BRICS: Expansion and the Dollar Challenge
BRICS: Expansion and the Dollar Challenge
I. Introduction
The international geopolitical and economic landscape is witnessing a significant recalibration, with the BRICS collective—Brazil, Russia, India, China, and South Africa—emerging as a pivotal actor at the heart of this transformation. Once primarily an economic acronym grouping major emerging markets, BRICS has matured into a notable political and diplomatic forum. Now, it stands at a critical juncture, undergoing a dual metamorphosis that is capturing global attention: a historic expansion of its membership and a concurrent, increasingly assertive strategy to diminish the long-standing dominance of the US dollar in global trade and finance. These intertwined developments are not occurring in a vacuum but are unfolding against a backdrop of heightened geopolitical tensions, economic uncertainties, and a growing sentiment, particularly across the Global South, that the existing international order requires substantial reform to reflect contemporary realities.
The bloc's decision to open its doors to new members, welcoming nations from the Middle East, Africa, and potentially other regions, signifies a broadening appeal and a deliberate effort to consolidate a more diverse coalition of states seeking alternative platforms for cooperation and influence. This expansion is more than a numerical increase; it represents a strategic move to amplify the collective voice of countries that often feel marginalized within traditional Western-led institutions and to bolster the group's economic and political leverage on the world stage. Concurrently, the BRICS de-dollarization agenda is moving beyond rhetoric. It encompasses a range of tangible initiatives, including the promotion of national currencies in bilateral and multilateral trade, the development of independent payment systems to bypass existing financial messaging networks like SWIFT, and the strategic utilization of BRICS-founded financial institutions such as the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA).
The current phase of BRICS evolution, marked by this significant expansion and a concerted push for de-dollarization, signals a deliberate effort to reshape global economic governance and foster a more multipolar international system. However, this ambition is fraught with considerable internal complexities stemming from the diverse interests of its members and significant external challenges, including resistance from established Western powers and the inherent difficulties in shifting entrenched global financial norms. The simultaneous pursuit of membership growth and financial re-alignment is not coincidental; these two prongs of BRICS strategy appear mutually reinforcing. A larger, more economically diverse BRICS possesses a greater collective capacity and a stronger incentive to create and sustain alternatives to dollar-centric financial and economic systems. As the bloc expands, its internal market grows, and its share of global trade increases, providing more substantial opportunities and a more compelling rationale for utilizing local currencies and newly developed payment infrastructures. The inclusion of major energy-producing nations, such as Iran and the United Arab Emirates, and the potential future accession of others like Saudi Arabia (though its current stance is hesitant), is particularly noteworthy. Energy trade, historically priced and settled predominantly in US dollars, forms a critical pillar of the dollar's global dominance. If an expanded BRICS can facilitate a significant portion of energy transactions in non-dollar currencies, it would directly challenge this foundational aspect of the current international financial architecture. Thus, expansion provides the necessary scale and resource diversity, while de-dollarization offers a core strategic objective for this enlarged and emboldened coalition.
Furthermore, the introduction of a "partner country" status, formalized at the Kazan Summit in October 2024, represents a nuanced and strategic innovation in BRICS's approach to external engagement. This tiered model allows for broader cooperation and influence without the immediate complexities and potential dilution of decision-making power that can accompany rapid full-membership growth. It effectively creates a wider network of like-minded or interested nations, a form of "waiting room" or antechamber, where countries can align with BRICS initiatives, participate in dialogues, and test mutual compatibility before committing to, or being accepted for, full membership. This approach mirrors strategies employed by other international groupings, such as the Shanghai Cooperation Organisation's dialogue partner and observer statuses, and allows BRICS to project a more inclusive image and cultivate relationships over time. This graduated engagement can be particularly useful for fostering cooperation on specific initiatives, such as the adoption of alternative payment systems or participation in local currency trade agreements, even if full membership is not an immediate prospect for all involved. It also provides the core BRICS members with an opportunity to assess the long-term commitment and strategic alignment of these partner nations, potentially mitigating some of the risks associated with unchecked or overly rapid expansion.
II. BRICS History: From Acronym to Alliance
The journey of BRICS from an economist's catchy acronym to a formal intergovernmental alliance has been a defining feature of the 21st-century global landscape. Its origins can be traced to a 2001 paper by Jim O'Neill, then at Goldman Sachs, who coined "BRIC" to highlight the significant growth potential and increasing global economic weight of Brazil, Russia, India, and China. O'Neill's thesis was primarily an investment concept, identifying these nations as key emerging markets poised to reshape the world economy. However, the idea of closer cooperation among these large, influential non-Western states predated this economic labeling. In the late 1990s, figures such as Yevgeny Primakov, then Russia's Foreign Minister and later Prime Minister, actively promoted the concept of a "strategic triangle" involving Russia, India, and China (RIC) as a means to foster a more multipolar world order and counterbalance perceived US unilateralism.
The transition from this economic grouping to a political initiative was driven by the governments of the founding countries themselves, who saw value in coordinating their positions on global issues. The first meeting of BRIC Foreign Ministers took place on the sidelines of the UN General Assembly in September 2006. This was followed by the inaugural BRIC Summit in Yekaterinburg, Russia, on June 16, 2009, attended by the leaders of Brazil, Russia, India, and China.
The initial stated goals of the BRIC grouping were ambitious and multifaceted. They included strengthening economic, political, and social cooperation among member states; enhancing the collective influence of countries from the Global South in international governance; and advocating for the reform of established global institutions such as the United Nations, the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO) to ensure greater legitimacy, equity in participation, and efficiency. A central theme from the outset, significantly amplified by the 2008 global financial crisis, was the urgent need for reform of the international financial architecture. The crisis, which originated in developed Western economies, was seen by BRIC nations as underscoring the vulnerabilities of the existing system and the growing importance of emerging economies. In the aftermath of the Yekaterinburg summit, the BRIC nations notably called for a "diverse, stable and predictable" new global reserve currency, implicitly questioning the long-standing dominance of the US dollar. In December 2010, the group invited South Africa to join, and with its formal accession in 2011, the acronym evolved to BRICS, marking a significant step in broadening its geographical representation to include the African continent.
