By Mikael-Benedict Worku – Contributor

South Africa hosted the annual BRICS summit in Johannesburg late August, where five influential emerging economies agreed on membership expansion and considered a shared currency. BRICS, consisting of Brazil, Russia, India, China and South Africa, planned a major expansion of their membership starting in 2024. They agreed to include Iran, Saudi Arabia, the UAE, Argentina, Egypt and Ethiopia. This decision will expand the bloc from its five to 11 members, significantly increasing the grouping’s economic and geopolitical influence. 

Many of the new members have criticized the current world order. Their addition aligns with BRICS’ vision of providing a greater voice for emerging economies and reforming institutions like the United Nations and the International Monetary Fund. The expansion also shows growing cooperation between Russia and China, as they bring together rivals like Iran and Saudi Arabia. 

The Johannesburg summit highlighted countries’ frustrations about Western power in global politics. The BRICS members desire for a greater say in international affairs. Their planned membership enlargement represents an important milestone for BRICS as it seeks to solidify itself as a counterweight to Western dominance in global governance. However, a global shift to multilateral blocs like BRICS could risk impeding cooperation on shared threats. 

At the recent BRICS summit, Brazilian President Lula da Silva floated the idea of creating a common currency for the BRICS bloc to conduct trade and investment, reducing reliance on the US dollar. However, this proposal was not formally on the summit agenda and experts point to major practical difficulties in actually adopting a shared currency. BRICS economies have very different fiscal policies, banking systems, levels of development and trade imbalances, with China dominating intra-BRICS trade. Both Russia and China expressed support for trading more in national currencies, but India and Brazil have closer Western ties, making consensus uncertain. 

The motivation behind the proposed currency is BRICS countries’ interest in circumventing the power of the US dollar and Western financial systems, whose sanctions have strongly impacted Russia. However, the US dollar remains the dominant global reserve currency today, so displacing it would require major coordination and alignment between BRICS economies. While the proposed currency signals the bloc’s growing economic ambitions and desire to reshape global finance, the obstacles to adoption are still immense. 

If the BRICS did adopt a shared currency, it could gradually erode US financial dominance over time. However, its implications depend on how the idea develops going forward and whether the BRICS can overcome divisions to implement it. For now, the currency remains just a proposal without a formal plan. 

The expansion of BRICS to include major developing economies like Saudi Arabia, the UAE, Argentina and Egypt grows the bloc’s economic and geopolitical influence. It supports BRICS’ ambition to reform international institutions to better represent the Global South. But, larger and more diverse membership means competing agendas that could make achieving consensus more difficult. Bringing together rivals like Iran and Saudi Arabia could introduce tensions between pro-West and anti-West factions within BRICS. For Russia and China, the expansion allows them to extend influence through ties with Middle Eastern states, countering US power. 

The changes underscore that the West must reform international institutions and share power more equitably, or lose influence as developing nations turn to alternatives.