BRITTLE BRICS

Saahil Menon writes (October 11 2024)

How BRICS is collapsing under the weight of its own ambition

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https://neweasterneurope.eu/2024/10/11/how-brics-is-collapsing-under-the-weight-of-its-own-ambition/

Nearly two decades after its establishment, the multilateral organization remains a mere talking shop with no coherent agenda or mission statement

In a seminal research paper from 2001, the then Goldman Sachs Chief Economist Jim O’Neill lumped together four standout emerging markets – namely Brazil, Russia, India and China. He believed they were punching well below their weight at the time and warranted greater representation in the international arena. Yekaterinburg played host to the inaugural 2009 BRICS summit, with the heads of state of all existing members in attendance. South Africa was admitted to the intergovernmental bloc a year later, notwithstanding bleak growth prospects that prompted Moody’s to downgrade its debt outlook from stable to negative in 2011.

The mind behind the BRICS idea began to suspect that the abstract marketing concept he came up with for “adventurous investors” was becoming something of a vanity project. During an event held by ETF Stream in London last summer, O’Neill even confessed that BRICS was never meant to be a “political club” and questioned “what fruitful purpose it serves” following the haphazard expansion wave on January 1st 2024. Bringing Iran, Egypt, the United Arab Emirates and Ethiopia into the fold only reaffirmed his assertion that the informal alliance was light on substance and heavy on symbolism, while lacking any real raison d’être.

Argentina’s “anarcho-capitalist” President Javier Milei opted out of this expanding BRICS shortly after assuming power in December 2023, citing his unwillingness to “ally with communists” as grounds for doing so. Meanwhile, fellow invitee Saudi Arabia has yet to confirm whether or not it will formally join the Russia-led association. Besides biding their time in anticipation of the US elections this November, the House of Saud and Crown Prince Mohammed Bin Salman (MbS) in particular appreciate that tethering the kingdom’s post-oil future to Greater Eurasia as opposed to the Group of Seven (G7) economies is a losing proposition.

Should Republican nominee Donald Trump return to the Oval Office for a second term, Riyadh will likely mirror Buenos Aires in scrapping BRICS membership altogether. Though he has long been accused of having a soft spot for Russia, Trump is at odds with Putin’s ongoing quest to undermine the petrodollar. Amid recently released footage directly implicating the Saudi intelligence operative Omar Al Bayoumi in the planning and execution of 9/11, the Trump administration could agree to suppress any negative publicity that risks torpedoing MbS’s Vision 2030 project in return for Saudi Arabia pivoting away from the orbit of Moscow and Beijing.

The 45th American president went out of his way to provide cover for the conservative sheikhdom’s de facto ruler in the aftermath of the 2018 murder of Saudi journalist Jamal Khashoggi. Affinity Partners, a hedge fund founded by Trump’s son-in-law Jared Kushner after leaving the White House, received a two billion US dollar windfall from Saudi Arabia’s Public Investment Fund (PIF) as a token of gratitude for burying the Khashoggi incident and limiting the reputational damage wrought upon MbS. It is also worth recalling that Kushner helped broker the historic 2020 Abraham Accords and now has his sights set on Saudi-Israel normalization.

That said, the October 7th massacre prevented both Middle Eastern states from reaching a near-term peace deal. If anything, Putin ended up milking the ensuing Gaza conflict and feigning sympathy for the Palestinian cause to advance his idea of multipolarity and win over the Global South. BRICS has admittedly generated interest from key players within the Organization of Islamic Cooperation (OIC) like Turkey, Malaysia and Algeria by virtue of its pro-Hamas stance. The Russian Foreign Minister Sergey Lavrov met his GCC counterparts in Riyadh last week to further consolidate pan-Arab support for the “new world order”.

Among the reasons why BRICS has, nonetheless, failed to position itself as a credible counterweight to the G7 or OECD is acute internal rivalries. This is especially true regarding China and India. Ever since the Galwan Valley border clash four years ago that left 20 Indian soldiers dead, diplomatic ties between the two Asian giants have remained at rock bottom. India has steered clear of the Belt and Road Initiative (BRI), refused to resume direct flights to China, and played an increasingly active role alongside the US, Japan and Australia in the Quad – a strategic security coalition aimed at containing Beijing’s influence across the Indo-Pacific region.

Another less talked about territorial dispute BRICS has managed to import concerns Iran and the UAE. Despite repeatedly lobbying Russia and China to condemn the Islamic Republic’s alleged annexation of the three Persian Gulf islands of Abu Musa, Greater Tunb and Lesser Tunb, the Emiratis are effectively underwriting their own position given Dubai’s notorious reputation as the go-to offshore haven for IRGC-linked officials to launder and stash away their ill-gotten gains. To make matters worse, the Kremlin has invited arch foes Armenia and Azerbaijan to the upcoming BRICS forum in Kazan that will take place next month.

When it comes to potential enlargement, however, Russia – which currently chairs BRICS – appears to have engaged in doublespeak. On the one hand, Putin continues to boast about the fact that 34 countries are vying for accession and hint at the absence of any hard and fast criterion that must be fulfilled to make the cut. At the same time, Lavrov recently ruled out the intake of any additional members in order to first “process new arrivals”. Although the “de-dollarization” agenda is bound to feature prominently in Kazan, prospects for launching an alternative payment mechanism and common currency are still riddled with challenges.

For starters, most BRICS participants are not as gung-ho about disrupting the status quo as the Russians, Chinese and Iranians. Efforts to bypass SWIFT and entertain non-dollar cross-border transactions at scale could expose nations on cordial terms with the West – such as India, Brazil and South Africa – to secondary sanctions. There have already been cases of punitive measures imposed on third-country banks that facilitate financial flows to and from Russia. Moreover, most funding and lending administered by the New Development Bank (NDB) is done in US dollars, with borrowing in local currencies amounting to less than 20 per cent.