Prior to the current wave of expansion, BRICS had already made significant strides in institutionalizing its cooperation and launching concrete initiatives. The most prominent among these were the establishment of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA). The NDB, proposed at the 5th BRICS Summit in Durban, South Africa, in 2013 and formally established at the 6th Summit in Fortaleza, Brazil, in 2014, is headquartered in Shanghai, China. With an initial subscribed capital of $50 billion and an authorized capital of $100 billion, the NDB was created to mobilize resources for infrastructure and sustainable development projects not only within BRICS countries but also in other emerging and developing economies. It was explicitly positioned as an alternative to, and a voice for reform within, the existing Bretton Woods institutions, aiming to provide development financing without the political conditionalities often associated with Western-led lenders.
Simultaneously, the BRICS Contingent Reserve Arrangement (CRA) was established in 2014 with an initial commitment of $100 billion. The CRA was designed as a framework for providing mutual financial support to member countries facing short-term balance of payments pressures, thereby offering a safety net that could reduce reliance on the IMF and its often-controversial loan conditions. These two institutions, the NDB and the CRA, represented more than just financial mechanisms; they were powerful political statements. Their creation, even with the inevitable initial operational hurdles, demonstrated BRICS's capacity for collective action and its clear intent to build parallel global governance structures rather than solely relying on the slow process of reforming existing Western-dominated ones. This proactive institution-building laid crucial practical and psychological groundwork, fostering confidence within the bloc for the more ambitious financial cooperation and de-dollarization efforts that are now gaining momentum.
Beyond these flagship financial institutions, BRICS developed a comprehensive, multi-layered framework for cooperation structured around three key pillars: politics and security; economy and finance; and cultural and people-to-people exchanges. In its first decade and a half, the bloc established nearly 60 intra-group institutions, dialogues, and working groups covering a wide array of subjects, underscoring its evolution into a multifaceted international association. This journey from an externally coined economic label to a self-defined political alliance reflects a conscious effort by the member states to shape their own narrative and assert their agency on the global stage. The deliberate appropriation and redefinition of the "BRIC" acronym, and its expansion to "BRICS" with South Africa's inclusion—a move driven by political considerations of geographic representation and solidarity with the Global South—demonstrates a proactive approach to identity formation and agenda-setting. This self-definition is fundamental to the bloc's claim of offering an alternative vision for global governance, moving beyond a role assigned by Western financial analysts to one actively constructed by the member nations themselves.
III. BRICS Expansion: Dynamics and Implications
The trajectory of BRICS took a decisive turn towards enlargement at the 15th Summit held in Johannesburg, South Africa, in August 2023. The summit culminated in the adoption of the Johannesburg II Declaration, which formally invited six nations—Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE)—to become full members of the bloc, effective from January 1, 2024. This marked the most significant expansion in the group's history.
Subsequently, Egypt, Ethiopia, Iran, and the UAE officially joined the ranks in January 2024, broadening BRICS's geographic and economic diversity. However, Argentina, following a change in government with the election of President Javier Milei, announced its decision to decline the invitation in late December 2023. The expansion continued into 2025, with Indonesia, a major Southeast Asian economy, formally acceding to the bloc in January.
The motivations driving these new members to join BRICS are varied yet share common threads. A predominant theme is the desire for greater international economic integration beyond the traditional Western-centric global economy. Access to development financing through the New Development Bank, particularly funding offered without stringent political conditionalities and potentially in local currencies, is a significant draw for many developing nations. Furthermore, membership is perceived as a means to enhance geopolitical influence, diversify strategic partnerships, and actively contribute to the shaping of a more multipolar world order. For some nations, BRICS also offers a "safe harbor" from perceived US diplomatic coercion and economic pressures, including sanctions and tariffs.
Individually, Egypt seeks financial aid, investment, and an expansion of trade conducted in national currencies, especially with China, its largest trading partner, while also aiming to diversify its strategic alliances. Ethiopia views BRICS membership as a vehicle to secure developmental and financial assistance crucial for its infrastructure, manufacturing sector, and climate resilience goals, aligning with its national development plan without the conditionalities imposed by Bretton Woods institutions. Iran, facing significant Western sanctions, sees BRICS as a vital geopolitical and economic counterweight, hoping to diminish its reliance on the US dollar, access alternative financial mechanisms like the NDB and CRA, diversify its energy-focused economic partnerships beyond China, and find new avenues for technology import and military equipment export. The UAE aims to expand trade, attract investment, access new markets, and leverage its strategic geographic location, all while reinforcing its commitment to multilateralism and expanding its strategic autonomy. Indonesia, prioritizing BRICS membership shortly after its new presidential administration took office, seeks to enhance collaboration with developing nations, increase trade (including potential oil imports from Russia), and embody an "independent and active foreign policy" that bridges the interests of developing countries and the Indo-Pacific region, while also eyeing technology transfer and infrastructure development through the NDB.
Adding another layer to its expansion strategy, BRICS formalized the "partner country" modality at the Kazan Summit in October 2024. The first cohort of nine nations—Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Uganda, and Uzbekistan—was announced to have attained this status effective January 1, 2025. The admission process involves informal consultations led by the rotating presidency, considering geographic balance and the maintenance of good diplomatic relations with all existing BRICS members, followed by a consensus decision by the leaders to extend an invitation. Partner countries are afforded privileges such as participation in BRICS Summits and Foreign Ministers' meetings, the potential to join other discussion sessions, and the option to endorse BRICS declarations. For nations like Nigeria, this status offers access to investment, new markets, support for economic diversification, an enhanced geopolitical role in Africa, and for BRICS, access to Nigeria's significant resources and market.
