Key Takeaways:
The 16th BRICS summit in Kazan, Russia, was the first since Egypt, Ethiopia, Iran, and the UAE joined the group, attracting 36 countries despite the ongoing Russia-Ukraine War.
Initiatives like BRICS Pay and the Cross-Border Payments Initiative aim to reduce reliance on the dollar, while members emphasise collaboration in AI, energy, and digital economies.
The summit signals continued global fractionalisation, creating opportunities for businesses within BRICS but complicating Western investments in these countries.
With significant control over global exports and production, BRICS poses risks to non-BRICS countries, particularly in the energy sector.
Key Summit Developments
The 16th summit of BRICS leaders was held in Kazan, Russia from October 22-24. The Kazan summit is unique in that it is the first BRICS summit organised after the extension of membership to Egypt, Ethiopia, Iran, and the United Arab Emirates (UAE) to BRICS in January 2024. The conference was also held in Russia, amidst the ongoing Russia-Ukraine War, which did not deter 36 countries and 6 international organisations from attending. Notably, UN Secretary-General Antonio Guterres, also participated in the summit, and has received significant backlash from the pro-Ukraine movement for meeting with Russian President, Vladimir Putin. The Kazan Declaration indicates future BRICS cooperation in healthcare, sustainable energy, supply chain and AI technology sectors.
Transaction and currency issues received close attention during the Kazan Summit. Several initiatives, including BRICS Pay, BRICS Clear, and BRICS Cross-Border Payments Initiative (BCBPI) were introduced or promoted, developing the group’s efforts at de-dollarisation.
Forward look
Geopolitical implications
KSG assesses that the growing membership of BRICS will likely bring challenges as well as benefits. The ten members tend to have dispersed interests and political alignments.For example, while Russia has an explicit anti-US outlook, KSG consultations confirmed that UAE and India would envision a more balanced strategy towards the US.
Business and finance
KSG assesses that BRICS’s de-dollarisation effort is unlikely to have a significant effect on the international financial landscape for at least the next three to four years. New financial systems take time to develop and mature, while the interests of BRICS members may also be dispersed on this issue (thus delaying progress beyond the assessment above - KSG will continue to report on intra-BRICS relations and strategy).
The extension of BRICS’ cooperation with ASEAN and AfCFTA - two other groups with dynamic economic activity, is likely to further enhance its position in the global economy. Businesses from South East Asia and Africa may consider the opportunity to work closer with BRICS for greater market access. KSG assesses that this will make it harder for Western companies to operate and invest in these countries.
Supply chain and transportation
Following the expansion of BRICS, the coalition now controls several key maritime routes, especially around the MENA region and the Indian Ocean. This suggests higher maritime security and an effective transport network for BRICS members, yet may indicate a risk for the US and its allies.
Energy and resources
Following the expansion of BRICS, the coalition now includes both key oil producers (Iran and UAE) and natural gas producers (Russia). This will likely increase energy cooperation and may especially benefit large energy-importing members such as China and India. KSG expects China’s investment access in the UAE’s energy industry to increase, which will likely undermine the investing and operating advantage of Western energy companies.
BRICS is building up considerable capability in the renewable energy sector based on its investment and policy support, and China especially is in a world-leading position for the new energy industry. BRICS’ development of renewable energy is likely to be beneficial for the global sustainability initiative, yet it also means that non-BRICS companies operating in the industry will likely face more sophisticated and advanced competition over time.