As far as Putin is concerned, BRICS and the Shanghai Cooperation Organisation (SCO) are the new Nord Stream I and II. Conducting strikes deep inside Russia is arguably Ukraine’s best bet to thwart the ex-KGB agent’s grand plans for a global redistribution of power and ensure that he is forced to show up at the negotiating table with a weak hand. Bringing the war home to Russia will not only render the federation “uninvestable” and off-limits to foreign dignitaries, but eventually encourage its “fence-sitting” allies to second-guess their commitment to an anti-western movement facing a major legitimacy crisis.

As audacious and timely as the Kursk incursion was, Putin’s tepid response to one of his supposed red lines served as a sobering reminder of how little he cares about the lives of non-Muscovites. The going rate for conscripts from Moscow has been set at 22,000 US dollars a head. Clearly, there is no alternative to targeting the aggressor’s seat of power if those who count are to feel the ramifications of the war and turn on their commander-in-chief. Pursuing this course of action will also lead to a loss of face for the Russian dictator in the eyes of developing nations, insulating them from the cancerous spread of Russkiy Mir.

TRUMP TARIFFS

Simone McCarthy for CNN Reports (July 10, 2025)

https://www.cnn.com/2025/07/10/business/brics-tariff-threat-trump

Trump in recent days has threatened members of the China- and Russia-backed club with 10% tariffs on goods imported to the US – in addition to heightened tariffs already looming for some of them.

“Any country aligning themselves with the Anti-American policies of BRICS” will face those duties with “no exceptions,” Trump wrote on social media Sunday, as leaders from the group met for an annual summit in Rio de Janeiro.

Days later, he went further, suggesting he wants to break up the group. “If they’re a member of BRICS, they are going to have to pay a 10% tariff, just for that one thing – and they won’t be a member long,” Trump said during a cabinet meeting.

Jacob Jensen writes (July 15, 2025)

https://www.americanactionforum.org/research/breaking-down-the-brics-tariff/

Why Is BRICS a Target?

The primary reason President Trump has his eye fixed on BRICS is its explicit goals of becoming less reliant on the U.S. dollar and creating alternatives to a dollar-based international financial system. This objective, known as de-dollarization, could damage the dollar’s status as the global reserve currency, which provides the United States numerous economic and geopolitical benefits. The dollar’s position lowers the federal government’s borrowing costs, makes it easier for consumers and producers to import goods, and gives the United States a key diplomatic bargaining chip over the international financial system due to its widespread use. The loss of dollar dominance, therefore, would result in higher U.S. consumer costs and an increase in federal borrowing costs, among other consequences.

As President Trump puts it, “losing the dollar standard would be like losing a war, a major world war.”

While Trump is rightfully concerned about preserving dollar dominance, his use of tariffs to cudgel countries into submission may only reinforce the concerns BRICS has about an overreliance on the U.S. dollar. This concern grew in recent years after the United States removed Russia from SWIFT and froze many of its assets held abroad, effectively cutting the country out of the global economy.

Trump’s initial tariff letters posted on Truth Social seemed to primarily target countries closely associated with BRICS, the most consequential being a potential 50-percent tariff on Brazil. The recent uncertainty in U.S. trade policy has led some countries to explore the opportunities offered by BRICS as an alternative to traditional U.S. ties. Even before the recent tariff letters, BRICS had been growing at a rapid pace, adding Indonesia in 2025 and 10 partner nations in 2024. This expansion indicates that countries are willing to risk their relationship with the United States in favor of a non-traditional organization like BRICS, meaning U.S. economic pressure or uncertainty may only help the bloc grow.

The Cost of a BRICS Tariff

The United States imported goods worth more than $600 billion from BRICS member countries in 2024 and more than $950 billion when factoring in partners and other interested countries. A standalone 10-percent tariff would cost U.S. consumers and businesses between $35–$56 billion within the first year of implementation, taking into account trade shifts and other offsets.

Setting aside the direct impact tariffs would have on input costs for U.S. firms and consumer prices, BRICS countries would likely institute retaliatory tariffs on U.S. exports. China, for instance, issued its own set of retaliatory tariffs on the United States this year and Brazil has declared that it will match the 50-percent “Liberation Day” tariff President Trump plans to implement on August 1. Retaliatory tariffs from BRICS would further damage the U.S. economy as nearly 20-percent of U.S. exports go to countries associated with the bloc. Referring back to China, U.S. exports between January and April of 2025 are 17 percent below 2024 levels, meaning U.S. companies are missing out on billions of dollars of revenue. Even a relatively small drop in exports to BRICS could result in $5–$20 billion worth of U.S. products no longer being sold or diverted elsewhere.

BRICS also represents a significant portion of the world’s population and global economic output. The BRICS founders alone constitute more than 40 percent of the entire global population and nearly 25 percent of global gross domestic product (GDP). Examining purchasing power parity (PPP), which adjusts GDP to account for differences in buying power and exchange rates across countries, shows the BRICS founders represent over a third of the global economy on their own.

Expanding BRICS to include all members, partners, and interested countries means that over 66 percent of the world’s population and half of global economic output are at risk of being mobilized to retaliate against the United States.

This represents a large-scale economic risk as U.S. tariffs targeted at BRICS might isolate the United States from numerous markets, investment opportunities, and emerging economies that are growing ever-more important on the world stage.

From talking shop to tariffs taker. A Bumpy BRICS road ahead.