The case of Saudi Arabia remains particularly nuanced. Despite receiving an invitation in August 2023 and participating in some BRICS activities, Riyadh has reportedly remained hesitant about formalizing its full membership. As of May 2025, reports suggest that Saudi Arabia is eschewing formal membership to avoid antagonizing the United States, its long-standing security and technology partner, especially in light of a potential $100 billion US arms deal and a newly announced "strategic economic partnership" under the Trump administration. This careful balancing act underscores the complex geopolitical calculus for nations navigating the shifting global landscape. Saudi Arabia's apparent decision highlights the intense pressures countries face when considering alignment with blocs perceived as challenging US interests, serving as a significant real-world test of BRICS's gravitational pull versus the influence of established Western alliances.
The formal criteria for admitting new full members, as outlined in documents like the "BRICS Membership Expansion: Guiding Principles, Standards, Criteria and Procedures" agreed upon around the Johannesburg 2023 summit, emphasize adherence to the BRICS spirit of mutual respect, sovereign equality, solidarity, and consensus. Prospective members are expected to be emerging or developing countries with significant regional and global influence, a strong economic standing, and substantial trade relations with existing BRICS states. They must also support a comprehensive reform of the United Nations, including its Security Council, to enhance the representation of developing countries, and commit to the rules-based multilateral trading system with the WTO at its core. Critically, aspiring members must maintain diplomatic and friendly relations with all current BRICS members and refrain from imposing sanctions on them that are not authorized by the UN Security Council. The process involves a formal expression of interest, assessment by BRICS Sherpas, recommendation by Foreign Ministers, and ultimately, a consensus decision by the BRICS Leaders.
This wave of expansion significantly augments BRICS's collective demographic and economic footprint. With the new members, the bloc now accounts for approximately 45-46% of the world's population and generates around 35-37% of global Gross Domestic Product (GDP) when measured in Purchasing Power Parity (PPP) terms—a metric often highlighted by BRICS to showcase its substantial economic scale. The expanded group also holds sway over a considerable portion of global oil production, estimated at nearly 30%. This enhanced scale is fundamental to its ambitions to exert greater influence on global governance and to create viable, self-sustaining economic and financial alternatives. The inclusion of populous nations like Egypt, Ethiopia, and Indonesia, alongside major energy exporters such as Iran and the UAE, translates into a greater collective weight in international forums and an increased capacity to shape global economic rules and norms. This scale makes BRICS-led initiatives, including new payment systems and development finance mechanisms, inherently more viable and attractive to other nations within the Global South.
However, this expansion, while boosting BRICS's collective clout, simultaneously introduces a greater degree of heterogeneity and potential for internal friction. The bloc now encompasses an even wider array of economic structures, political systems, foreign policy orientations, and historical regional relationships. For instance, the overt anti-Western stance of Iran contrasts with the more traditionally balanced foreign policies of countries like the UAE or Brazil. Long-standing bilateral tensions, such as the India-China rivalry, or potential regional frictions between new members (e.g., Egypt and Ethiopia concerning Nile water resources, or the complex dynamics between Iran and Gulf Arab states, though Saudi Arabia's membership remains uncertain) could complicate the consensus-building process that is a hallmark of BRICS decision-making. This internal diversity, if not managed adeptly, could be exploited by external actors or could slow the bloc's ability to respond cohesively and decisively to global events or to vigorously push its collective agenda forward, especially on politically sensitive matters. The primary challenge for the expanded BRICS will be to navigate this increased diversity, finding common ground on issues of mutual benefit while managing points of contention, to maintain its coherence and effectiveness as an international actor.
To illustrate the transformed scale and diversity of the bloc, a profile of its current full members and key partner countries is instructive:
Table 1: Profile of Expanded BRICS Members and Key Partner Countries (as of May 2025)
This table provides a quantitative snapshot of the expanded BRICS ecosystem, illustrating its increased global economic footprint, particularly when considering GDP in PPP terms, a measure that often shows the collective economic size of these nations as more substantial relative to traditional nominal GDP figures. The "Key Economic Sectors/Strategic Importance" column highlights the diverse assets these nations bring, from the energy resources of the UAE and Iran to the agricultural capacity of Ethiopia and Brazil, Indonesia's demographic weight and commodity wealth, and Nigeria's growing economic influence in Africa. Understanding these economic profiles is crucial for contextualizing the motivations for expansion and the potential impact on global commodity markets, supply chains, and the broader de-dollarization agenda.
IV. De-Dollarization: Creating Financial Alternatives
A central and increasingly prominent agenda item for the BRICS bloc is the concerted effort to reduce reliance on the US dollar in international trade and finance—a process commonly referred to as de-dollarization. This drive is underpinned by a confluence of economic and geopolitical motivations shared, to varying degrees, by its member states.
Core Motivations for De-Dollarization:
The primary impetus behind the de-dollarization strategy is the desire to mitigate risks associated with the US dollar's global dominance. These risks include vulnerability to fluctuations in US monetary policy, which can have significant spillover effects on emerging economies, and the potential "weaponization" of the dollar through financial sanctions and trade restrictions, a concern that has grown more acute in recent years. By reducing their dependence, BRICS nations aim to enhance their economic sovereignty and gain greater policy autonomy, allowing them to chart their economic courses with less susceptibility to external financial pressures.
