Brick by BRICS: Russia hosts expanded membership at Kazan summit

One of the world’s largest economic blocs, BRICS+, gathered in the Russian city of Kazan from October 22nd to 24th. The meeting saw the group’s core membership —Brazil, Russia, India, China, and South Africa — welcome four new members: Egypt, Ethiopia, Iran, and the United Arab Emirates (UAE). 

The BRICS+ meeting is a challenge to the attempts of Western powers to isolate Russian President Vladimir Putin over the war in Ukraine. No matter how bruised and battered by sanctions and the invasion of Ukraine grinding into its third year, Putin remains a  significant ‘revisionist’ player in the informal organization seeking to shape the emergent multipolar world. Putin’s presence flouts the desires of powers like the U.S. and signals BRICS+ as an independent, if not altogether coherent, alternative to the likes of other Informals, the G7 and even possibly the G20.

The BRICS+ gathering in Kazan granted Putin an opportunity to appear with other world leaders after Russia’s prolonged absence from international fora resulting from its invasion of Ukraine. But what would appear as a diplomatic coup was at odds with the diverse reality of BRICS’ membership.

The takeaways from Kazan may fall short of Putin’s most optimistic hopes for the BRICS+. The bloc voiced concern over Western sanctions against Russia and supported increased financial and trade cooperation between members by urging adoption of local currencies for transactions, but affirmed its commitment to the IMF. The BRICS+ also urged diplomatic settlement to the wars in the Middle East and Ukraine. The Informal supports a BRICS+ Grain Exchange, “to improve food security through enhanced trade in agricultural commodities.” It wants members to work together on a BRICS+ R&D Vaccine Center and to further develop the BRICS+ Integrated Early Warning System for future pandemics. Many of the BRICS+ announcements from Kazan sound a strong note of reform.

A (deferred) end to dollar dominance?

Putin used the meeting to float the creation of a BRICS-led IMF. He has clear reasons to make such a move: the global financial architecture is a common grievance among BRICS members; it is no secret that a sanctions proof financial system must be appealing to the President. In the aftermath of the invasion of Ukraine, Russia’s dollar and euro foreign exchange reserves were frozen as the country was denied access to foreign capital markets. Those measures also applied to the existing BRICS+ financial institution, the New Development Bank (NDB), which halted all projects in Russia. However, it is unclear how this new or revised body would be distinct from the BRICS Contingent Reserve Arrangement (CRA), which provides emergency liquidity to debt-distressed countries, although seldom called on. 

Russia had its forex reserves in dollars and euros frozen and its financial system heavily hit by sanctions by the West after it invaded Ukraine in February 2022. The country is cut off from international capital markets. Russia has recently also experienced delays in international transactions with its trading partners, including BRICS member countries, as banks in these countries fear punitive actions from Western regulators. Russia’s Central Bank Governor, Elvira Nabiullina, has previously talked about a BRICS Bridge payments system, which would link member countries’ financial systems, but progress has been slow. Reuters reports the system would attempt to use blockchain technology to create digital tokens that would bypass dollar transactions, potentially easing fears that Russian partners would be the target of sanctions. Russia’s trade with India and China have helped it weather the worst of the sanctions; attempting to reduce their exposure to penalties seems like a logical additional choice.

Nevertheless these proposals fail to live up to the hype of the end of US dollar dominance. The most notable BRICS finance institution remains the NDB, created in 2015 to finance infrastructure and sustainable development projects in BRICS members and other emerging economies. The NDB since 2015 has loaned $33 billion, less than half of the $78 billion the World Bank loaned in 2022 alone. 

More seats at the table

When President Xi Jinping arrived in Russia, it appeared like China was the driving force behind the expanded BRICS+ membership. The bloc now accounts for 29% of the globe’s GDP and 46% of its population, complemented with the introduction of some of  the world’s most significant oil producers. Washington’s attempt to constrain China’s rise has contributed to its strategy of developing an alternate world order and has given it common cause with Russia on several issues.  

Its sheer size can develop links between members in a range of areas that can address some of the group’s concerns over trade, technology and finance. However, that larger membership base has a trade-off. More members are likely to make it more difficult to arrive at unified positions or create a positive alternate vision for a reformed global governance order or to represent the Global South writ large. For example, Thailand and Malaysia’s recent move to apply to join BRICS+ will give both a greater voice when advocating for international reforms and lend access to BRICS+ development and finance infrastructure, but neither’s “marriage with BRICS will be exclusive.” Thailand is an American ally. Malaysia has built a close relationship with China but is a significant recipient of U.S. investment. Elsewhere Brazil and India are keen global reformers but seek more of a middle ground than either Russia and China. Both countries disapproved of the invasion of Ukraine but benefited from Russian trade after that fact. 

BRICS+ members like them have founded, reasonable complaints. Brazilian President Luiz Inácio Lula da Silva recently stood up at the United Nations to call the international financial system a “Marshall Plan in reverse where the poorest finance the richest” and note that “African countries borrow at rates up to eight times higher than Germany and four times higher than the United States.” India, Brazil and South Africa are keen to balance Washington with Beijing without becoming outright adversaries of either.

For example, Brazil vetoed Venezuela’s membership request despite Russian support — a move that would be welcomed by U.S. policymakers.

These debates over membership will likely continue, particularly for democracies who will have to navigate political allies losing power. This was already an issue for Lula’s preferred pick of Argentina when Javier Milei replaced Argentina’s left-leaning Peronist government. If Brazil picks Colombia and Chile, Lula runs the risk that his kindred political spirits will lose power there as well. If China and Russia choose autocratic governments in the future, they will not be faced with the same uncertainty. There are common reasons for joining BRICS+, but that does not mean all future membership picks will share ideologies or forms of government.

It is unlikely that the BRICS+ and its expansion suggest a return of a bipolar world. Its current members share some critiques with global governance’s unipolar moment and seek to improve their position in the international system, but they have not coalesced around a single vision. The group does seem to be composed of complementary differences and strange bedfellows that nevertheless see the benefit of Global South collaboration. The meeting in Kazan reflected that reality.