are most in need of financing their imports or national projects.
Second, developing economies have to discover solutions when facing inflation due to the exit of the dollar from their countries to the United States after increasing interest rates. They must often do this with little warning and without the coordination of any international financial institutions or economic groups, although the dollar and the decisions of the U.S. Treasury affect all central banks in the world.
In fact, the United States does not study the impact of its interest rate decisions on the rest of the world, especially on developing countries. The U.S. only cares about its own interests rather than the harmful effects of its monetary and financial policies on other economies, despite it owning the monetary reserves of all central banks. In addition, it represents the global currency for commercial exchange, which the countries of the world need for their foreign trade and for payment of their financial obligations.
Furthermore, the U.S.'s unilateral sanctions pose a threat to many countries, as they could put countries under great pressure and destroy them. The world has watched for decades how the U.S. uses the dollar as a weapon against countries that oppose its policies and interests. Many countries have suffered from these sanctions, including Iran, Cuba, Venezuela, and Sudan, which have caused catastrophic harm to their peoples and economies as a whole. Countries or companies that try to deal with the countries that have been sanctioned may also suffer sanctions. As such, the U.S. puts these countries in permanent economic and political blockades.
The BRICS members account for one-third of the global economic output, with their combined output being higher than that of the G7 economies. The group also represents over 40% of the world's population and nearly 30% of the global landmass. The rapid growth rates and experiences of BRICS members, especially China, offer other countries economic opportunities. Trade exchange with these countries in local currencies represents a quick and effective solution to the problem of dollar scarcity. The presence of the new development bank and its availability to finance without unfair conditions or high interest rates provides an important option for countries that have suffered or are suffering from acute shortages of financing and its high costs. As such, joining the BRICS could get support for development due to the great economic, technological, and financial capabilities within the BRICS group.
The world is no longer as it was, unipolar-centric around one country. Many countries have the need to make their voice heard by the world. They have independent policies and growing economies. Therefore, they aspire to a position in global organizations that resembles and manifests itself in this development. Joining the BRICS is one start to this solution. I believe that the upcoming BRICS Summit will achieve outcomes that support the coordinated development of the world.
The author is an economist at the Egyptian Ministry of Foreign Trade and Industry.