Furthermore, there is a shared aspiration among BRICS countries to foster a more balanced, equitable, and multipolar international financial system, one that is less reliant on a single hegemonic currency. De-dollarization is also seen as a practical measure to facilitate and strengthen intra-BRICS trade and investment by reducing transaction costs associated with currency conversions and mitigating exchange rate risks.
Strategies and Mechanisms:
The BRICS de-dollarization strategy is multifaceted, involving several interconnected initiatives:
Promoting National Currencies in Trade: A cornerstone of the strategy is to increase the use of member states' national currencies in bilateral and multilateral trade settlements. This has been pursued through various bilateral agreements. For instance, trade between Russia and China is now overwhelmingly conducted in rubles and yuan, with reports indicating that as much as 95% of their bilateral trade is settled in these currencies. Similarly, Brazil and China have established an agreement for direct exchange between the Brazilian real and the Chinese yuan, and Brazilian banks have joined China's Cross-Border Interbank Payment System (CIPS) to facilitate yuan-denominated transactions. India and the UAE have also signed an agreement to promote trade in Indian rupees, with India subsequently making oil purchases from the UAE in its national currency. Indonesia, even before its full membership, began promoting local currency transactions and signed a Memorandum of Understanding with India to facilitate bilateral trade using their respective currencies. The Kazan Declaration, issued at the BRICS Summit in October 2024, formally endorsed the use of local currencies in financial transactions between BRICS countries and their trading partners, encouraging the strengthening of correspondent banking networks and enabling settlements in local currencies through the BRICS Cross-Border Payments Initiative (BCBPI). Section 65 of the Kazan Declaration specifically welcomes this development and calls for continued discussions within the BRICS Payment Task Force.
Developing Alternative Payment Systems: Perhaps the most ambitious and potentially transformative aspect of the de-dollarization agenda is the development of independent payment systems.
BRICS Pay: This concept, discussed since at least 2018 and launched by the BRICS Business Council, envisions a decentralized payment messaging system to facilitate trade in national currencies, thereby reducing reliance on the US dollar and Western-controlled financial channels like SWIFT. Russia and China have been reported as leading its development, which includes a digital asset platform for cross-border transactions. The Kazan Declaration of October 2024 acknowledged the benefits of such cross-border payment instruments.
Decentralized Cross-border Messaging System (DCMS): A core component of BRICS Pay, the DCMS is being developed by scientists at Saint-Petersburg State University in Russia. It aims for transparency, operating without a central owner or hub. Instead, participants would manage their own nodes, theoretically making the system resistant to external control or interference. The DCMS is designed to automatically build transaction routes, encrypt messages, and allow participants to set currency conversion rates and transaction limits, with a projected capacity of 20,000 messages per second and plans for it to be open source after a piloting phase.
BRICS Cross-Border Payment Initiative (BCBPI): Explicitly mentioned in the Kazan Declaration (Section 65), the BCBPI is described as a voluntary and non-binding initiative aimed at enabling settlements in local currencies, with further discussions anticipated within the BRICS Payment Task Force.
BRICS Clear: The Kazan Declaration (Section 66) also recorded an agreement among leaders to "discuss and study the feasibility of establishment of an independent cross-border settlement... infrastructure," termed BRICS Clear. This initiative is intended to complement existing financial market infrastructure and appears to be in an early conceptual and exploratory phase.
BRICS Bridge: Some analyses also refer to a "BRICS Bridge" initiative as part of the broader effort to create independent cross-border payment infrastructure.
Operational Status: While BRICS Pay was initiated by the Business Council in 2018, and the DCMS is reportedly in a piloting phase, some reports suggest a potential launch for BRICS Pay in 2025, with Russia possibly being the first country to utilize it. China officially expressed its full backing for BRICS Pay in October 2024. The development of these independent payment systems is arguably the most critical element of the de-dollarization strategy. If successfully implemented and widely adopted, such systems could significantly reduce reliance on SWIFT and Western financial intermediaries, thereby diminishing the impact of financial sanctions and fundamentally altering the "plumbing" of global finance. The exclusion of Russian banks from SWIFT following the conflict in Ukraine served as a potent catalyst, accelerating these efforts. An independent messaging and settlement system would allow direct transactions between member countries (and potentially partner nations) in their own currencies or other mutually agreed alternatives, bypassing traditional financial corridors. The Kazan Declaration's emphasis on the BCBPI, the exploration of BRICS Clear, and drills for the BRICS Rapid Information Security Channel (BRISC) to enhance financial sector cyber resilience all underscore the seriousness of this intent. However, achieving the necessary interoperability, security, efficiency, and widespread adoption for these nascent systems presents formidable technical, regulatory, and political challenges.
Role of the New Development Bank (NDB): The NDB is a key institutional pillar in the BRICS de-dollarization strategy. Its General Strategy for 2022–2026 explicitly sets a target of providing 30% of its total financing in the local currencies of its member countries. This is a quantifiable benchmark of progress. The NDB has been actively raising funds in various currencies, including Renminbi (RMB), South African Rand (ZAR), and Hong Kong Dollar (HKD), through bond issuances and syndicated loans. The NDB's 2023 Annual Report highlighted raising USD 4.6 billion equivalent in diverse currencies and emphasized its commitment to supporting investments that allow governments and the private sector to manage cash flow mismatches through local currency transactions, thereby enhancing predictability and reducing hedging costs. The Kazan Declaration (Section 62) explicitly supports the NDB in further expanding its local currency financing operations and strengthening innovation in investment and financing tools. By lending in local currencies, the NDB not only reduces currency risk for borrowers in member states but also actively creates demand for and supply of these currencies in international project finance. This, in turn, contributes to their gradual internationalization and develops local capital markets. While earlier reports had noted some underperformance in loan disbursements compared to initial targets, disbursements reportedly increased significantly following the COVID-19 pandemic.
