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In August 2023, the 15th BRICS summit was held in Johannesburg, South Africa. The summit was a pivotal gathering where the BRICS countries came together to discuss pressing global issues, notably the global economic recovery post-COVID-19, strengthening partnerships with Africa and the Global South, and addressing the war in Ukraine. This series of meetings underscored the BRICS countries’ commitment to fostering global cooperation and addressing contemporary challenges. The Brazil, Russia, India, China, and South Africa grouping, commonly known as BRICS, is an influential group of emerging economies that has been steadily growing in importance in recent years.
In August 2023, Egypt, along with Argentina, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE), were formally invited to join BRICS, marking a significant milestone for the alliance and for the countries involved. Starting January 2024, Egypt will officially be a BRICS member. This expansion will increase the bloc’s share of global GDP to almost 30 percent from the current 26 percent. Furthermore, including Saudi Arabia, Iran, and the UAE will give the member countries of BRICS control over 43 percent of global oil production, up from 20 percent currently. “BRICS encompasses around 27 percent of the world’s land surface, and more than 40 percent of the global population,” says Dr. Amal Mowafy, Chief of Party of USAID Egyptian Pioneers and Economics Professor at the American University in Cairo (AUC). But what’s the story behind the term ‘BRICS’? And what are the benefits expected from Egypt’s joining this growing grouping?
When did the term ‘BRICS’ first appear?
The term “BRICS” was first coined in 2001 by Jim O’Neill, the then-chairman of Goldman Sachs Asset Management. In his paper “The World Needs Better Economic BRICS” he predicted that Brazil, Russia, India, and China (BRIC) would dominate the world’s economies by 2050. The acronym originally excluded South Africa, but by 2010, South Africa was invited, adding the “S” to BRICS. Over the years, this grouping has evolved from a mere economic forecast into a robust collaborative association, with annual summits addressing global challenges. With Egypt’s inclusion, one wonders about the potential benefits for the nation.
What joining BRICS means for Egypt
Egypt’s inclusion in BRICS is significant for a number of reasons. First, it will help diversify the alliance and make it more representative of the global economy. Second, it will give Egypt access to the vast resources and markets of the BRICS countries. Third, it will strengthen Egypt’s ties with these countries and help boost its economic development.
Egypt has already joined the BRICS’ $100 billion multilateral lender, the New Development Bank (NDB), in March, which gives Egypt access to finance from the bank for development projects.
Moreover, Joining BRICS is expected to boost foreign direct investments (FDI) and exports and deepen economic cooperation and trade exchange between Egypt and other member states, according to Egypt’s Minister of Finance, Mohamed Maait.
This membership could also help the state reduce its dependence on the US dollar for international trade, which would “help Egypt rationalize hard currency spending on imports, leading to relieving pressure on the budget,” Maait added.
What BRICS stands to gain from Egypt’s membership
Egypt’s strategic position, coupled with its growing economy, presents a wealth of opportunities for the BRICS nations. Dr. Mowafy stresses that Egypt’s human capital is primed to offer quality services to the alliance. Beyond human resources, Egypt’s affiliations, being a member of both the Arab League and the Organization of Islamic Cooperation, grant BRICS an extended reach into vital markets and resources. While the mutual benefits of this partnership are evident, it’s essential to recognize that with new opportunities come new challenges that both Egypt and the BRICS nations must navigate.
What are the challenges that Egypt and BRICS could be facing in the future?
While the inclusion of Egypt in BRICS holds potential opportunities, it also presents possible challenges. For instance, to seamlessly integrate into the BRICS bloc, Egypt might need to consider reforms in areas such as economic policies and trade regulations. One specific area of focus could be the modification of its trade tariffs to facilitate smoother trade relations with BRICS member countries.
Another challenge is that the BRICS countries themselves are dealing with some difficulties on their part. The expansion also introduces a measure of geopolitical tension into the group. For example, relations are still chilly between Egypt and Ethiopia due to the construction of the Grand Ethiopian Renaissance Dam. Moreover, while Saudi Arabia and Iran are mending their relations, their long standing tension, rooted in factors like rivalry for regional dominance and religious differences, remains a concern.
These geopolitical tensions, coupled with economic slowdowns and political instabilities, might test the resilience of this alliance. Yet, the future beckons with promise.
What the future holds
The inclusion of Egypt in BRICS is not merely an expansion; it’s a beacon illuminating the evolving dynamics of global power. As trade discussions hint at transactions in local currencies, or even the creation of a gold-backed currency to counter the US dollar’s dominance, the alliance’s potential to redefine global economic structures becomes even more palpable. Dr. Amal Mowafy emphasizes, “While the BRICS seems very promising, there needs to be a clear action plan to witness a significant shift in power.” With whispers of more countries potentially joining BRICS in the future, one can’t help but wonder: What’s the next chapter in this global saga? The world watches, anticipation building, as BRICS charts its course into uncharted territories.