The rival economics club is doubling

MARY REICHARD, HOST: Coming up next on The World and Everything in It: BRICS adds new members.

You likely saw that headline in your newsfeed this past week. BRICS is an acronym for the names of five countries with an informal economic association. Those nations are Brazil, Russia, India, China, and South Africa.

NICK EICHER, HOST: Last week, the group held its annual meeting in South Africa and invited six new members to join the group. Those countries are Saudi Arabia, the United Arab Emirates, Ethiopia, Egypt, Argentina, and surprisingly, Iran.

Joining us now to talk about what’s going on is Josh Birenbaum. He’s the deputy director of the Center on Economic and Financial Power for the Foundation for the Defense of Democracies in Washington D.C.

REICHARD: Josh, good morning!

JOSH BIRENBAUM: Good morning. Thanks so much for having me, Mary.

REICHARD: These five nations seem like odd bedfellows. Again, Brazil, Russia, India, China, and South Africa. Where did that alliance come from?

BIRENBAUM: You're absolutely right, that they are an odd fit together. And to some extent, this is an accidental organization, and that really shows from the way that their interests are divergent. BRICS, which originally was BRIC, was coined by a Goldman Sachs economist. And then after the fact, it was picked up on by the group of nations. It's a little bit like coming up with a great title for a book, and then you have to write a book to justify the title. These countries have never really fit together particularly well. But they do much less now than in 2009 when they first came together. It's mostly at this point a symbolic union that demonstrates discontent with the West and the United States-led democracies. But for the most part, there's been very little to show for their actions over the last decade and a half.

EICHER: How does BRICS differ from the G7, not just in who the members are, but in their approach to global economics?

BIRENBAUM: I mean, the G7 itself is a bit of an informal group. It doesn't have its own Secretary General, it doesn't have its own bureaucracy behind it. It's an opportunity for the leading core democracies to get together and align their economic interests and their political interests. One might recall that as recently as 2014, it was the G8 and Russia was a member. Bill Clinton had invited Russia to join the group when Boris Yeltsin was president in the hopes that that would open up Russia to Western influence. As we can tell, that hasn't worked out. And Russia was kicked out of the group in 2014 by Obama and the other leaders of the G7 nations after the invasion of Crimea. So the, the G7 has been focused on trying to build a core democratic response to global pandemics, economic shocks and similar issues. BRICS, by contrast, is really focused on trying to counter American and democratic interests in the world.

REICHARD: Let’s talk about the new kids on the block. Three countries from the middle east, two from Africa, and one from South America. Why these six new additions? What do they bring to the table?

BIRENBAUM: To some extent they represent a compromise. The countries of Russia and China were very eager to add new members, mostly to be able to be seen on the global stage as leaders that were worthy of having a unified front against sanctioning countries such as the U.S. and European nations. But Brazil and India, on the other hand, really didn't want to increase the size of the group and dilute its membership that much, and they certainly didn't want the group to become more authoritarian. These countries are somewhat authoritarian. Iran is absolutely authoritarian, Saudi Arabia, UAE as well, but they also had some economic interests that work well, with all five of the nations mostly in the energy sector and critical minerals. You have now three of the top oil and gas producers as members of BRICS. And you have starting to be a group of critical mineral producers and refiners that's formidable addressing industries, lithium, manganese, graphite, nickel, copper, all major producers and, and refiners and that creates in some ways the biggest threat the BRICS presents.

EICHER: I’m wondering what this expanded bloc means for Western sanctions on Russia and Iran. What do you think?

BIRENBAUM: Well, there's no doubt that Russia and China are seeking desperately to have alternative financial means to circumvent sanctions. Many people are aware that the Swift banking messaging system that is relied on by most economies in the world recently kicked Russia out as part of the sanctions package against the regime. And Russia, China and others are wary of the way in which sanctions can be used against countries that block the financial sector, so they're seeking to find different avenues for currency to circumvent the use of the U.S. dollar. Most indications are, while the group would like to build a currency, that's a BRICS currency for the members, there are a lot of hurdles to that happening. And if you ask the members of the EU, it wasn't easy for them to do when they are much more geographically politically aligned.

REICHARD: Final question here, Josh. Is there any aspect of this story that the mainstream media is overlooking?

BIRENBAUM: Well, I think there are two things that are really fascinating here. One is the amount of animosity between the BRICS nations that sort of papered over. China and India do not get along. They have military skirmishes along their borders. Ethiopia and Egypt have massive disputes over water, and Saudi Arabia and Iran have a long history of animosity between those countries. So while it would be in their interest for everyone to get along well, there's no indication that they've taken any steps to address those animosities. The other thing that I think is fascinating is who hasn't joined. There were a number of countries that have expressed interest. Some of them were non-starters, Afghanistan, Venezuela, Cuba, Bangladesh, Sudan. But a number of them would have been real threats to US national and economic security, mostly Indonesia, Mexico, and Turkey. The absence of those countries in this group is significant and important for the US and its allies.

REICHARD: Josh Birenbaum is deputy director of the Center on Economic and Financial Power for the Foundation for the Defense of Democracies in Washington D.C. Josh, we appreciate your time. Thanks so much!

BIRENBAUM: Thanks for having me.

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