Role of the Contingent Reserve Arrangement (CRA): The CRA serves as an important financial safety net for BRICS members, designed to help them forestall short-term balance of payments pressures and bolster financial stability. The Kazan Declaration (Section 68) expressed strong support for improving the CRA mechanism by "envisaging alternative eligible currencies" and noted that amendments to the CRA's governing documents were being finalized. While the specific alternative currencies being considered have not yet been publicly detailed, this move suggests an intention to diversify the CRA's resources beyond initial contributions (which were primarily in US dollars or readily convertible currencies). If member states can contribute to or draw from the CRA in their own national currencies or other non-dollar alternatives, it would reduce the CRA's intrinsic reliance on the dollar and enhance the utility of member currencies within this mutual support framework, making it a more genuinely multi-currency financial safety net.
The BRICS Common Currency Debate: The idea of a unified BRICS currency has been a recurring topic of discussion and aspiration, often portrayed as an ultimate goal of de-dollarization. However, its implementation faces considerable economic, political, and institutional hurdles. These include the wide diversity in economic structures, levels of development, monetary and fiscal policies among member states, the lack of a supranational coordinating body akin to the European Central Bank, and concerns, particularly from India, about potential dominance by the Chinese yuan within such an arrangement. Recent developments suggest a tempering of ambitions in this area. Brazil, which holds the BRICS presidency for 2025, reportedly dropped the common currency proposal from its immediate agenda following threats of tariffs from the US, choosing instead to focus on promoting trade in local currencies. Similarly, Russian President Vladimir Putin, speaking at the Kazan Summit, appeared to step back from earlier, more aggressive calls for de-dollarization, emphasizing the development of alternative systems to deter the "weaponization" of the US dollar rather than an outright rejection of it. Victoria Panova, a prominent Russian BRICS expert, also clarified that BRICS is not currently discussing "getting rid of the dollar" but is focused on ensuring national security through new, independent payment systems. This suggests that the BRICS de-dollarization strategy is currently prioritizing pragmatic, incremental steps—such as promoting bilateral local currency trade, enhancing the NDB's local currency financing, and building alternative payment infrastructures—over the more radical and complex pursuit of a common currency. The "common currency" thus remains a more distant, perhaps symbolic, aspiration.
Increasing Gold Reserves: Another facet of the broader de-dollarization trend involves central banks, including those in BRICS nations, increasing their holdings of gold. This is often seen as a measure to diversify national reserves away from the US dollar and as a hedge against currency volatility and geopolitical uncertainty.
Progress and Hurdles:
The BRICS de-dollarization efforts have achieved some notable successes. The proportion of bilateral trade conducted in local currencies is growing, particularly between key partners like Russia and China. The NDB is actively issuing bonds and disbursing loans in local currencies, meeting a portion of its strategic targets. The CRA is operational, and plans are underway to enhance its currency diversification. The development of BRICS Pay and associated infrastructure is progressing, with high-level political backing.
However, the path to significant de-dollarization is fraught with substantial challenges:
Dominance of the US Dollar: The US dollar remains deeply entrenched in the global financial system, accounting for the vast majority of foreign exchange transactions, international trade invoicing, and official foreign reserves.
Efficiency and Liquidity Issues: Transacting in many non-dollar currencies, especially those of emerging markets, can be less efficient and more costly due to lower liquidity and less developed market infrastructure. The dollar often serves as an intermediary currency for exchanges between two other less liquid currencies.
Financial Infrastructure Deficiencies: Inadequate financial market infrastructure in some BRICS countries, such as the lack of robust payment-versus-payment (PvP) arrangements for many currency pairs, hinders the widespread use of local currencies in cross-border transactions.
Commodity Pricing: The global trade in major commodities, including oil, is predominantly priced and settled in US dollars. This presents a significant challenge for commodity-dependent BRICS economies seeking to de-dollarize their trade.
Capital Controls and Convertibility: The currencies of some BRICS members, notably the Chinese yuan, are subject to capital controls and are not fully convertible, limiting their appeal and utility as international reserve or transaction currencies.
Geopolitical Tensions and External Pressure: The de-dollarization agenda, particularly if perceived as a direct challenge to US financial hegemony, invites external pressure. Threats of tariffs and other retaliatory measures from the United States are a significant factor. The risk of secondary sanctions impacting participants in new BRICS payment systems is also a concern.
Internal BRICS Divergences: Not all BRICS members share the same level of enthusiasm or urgency for aggressive de-dollarization. India, for example, has expressed caution, partly due to its complex relationship with China and its desire to maintain balanced ties with the West.
Historical Context: Lessons from Past De-Dollarization Attempts:
History offers valuable lessons for the BRICS endeavor. Successful de-dollarization efforts, such as those in Poland and Israel, typically involved comprehensive strategies combining macroeconomic stability (often anchored by a strong exchange rate policy), the development of attractive local currency-indexed financial assets, and financial liberalization that led to competitive domestic interest rates. Conversely, attempts at forced de-dollarization, for instance, the compulsory currency conversions in Peru and Bolivia in the 1980s or Argentina in 2002, often backfired, leading to capital flight, financial disintermediation, and a loss of public confidence, especially when not supported by credible and consistent long-term macroeconomic policies. Measures like transaction taxes on foreign currency use or differential reserve requirements have yielded mixed results, underscoring that there is no one-size-fits-all solution. The key takeaways from these historical experiences emphasize the paramount importance of policy credibility, sustained macroeconomic stability, the development of deep and liquid local financial markets, and generally avoiding overly coercive measures. De-dollarization is invariably a long-term process requiring unwavering political commitment and careful navigation of both domestic and international complexities.
