BRICS vs G7: The Fight is On

When the BRICS countries met last August in South Africa, China used the opportunity to push the grouping to become a global rival to the Group of Seven Countries, an informal grouping of the world’s advanced economies. Conditions for such global rivalry are ripe. There is not a single country with membership in both groups. G7 is led by the West (US, UK, Germany, France, Canada, Italy, Japan with the EU being a “non-member”). BRICS, on the other hand, includes Brazil, Russia, India, China, and South Africa. With the so-called BRICS Plus, six new countries – Iran, the UAE, Saudi Arabia, Argentina, Egypt, and Ethiopia, have also joined the original five. This inclusion has allowed the BRICS, as opposed to G7, to claim a more global and plural outlook.

Whereas G7 is primarily a Western club (Japan is a small ‘Asian minority’ in the club), “BRICS Plus” draws membership from Europe/Asia (Russia), Asia (India and China), Latin America (Brazil and Argentina), Middle East (Iran, UAE, and Saudi Arabia), and Africa (Ethiopia). This global outlook reinforces Chinese and Russian ambitions to challenge the US-led global order and establish a new, multipolar world order.

Accordingly, the narrative that comes out of “BRICS Plus” is largely critical of the West. In its (virtual) meeting in November 2023, BRICS countries excoriated the West for its failure to secure a ceasefire in Gaza. Yet, while the summit was “extraordinary,” there was no joint statement nor a mutually agreed position vis-à-vis Israel and the Palestine question. It appears that BRICS’s global outlook might have become a problem, denting its ability to present a substantial challenge to the West.

While BRICS, including “BRICS Plus”, does include a variety of countries, it also includes many countries that are geopolitically double-players. India, for instance, is a key member of BRICS and is known to have strong ties with Russia, but India also has deep ties with the US, which are motivated by its ambition to counterbalance China in the Indo-Pacific region. Therefore, New Delhi is unlikely to support any policy that might openly challenge Washington. This is in addition to the fact that India is already looking to reduce its dependence on Russian weapons in favour of increasing its purchases from the US.

As far as other BRICS members are concerned, the UAE and Saudi Arabia have mostly relied on – and still rely on – the West, if not just the US, for security. Saudi Arabia, despite recent tensions with Washington over Biden’s now-discarded policy to make the Kingdom a “pariah” state, is still interested in a defense deal with the US. The UAE, on the other hand, happens to be the first signatory of The Abraham Accords, the bilateral agreements on Arab–Israeli normalization signed between Israel and the United Arab Emirates and between Israel and Bahrain. The only reason these countries – especially, the UAE and Saudi Arabia – have joined BRICS is their desire to diversify their foreign ties and/or reduce traditional dependence on the US.

But the desire to reduce dependence on the US hardly translates into an active pursuit of a new, alternative global order. For India, BRICS matters mainly because it can use this membership to launch occasional attacks on the West and maintain the illusion of “non-alignment”, as well as benefiting from its internal trade arrangements.

Because “BRICS Plus” is an internally divided configuration, it is unable to exercise the kind of geopolitical influence that G7 can. When it comes to major geopolitical tensions, G7 has been able to take joint positions. It has been able to impose sanctions on Russia in the wake of the ongoing military conflict with Ukraine. It continues to support Ukraine unanimously. Although sustained Western/NATO support against Russia has so far not proven to be effective enough to help Ukraine reclaim its lost territories, G7 countries still reaffirmed their support in their meeting last month with the Ukrainian leader. Even though some cracks have appeared between G7 members vis-à-vis the question of sending NATO troops to Ukraine to directly fight Russia, there is still no crack in their established position to resist Russia. This consensus is reinforced by their joint fear of Russia as a country bent upon attacking the entire Europe. (It is another thing that Russia has its own fears vis-à-vis NATO’s expansion to include Ukraine.) BRICS, on the other hand, has no means to punish its geopolitical rivals, either via sanctions or military support.

But BRICS is becoming a key body that rivals G7 economically. In addition to the membership of six new countries, 17 others applied for membership in 2023. Were all of these countries to ultimately join “BRICS Plus”, this club would have a population of close to 4.2 billion or close to half of the global population, 60 percent of the globe’s gas reserves and a GDP close to double the EU’s GDP (US$30 trillion).

Although their amalgamated GDP would still be less than G7’s at about US$ 47 trillion, “BRICS Plus” still becomes a formidable economic space for many underdeveloped and developing nations that otherwise have neither access nor voice in G7 and/or global affairs. Like G7, “BRICS Plus” is not a trading block, but some recent developments show it might turn into one. This is especially evident from the establishment of the New Development Bank. Although these developments have a crucial Chinese imprint on them, many members of “BRICS Plus” do not see China as an economic threat. That includes India.

India-China border tensions aside, the so-called “Sino-India” model of trade – which treats trade and geopolitical tensions as two strictly separate matters – continues to yield positive trade outcomes for both countries. China’s trade with India increased by 15.8 percent in the first two months of 2024. In 2023, bilateral trade reached a record of US$136.2 billion.

BRICS already beats G7 in terms of GDP measured by the Purchasing Power Parity. Its emphasis on “de-dollarization” has its own attraction too. While an extremely ambitious idea, if a “BRICS currency” becomes a reality, it could leave a significant impact on the global order, allowing member countries to adopt a more autonomous position vis-à-vis the West without fear of being sanctioned and deprived of access to the West-dominated financial centers. The crucial significance of a BRICS currency is not that it would immediately make the US dollar irrelevant but that it would create an alternative financial center able to compete with the US-led financial system. While still far from becoming a reality, the fact there would be competition means the US-led system would lose its monopoly and hegemony.

Even if the idea of a new currency is hard to gain traction immediately, the idea of BRICS countries settling trade in their local currencies has its own attraction too insofar as it still contributes to “de-dollarization,” one key reason more and more countries are lining up to join. But while the group might expand economically, its ability to shape geopolitics, directly, would remain limited because of the diversity of foreign policy outlook of many of its members.