The following table provides a structured overview of the BRICS de-dollarization initiatives:
Table 2: Overview of BRICS De-Dollarization Initiatives (as of May 2025)
This structured overview underscores the comprehensive nature of BRICS's de-dollarization efforts, moving from aspirational goals to concrete, albeit challenging, initiatives across trade, finance, and institutional development.
V. Geopolitics: BRICS and the Global Shift
The expansion of BRICS and its concerted push towards de-dollarization are not merely economic maneuvers; they carry profound geopolitical implications, signaling a potential reshaping of the global balance of power and challenging the established international order that has prevailed for decades.
BRICS as a Voice for the Global South and an Advocate for Multipolarity:
A core element of BRICS's identity and mission is its positioning as a prominent political and diplomatic coordination forum for countries of the Global South. The bloc consistently advocates for the reform of global governance institutions, including the United Nations (particularly the Security Council), the International Monetary Fund, the World Bank, and the World Trade Organization. The aim is to ensure these bodies are more representative of the contemporary global landscape and provide a greater voice and more equitable participation for emerging markets and developing countries. The Johannesburg II Declaration of 2023, for instance, explicitly supported the legitimate aspirations of Brazil, India, and South Africa to play a more prominent role in the international arena, particularly at the UN Security Council. The Kazan Declaration of October 2024 reaffirmed the BRICS commitment to a comprehensive reform of the UN, including its Security Council, with a view to making it more democratic, representative, effective, and efficient, and to increase the representation of developing countries in the Council's memberships. The expansion of BRICS to include new members from diverse regions significantly enhances its claim to represent a substantial portion of the "global majority", thereby lending greater weight to its calls for a multipolar world order. This push for UN Security Council reform is a direct challenge to the post-World War II power structure, which many in the Global South view as anachronistic and unrepresentative of current global realities. While achieving such reform faces immense resistance from the existing permanent members (P5), as it would require amending the UN Charter and a dilution of their own power, the persistent advocacy by a bloc of BRICS's stature keeps the issue on the international agenda and exerts considerable moral and political pressure. It also serves as a powerful rallying point for developing nations seeking a more equitable international system.
BRICS as an Emerging Counterweight to the G7:
With its expansion, BRICS is increasingly viewed, both by its proponents and by some external observers, as an emerging counterweight to the Group of Seven (G7) industrialized nations. The expanded BRICS bloc now boasts significant economic clout. In terms of Purchasing Power Parity (PPP), its collective GDP is often cited as surpassing that of the G7. It also represents a large share of the world's population, merchandise exports, and, crucially with its new members, global energy production. Initiatives like the New Development Bank, the Contingent Reserve Arrangement, and the developing BRICS Pay system are often framed as alternatives to the G7/Western-led international financial architecture.
However, the vision for BRICS's role diverges among its own members. Some, like India and Brazil, tend to emphasize a reformist agenda, seeking to enhance multipolarity and amplify the voice of the Global South within existing and new structures, while being cautious about direct confrontation with the West or allowing the bloc to be dominated by any single member, such as China. Others, notably Russia and new member Iran, appear to view BRICS more explicitly as a vehicle to actively counter US and Western hegemony, particularly in light of ongoing geopolitical tensions and sanctions. China's objectives are multifaceted, involving the promotion of its leadership within the Global South and a reform of the international order that may inherently challenge US dominance. This internal diversity of geopolitical outlooks is a critical factor shaping BRICS's external posture. The inclusion of countries like Iran, which has an overtly anti-Western foreign policy, inherently shifts the bloc's geopolitical center of gravity and may amplify anti-Western narratives, even if members like India and Brazil attempt to moderate this tendency. This could, in turn, make constructive engagement between BRICS and G7/Western nations more challenging, potentially leading to a hardening of positions and an increased perception of BRICS as a geopolitical rival rather than primarily a partner for reforming global governance.
Impact on Global Governance and International Alliances:
The rise of an expanded BRICS has the potential to significantly impact global governance structures and international alliances. Some analysts fear that if BRICS evolves into a more coherent and overtly anti-Western bloc, it could deepen divisions within broader multilateral forums like the G20 and the United Nations, complicating efforts to address shared global challenges. This could contribute to a more fragmented world order, characterized by parallel institutions and competing sets of norms and rules.
However, other observers are more sanguine, pointing out that most BRICS members and aspiring partner countries do not desire a world rigidly divided into opposing blocs and remain open to cooperation with Western countries on matters of common concern. From this perspective, BRICS might function more as a "coalition of sovereign states" focused on resisting perceived encroachments on national sovereignty and promoting specific reforms, rather than seeking to overturn the entirety of the liberal international order. The "soft balancing" behavior of BRICS—employing institutional mechanisms, diplomatic coordination, and economic initiatives to constrain the influence of a dominant power (primarily the United States) without resorting to direct military confrontation—is likely to become more pronounced with the bloc's expansion and its de-dollarization efforts. This involves creating alternative spheres of influence and cooperation, which, while not overtly aggressive, can subtly but significantly reshape international power dynamics over time.
The following table provides a comparative overview of the economic and demographic weight of the expanded BRICS versus the G7:
Table 3: Comparative Economic & Demographic Weight: Expanded BRICS vs. G7 (2024/2025 Data/Projections)
This comparative data underscores the significant collective weight of the expanded BRICS, particularly in population and GDP measured by PPP. It also highlights the disparity in representation within key global governance bodies like the UN Security Council, a central grievance that fuels BRICS's calls for reform.
VI. Global Reactions
The expansion of BRICS and its de-dollarization agenda have elicited a range of reactions from major global actors, reflecting the complex and evolving nature of international relations.
The United States:
The US stance towards BRICS has seen a notable shift. While the Biden administration had largely downplayed the bloc's potential to become a direct geopolitical rival, with officials like National Security Advisor Jake Sullivan and Treasury Secretary Janet Yellen framing de-dollarization moves as a "natural desire to diversify", the rhetoric and policy indications from the second Trump administration suggest a more confrontational approach. President Trump has explicitly identified BRICS as a major threat to US financial hegemony. This has been accompanied by threats of imposing tariffs of 100% or more on BRICS nations if they pursue a common currency or significantly undermine the US dollar's global standing. This signals a potential US policy shift towards treating BRICS as a unified bloc and actively seeking to raise the costs of its de-dollarization initiatives.
The impact of this more assertive US stance is multifaceted. On one hand, it appears to have influenced the calculus of some nations considering closer ties with BRICS. Saudi Arabia's reported decision to eschew formal membership, and the hesitancy of countries like Vietnam and Türkiye to become partner states, have been partly attributed to US pressure and incentives. On the other hand, for core BRICS members already facing US sanctions or wary of American unilateralism (such as Russia and China), such threats may paradoxically reinforce their determination to build financial autonomy and accelerate de-dollarization efforts. Brazilian President Lula da Silva's declaration that US tariff threats "won't stop the group's determination to seek alternative platforms for payments" exemplifies this resolve. This reactive US policy, therefore, carries the risk of further galvanizing the very trends it seeks to deter.
G7 and European Union:
Official joint statements from the G7 specifically addressing the BRICS expansion and de-dollarization strategy as a collective challenge were not prominently found in publicly accessible G7 summit documents for 2024-2025. However, the G7 is implicitly the grouping against which BRICS often positions itself or is perceived as an alternative to.
The European Union, through the European Parliament, has expressed concern. A February 2025 resolution noted the October 2024 BRICS summit in Kazan as a platform leveraged by Russian President Putin to counteract isolation and build alliances. The resolution called for a unified and strategic EU response to uphold the principles of the rules-based international order, reflecting anxieties about autocratic powers challenging established multilateral institutions and international law.
Analysis from European think tanks and academics suggests a nuanced view. BRICS+, the expanded bloc, is recognized as a new and significant player calling for changes to the international economic order. However, this challenge is often seen as focused on particular issues and seeking greater representation rather than a wholesale rejection of all norms underpinning the global order. There is an ongoing debate about whether BRICS is fundamentally an anti-Western bloc or a more reformist coalition. Some European analysts recommend that the G7 should open a dialogue with BRICS+ to find common ground on various policy areas. The EU's response appears to be one of cautious concern, acknowledging BRICS's growing influence and its potential to challenge the "rules-based order," especially given Russia's prominent role. Yet, the EU also grapples with how to engage a bloc that is internally diverse and not monolithically anti-Western. The EU's primary focus is likely to remain on upholding the existing international order while potentially engaging BRICS on specific issues of mutual interest, rather than opting for outright confrontation or complete dismissal.
Think Tanks and Academic Circles:
The global community of analysts and academics presents a wide spectrum of opinions on BRICS's trajectory and impact. Some view the expansion and de-dollarization efforts as a watershed moment, heralding a shift towards a more egalitarian and multipolar international system. They emphasize the bloc's growing economic weight and its potential to offer viable alternatives to Western-dominated institutions.
Conversely, other observers are more skeptical, pointing to the significant heterogeneity within BRICS, which is only amplified by expansion. They highlight the diverse, and sometimes conflicting, national interests, economic structures, and political systems of its members, arguing that these internal contradictions may limit the bloc's ability to act cohesively or to form rigid, oppositional blocs. There is an ongoing debate as to whether BRICS+ signals a definitive turn against the West or simply a move away from Western-centric systems to create more diversified options.
Regarding de-dollarization, while the ambition is recognized, many analysts underscore the formidable headwinds facing such efforts, given the US dollar's deeply entrenched role in global finance, its liquidity, and the extensive infrastructure supporting it. However, there is also an acknowledgment that US policies, including the use of sanctions, tariffs, and discussions around potential "user fees" on US Treasuries, could inadvertently accelerate the trend towards seeking dollar alternatives. The sheer range of expert opinions—from descriptions of a BRICS currency as an "economic inevitability" to a "political fantasy", and portrayals of BRICS as anything from a "coherent anti-Western bloc" to a "heterogeneous group with no desire for rigid blocs"—underscores the profound uncertainty and complexity surrounding the bloc's future. This lack of consensus is itself significant, indicating that BRICS is an evolving phenomenon whose ultimate global impact is still being actively shaped and remains, to a large extent, an open question.
VII. Brazil's 2025 Presidency
As BRICS navigates this period of significant transformation, the rotating presidency plays a crucial role in shaping the agenda and guiding the bloc's priorities. Brazil assumed the BRICS presidency on January 1, 2025, taking the helm at a pivotal moment.
Brazil's BRICS Presidency (Commenced Jan 1, 2025):
Brazil has articulated its vision for its presidential term under the overarching theme: "Strengthening Global South Cooperation for More Inclusive and Sustainable Governance". This theme signals a focus on consolidating BRICS's role as a champion for developing nations and advocating for reforms that lead to a more equitable global system. The Brazilian presidency has outlined two main areas of action: fostering Global South Cooperation and advancing BRICS Partnerships for Social, Economic, and Environmental Development.
These broad areas are further distilled into six flagship priorities for 2025:
Cooperation for Global Health.
Trade, Investments, and Finance.
Climate Change.
Artificial Intelligence Governance.
Multilateral Architecture for Peace and Security.
Strengthening the Institutional Framework of the BRICS.
To facilitate these discussions and initiatives, Brazil has launched an official BRICS Brasil 2025 website (brics.br) as a central information hub. An extensive calendar of over 100 ministerial meetings, technical seminars, and other events is scheduled to take place, primarily in Brasilia, between February and July 2025. The culmination of Brazil's presidency will be the BRICS Leaders Summit, slated for July 6-7, 2025, in Rio de Janeiro. Statements from Brazilian President Luiz Inácio Lula da Silva have consistently emphasized the importance of strengthening free trade and multilateralism, positioning BRICS as a platform for coalition-building rather than confrontation. This approach suggests an attempt by Brazil to steer BRICS towards a more reformist and institution-building path, potentially balancing the more overtly confrontational tendencies of some other members and aligning with Brazil's traditional foreign policy emphasis on multilateral diplomacy and constructive engagement.
BRICS Business Council Priorities under Brazil's Presidency (2025):
Parallel to the governmental track, the BRICS Business Council (BBC) plays a vital role in fostering economic ties. Under Brazil's leadership, the BBC's strategic priorities for 2025 are organized around four key pillars:
Energy Transition and Sustainable Development.
Strengthening Intra-BRICS Trade and Supply Chain Resilience.
Innovation and Digital Transformation.
Governance and Integration of New Members.
Within these pillars, specific working groups are tasked with advancing particular agendas. Relevant to the core themes of BRICS's evolution, the Financial Services Working Group will focus on "Innovative Finance and Economic Integration in BRICS" and "Sustainability and Financial Inclusion." The Trade and Investment Working Group will prioritize "Trade facilitation and economic integration within BRICS," "Sustainability and resilience of supply chains," and "Trade efficiency through automation and regulatory harmonization". The primary deliverables from the BBC during this period will be its Annual Report, presented to the BRICS Leaders, and the organization of the BRICS Business Forum. This practical, business-oriented agenda, focusing on tangible economic benefits such as improved trade facilitation, resilient supply chains, and cooperation on energy transition and artificial intelligence, runs parallel to the higher-level geopolitical discussions. Success in these areas could create concrete economic advantages for member states, thereby strengthening the bloc's appeal and internal cohesion from the ground up, potentially irrespective of differing views on broader geopolitical maneuvering. If intra-BRICS trade becomes demonstrably easier and more profitable, and if collaborative efforts in new technological frontiers yield competitive advantages, this would reinforce the economic rationale for BRICS cooperation and could foster deeper integration even amidst political diversity.
Future Outlook and Expert Analyses:
Looking ahead, BRICS is expected to continue its expansionary trajectory, with more countries reportedly expressing interest in joining either as full members or partners. The bloc appears committed to solidifying its role as an ever-larger platform for the Global South. The de-dollarization momentum is also anticipated to persist, driven by motivations of national security, financial independence, and the pursuit of more efficient and less politically fraught payment mechanisms, despite the acknowledged challenges and external pressures.
However, the challenges to BRICS cohesion remain significant. The internal disparities in economic scale, political systems, and foreign policy alignments, further amplified by the recent expansion, will continue to test the bloc's ability to forge consensus and act collectively. Nevertheless, BRICS is likely to continue evolving as a "soft balancing" coalition, utilizing institutional, diplomatic, and economic means to gradually reshape the global order and assert the interests of its members and the broader Global South.
VIII. BRICS and the New World Order
The BRICS group is undeniably at the forefront of a shifting global landscape. Its concurrent pursuit of membership expansion and alternatives to the US dollar-centric financial system represents a significant and deliberate effort by a diverse coalition of nations, predominantly from the Global South, to assert greater influence and reshape the international economic and political architecture. The bloc has evolved considerably from its origins as an economic acronym, establishing tangible institutions like the New Development Bank and the Contingent Reserve Arrangement, and fostering a multi-layered cooperative framework.
The recent wave of expansion, welcoming new full members such as Egypt, Ethiopia, Iran, the UAE, and Indonesia, alongside the creation of a "partner country" category, has substantially increased BRICS's demographic and economic weight, now accounting for roughly 45% of the world's population and a share of global GDP (in PPP terms) that rivals or exceeds that of the G7. This enhanced scale provides a more substantial foundation for its ambitions to influence global governance and create viable economic alternatives. The motivations of new and prospective members are varied, ranging from seeking economic diversification and development finance to enhancing geopolitical standing and finding a "safe harbor" from Western pressures.
The de-dollarization drive is a core component of this transformative agenda. It is a pragmatic, multi-layered strategy focusing on incremental steps such as promoting the use of national currencies in bilateral and multilateral trade, leveraging the NDB for local currency financing (with a stated target of 30% of its portfolio), enhancing the CRA with alternative eligible currencies, and, critically, developing independent payment systems like BRICS Pay and the BRICS Cross-Border Payment Initiative. While a common BRICS currency remains a distant and complex aspiration, these practical measures aim to reduce vulnerabilities to US monetary policy and sanctions, enhance economic sovereignty, and foster a more multipolar international financial system.
However, the BRICS project is not without significant challenges. The expansion, while boosting collective influence, also introduces greater internal heterogeneity in terms of economic capacity, political systems, and foreign policy alignments. This diversity can complicate the consensus-based decision-making process that is central to BRICS operations and may be exploited by external actors. The de-dollarization initiatives face formidable obstacles, including the entrenched dominance of the US dollar, the complexities of building efficient and trusted alternative financial infrastructures, and external pressures from powers like the United States, which has signaled a more confrontational stance. Saudi Arabia's apparent decision to forgo formal membership for now, reportedly due to US relations, highlights these geopolitical cross-pressures.
The international response to BRICS's evolution is varied. The United States, particularly under the current Trump administration, views the bloc's ambitions with increasing concern, threatening punitive measures against de-dollarization efforts. The European Union expresses apprehension about challenges to the rules-based order, especially with Russia's role in BRICS, but also recognizes the need for engagement. Expert opinions globally remain divided, reflecting the profound uncertainties and complexities inherent in the bloc's trajectory and its ultimate impact on the world order.
